SAN FRANCISCO Amazon.com Inc on Thursday introduced a $50 tablet, a price tag analysts said was low enough to set it apart in a crowded market and draw more customers to its online services.
The new Fire tablet, one of several new and upgraded devices from Amazon, comes with a screen that measures 7 inches (17 cm) diagonally and a front-and-back camera. It will start shipping on Sept. 30.
"There's one part of the tablet (market) that's growing right now, and ... that's sub-$100 tablets," said Dave Limp, senior vice president of Amazon devices. The company's $99 Fire HD was Amazon's best-selling tablet last year, he added.
Analysts said there were few comparable tablets that cost as little as the new Fire. Amazon will also sell the tablets in a six-pack for less than $250.
"The lesson we learned from consumer electronics is that when the market matures, consumers go cheaper," said Forrester principal analyst James McQuivey. "If you're Amazon and you know this is going to happen, you might as well join in."
He called the $50 tablet a "gateway drug" for Amazon to attract new customers to Prime, a $99-a-year shopping program estimated to have about 40 million members.
Shares of Amazon were up 1.9 percent at $537.15.
The potential to draw more customers may appease investors but could prove costly if Amazon fails to sell large volumes, analysts said.
Amazon took a $170 million write-down in the third quarter last year after it struggled to sell its inventory of $200 Fire smartphones. The company has said it does not plan to profit from devices but wants to use them to draw more customers to its services.
"They're out of the phone business," said Tim Bajarin, president of San Jose-based tech research firm Creative Strategies. "To be fair that was a true mistake. The $50 tablet is far more strategic to their business."
Also on Thursday, Amazon also introduced a line of new, 8-inch and 10-inch Fire HD tablets and revamped Fire TV gadgets.
The $99.99 Fire TV set-top box integrates Amazon's cloud-based virtual assistant Alexa, allowing viewers to check the weather, look up sports scores and play music.
Amazon said viewers could soon control home appliances through Fire TV, a function available on Echo, the company's personal aide gadget that can regulate thermostats and lights.
(Reporting by Mari Saito; Editing by Miral Fahmy and Lisa Von Ahn)
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Updated Date: Sep 18, 2015 00:00:05 IST