Apple Will Hit Amazon Where It Hurts

A smaller iPad is beginning to look like less and less of a phantom as reports of its forthcoming existence keep coming. And if the latest is true, the new Apple (NASDAQ:AAPL) tablet will hit Amazon’s (NASDAQ:AMZN) Kindle Fire where it hurts. A report on the website iMore claims Apple is preparing to launch a 7-inch tablet this October with 8 gigabytes of storage for less than $250. The price could in fact drop to as little as $200, iMore was told by a “reliable” source. Amazon’s Kindle Fire, which runs on Google’s (NASDAQ:GOOG) Android software, starts at $199.

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On Wednesday, there had been a report of Apple getting ready to release a smaller iPad in August.

However, while iMore said the tablet would measure about 7 inches, it didn’t commit to exact measurements. Other reports have predicted the smaller iPad to be 7.85 inches, nearly two inches smaller than the current 9.7-inch version.

However, Apple’s supposed aggressive price would lower the company’s margins. It would also likely require a price revision for the iPod touch lineup. The music player sells for $299 with 32 gigabytes of capacity and for $399 with 64 gigabytes.

Amazon’s Kindle Fire had been the closest competitor for the iPad around the holiday season, but sales have since dropped off. IDC reported earlier this month that shipments of the Kindle Fire dropped from a 16.8 percent market share in the fourth quarter last year to just 4 percent in the first quarter this year.

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