Amazon offers the cheapest 7-inch tablets

Thanks to Amazon's release of its Kindle Fire last year, consumers can currently get a tablet for the very attractive price of $199. The company intends to make this situation even better by planning to offer a more budget friendly version, called Kindle Fire SD, at an even lower price of $159. According to WitsView, the display research division of TrendForce, this price is 20 percent lower than its peers and sets a new record in the low-priced tablet market.

Eric Chiou, WitsView research director, said that apart from the tablets, Amazon launched several other models at very low prices simultaneously. Although Kindle Fire SD's 1024x600 resolution is fairly common, it is leading the way in the tablet market with a competitive price of $159. That is appealing to price-oriented buyers and consumers who hesitate to purchase tablets due to high prices.

As for the Kindle Fire HD, it has been compared to Google's Nexus 7. Both tablets use WXGA (1280x800) and direct bonding, which has less reflection and better transparency. Cost-wise, Kindle Fire HD applied the traditional GG structure for the touch module, with at least a higher cost of $3-$4 compared to Nexus 7's one glass solution (OGS). The 16G of storage is twice as large as the Nexus 7.

Amazon bit the bullet and kept the price of the Kindle Fire at $199, to regain the market share lost due to the release of Nexus 7. The competitive price confirms Amazon's conviction to keep their position in both low-priced and mainstream segments of the tablet market, especially as the iPad mini is expected to come out in the 4th quarter.

Based on WitsView's observations, it is common for operating system developers such as Google and content providers like Amazon to lower tablet prices with subsidies. Tablet brands which only make profit on hardware have lost their competitive edge in the market. Once the same pattern is duplicated to 10.1 and 10.6-inch markets, it does not make much room for hardware manufacturers to survive.

The 8.9-inch Kindle Fire HD features full HD (1920x1200), which is not the mainstream choice. Chiou said that the basic models of 10.1 and 9.7 inches have been priced below $400 and the price could further drop to approximately $350 due to promotions in the 4th quarter.

Although Kindle Fire HD is equipped with one of the highest resolutions, the active area is only 77 percent of 10.1 inches. The relatively small price gap of $50 shows less popularity than 7-inch tablets. The sale performance is estimated to be suppressed by mainstream products such as 10.1 and 9.7 inch tablets.

According to WitsView, although Amazon Kindle Fire showed weak sales during the first 3 quarters of this year amid the absence of new models, this year's Amazon tablet shipments are projected to reach 7 million to 7.5 million with the showcase of the Kindle Fire HD. Tablet prices will become more and more consumer-friendly, as shipments are projected to grow 37 percent YoY in 2013 and climb above 130 million units, if tablets continue to be affordable.