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Amazon's Kindle Fire HD Is a Menace to Android and a Friend to the iPad

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Amazon's new Kindle Fire HD is about to shake up the tablet market.

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The bigger Kindle Fire HD with an 8.9-inch screen and 32 GB of memory is just $299. The cheapest iPad and Galaxy Note models are $499 and have half the memory!

Plus, the 32 GB 8.9-inch Kindle Fire HD with 4G/LE wireless is just $499, while the basic 4G iPad is $629 and again, has half the storage space.

This is a new paradigm in tablet pricing -- Amazon is now the Wal-Mart (WMT) of the industry!

And why would they do this?

Well, it's simple.

Amazon is vertically integrated, and the Kindle product line (both the e-readers and the tablets) is not a profit center in and of itself -- the devices are designed to push Amazon's digital content offerings and its overall storefront.

Think about it.

The Kindle Fire line runs a highly-customized version of Android and this is a big, big problem for Android.

Why?

First and foremost, it gets people used to using Amazon's customized interface instead of Android itself. Why do so many people still use Windows? Because they're used to it.

Secondly, the devices funnel end users not to the Google Play store, but to Amazon itself.

From a broader industry perspective, Amazon's bargain-basement pricing lowers the floor for what people can expect to pay for a high-quality, well-spec'd tablet. This is awful for companies like Samsung trying to make a buck on a tablet in the $199 to $249 price range. And it makes things really tough for Microsoft (MSFT), which doesn't even have a horse in the running yet.

Apple might lose a few customers at the margins. But on average, the type of person who is willing to shell out $499 for an iPad isn't price shopping. iPad buyers are paying for stunning design, ease-of-use, easy integration with other Apple products, and sexy branding.
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