The thing that is most striking to me and to some others about the new Kindle tablets is how cheap they are relative to the iPad. But details are starting to emerge that suggest how Amazon accomplished this: a search deal with Microsoft and lockscreen ads.
Amazon decided to break even on the original Kindle Fire to drive adoption and market share. That strategy worked like a charm. Millions of people bought the device for $199. The 2.0 Kindle tablet devices range from $159 to $499 for the larger, 4G-enabled version.
However all of them will feature “Special Offers” and “Sponsored Screensavers” (ads). These will appear on the lockscreen and there’s apparently no way to get rid of them, even by paying a fee to Amazon — as one could with the original ad-subsidized Kindle ($69).
Advertising may be one way that Amazon is keeping prices down. Another may be the just-discovered default search deal with Bing. Microsoft has not formally confirmed the arrangement.
However if Bing is the new default search engine for Amazon’s browser, I guarantee that Microsoft is paying Amazon something for the privilege. There might be an upfront payment and a rev share on advertising. Such a deal would also potentially enable Amazon to reduce the price of its tablets.
What do you think about these theories? And do you care?
Source:
http://www.screenwerk.com/2012/09/07/amazon-kindle-hd-prices-subsidized-by-ads-microsoft/