The latest update to Amazon's Kindle Fire raises the price of the tablet up from that lovely sounding $200 figure to a starting price of $229 — although that number can go as high as $479 — making it the cheap tablet no more. The Kindle Fire HDX has a number of improvements that warrant the minor price bump: It's thinner, lighter, has a higher resolution screen, faster processor, and built-in tech support with a new digital Genius Bar-type service called Mayday. But, for all of that, Amazon gives up the nice sounding "$200 tablet" moniker (a price that sits well with consumers) for something slightly more expensive and a lot less elegant.
Despite the price hike, CEO Jeff Bezos is still selling the device as a cheap gateway to all of Amazon's content. "We want to make money when people use our devices, not when they buy our devices," he told The Wall Street Journal's Greg Bensinger. To be sure, $230 is still on the low-end of things. The iPad Mini starts at $329; the just announced Microsoft Surface tablet starts at $449. But there are also plenty of tablets that retail for less than $200. If Amazon really doesn't care about making money on the tablet itself, then you'd expect a price decrease, as many tech pundits had surmised earlier this year.
At the very least, consumers are accustomed to the status quo with product refreshes: The new iPhone 5S costs $650 (without a subsidy), just as much as the iPhone 5 cost when it first came out. A price hike is a harder sell. Though for those looking for a bargain, the previous Kindle Fire HD costs just $139 dollars. "We don't have to have our customers on the upgrade treadmill," added Bezos, suggesting there's still a cheap option for those who want it.
Amazon, however, might see some benefits in the pricier device. Even at $230, the company loses money on every device it sells. But, for some reviewers, the Kindle Fire felt as cheap as its price-tag. When Amazon upgraded to the HD, reviewers noted that there were other cheap tablets that had better features. The little extra investments in the HDX might help with that reputation. And this time, Bezos is indeed using the hardware — not just all the Amazon content it enables users to access — as a selling point. "There are some customer delight features that we want to build that require us to operate all the way down to the hardware," he said.
At the $200 price point, it's unclear how well the Kindle Fire has sold. Amazon doesn't release sales figures. All those cheap tablets have, however, hurt Amazon's profit margins. Bezos has always talked a long game with Amazon's overall success. The theory goes that if he can just get Kindle Fires into people's hands then the company will make money selling them entertainment, eventually. But, that still entails selling the Kindle Fire. The psychology of a $200 tablet apparently wasn't enough to accomplish that goal.