Amazon released a series of more expensive new Alexa tablets on Thursday and announced that it would abandon its affordable Fire product line, marking a significant shift in the device strategy of this e-commerce giant.
The company has launched models of 8 inches, 11 inches, and 12 inches, with starting prices ranging from $230 to a maximum of $550. All devices are available for reservation on Thursday, and shipping will begin on October 14th.
In the past, Amazon typically sold devices at prices close to their manufacturing costs, partly to suppress competitors with extremely low prices, and also in the hope of driving sales of other products and services through this approach. The company's strategy was that for every $80 Echo smart speaker sold, users would purchase movie subscriptions, audiobooks, or goods from its vast online store, which generally have higher profit margins.
Since CEO Andy Jassy took over from founder Jeff Bezos in 2021, Amazon has been taking measures to try to earn more money from its device business. Last year, the company launched higher-priced versions of its Echo smart speakers and began charging a Alexa subscription fee to non-Prime members. Alexa+ is an enhanced version of its digital assistant.
The Alexa Tablet priced at $550 is more than twice the price of Amazon's basic model Fire HD which sells for $1015, and this also places it in a closer position to Apple's iPad, whose price range is from $449 to $1199.
At the time of this release, Amazon and other device manufacturers are dealing with a historic increase in memory prices. In August, Amazon raised the prices of Echo, Kindle, Fire TV and other hardware products due to a shortage of memory. Earlier this year, Apple increased the prices of MacBook and iPad, and Nintendo also raised the selling price of its Switch gaming console.
Amazon denies that rising memory costs are the reason for its increase in the selling price of the Alexa tablet. However, Panos Panay, the person in charge of the company's device business, admitted that the shortage makes it "quite tricky" to create a high-end tablet at a reasonable price without making any "trade-offs."
“I think the team did a great job in the design; they didn’t make any such trade-offs,” Panos Panay said in an interview with CNBC. “They provided you with a product that has complete craftsmanship, while also maintaining the price at that level.”
The company stated that the improvements in speed and performance, artificial intelligence features, and the upgraded design of the Alexa tablet are sufficient to justify a higher price tag, and that these devices can now compete with "the best tablets on the market."
Amazon has added a more stylish and sturdy aluminum backplate, a higher-resolution display, and a faster processor to its new devices. On its top-of-the-line Alexa Tablet 12 Pro, the company has adopted the “Nanomatte” display technology developed in collaboration with Corning to “significantly reduce screen glare.”
One of the most notable upgrades is that all devices now run Google's Android operating system, which is a significant difference from earlier models. Previous models relied on a customized version of Android called Fire OS, and used Amazon's own app store, which limited the number of available apps.
This is also Amazon's first time binding a set of devices to the Alexa brand. Alexa is the company's automated assistant, which was first introduced in 2014 through the Echo smart speaker. The new tablet places Alexa in a central position; there is a "dynamic tab page" on the main screen that provides recommended content and allows users to quickly return to where they left off reading or watching TV shows.
The company has also launched a new feature called “On - Screen Intelligence”, where users can allow Alexa to view the content on the screen and provide suggestions or perform actions.
During the demonstration, Panos Panay showed how users can watch a TikTok video, which features someone cooking on a grill. The video also includes a request for Alexa to purchase the hamburger molds used in the video on their behalf. Amazon mentioned that users can also access the competition schedule and add all the dates to their calendars.
“She’ll finish her homework, and if everything goes well, she’ll pop up a shopping list for me. I just need to click ‘Buy Now’,” said Panos.
Amazon stated that the company will continue to support the Fire product line, and consumers can continue to use the existing devices just as they do today, but the company will no longer produce new models. The Fire product line includes one 10-inch and one 8-inch model, as well as two versions designed for children.
