Here’s How Amazon is Keeping the Kindle Fire in the Fight

Amazon’s (NASDAQ:AMZN) Kindle Fire has sold extremely well, and the company is expected to announce at least one new 7-inch version at a press conference on September 6.

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Amazon and Apple (NASDAQ:AAPL) have been fighting for a while on various fronts. Amazon is notorious for selling at a loss in order to claim market share, previously drawing heat from Steve Jobs when they began selling eBooks at $9.99. When Amazon released the Kindle Fire for $199, it was following a similar strategy. But now that Google (NASDAQ:GOOG) is selling its 7-inch Nexus at $199 and Barnes & Noble’s (NYSE:BKS) Nook is down to $179, “the $199 price point is no longer unique,” says So Young Lee, an analyst at SunTrust Robinson Humphrey.

If Amazon wants to take market share away from Apple and Google with the same tactic, it’s going to need a $150 device. Amazon claims one fifth of the U.S. tablet market, but the Kindle Fire is infamously unimpressive. It lacks the technical specs of the Nexus 7, most notably a camera. If Amazon can offer a comparable device at a lower price point, the Kindle Fire line will continue to see success. One possibility is an ad-supported model which would bring prices down.

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