Digitaltrends reports that Amazon placed an ODM order with Foxconn for a 10-inch tablet, which will sell before summer. ODM stands for Original Design Manufacturer, and refers to a strategy where the manufacturer handles both the design process and production, then hands the final product over to partners for branding.
Amazon did fairly well with the 7-inch Kindle Fire, selling roughly 3.9 million units since November last year. By moving such an unprecedented volume, Amazon managed to spring second only to the iPad completely smashing sales figures of other Android devices.
Success didn’t come for free, the Kindle Fire sells at $199, which iSuppli estimates to be a couple dollars under production costs. The company chose to make healthy profits on the back-end instead, by essentially giving Kindle owners a hot-line to Amazon content services, such as the Kindle bookstore, Amazon MP3 and Instant Video.
With a 10-inch Amazon tablet priced in a similar fashion, the company stands every chance to give a hard time to Apple’s current tablet lineup, but definitely not among the more demanding, savvy consumers. Apple’s rumored iPad 3 release might dampen some of the damage the new Amazon tablet will do to its market share figures, but with its more competitive cost structure Amazon can scoop up cost-sensitive buyers and turn them into long-term customers.
As far as other Android tablets go, Samsung and Asus will have to re-think their tablet strategy or settle with manufacturing for the premium segment, where the initial unit price hardly sways decisions. Asus has already taken steps so that it doesn’t happen. We’ll see if a cheaper Transformer cuts Kindle Fire’s rampage in the value segment short.
A 10-inch tablet from Amazon is bound to reshape the cheap tablet landscape completely, and have a profound effect on other Android tablet makers as well. Apple seems to be safe for now, especially if retina-display rumors and the early-March release date are to be believed about the iPad 3.