Amazon’s first Kindle Fire, which journalists positioned as a potential rival to the iPad’s throne when it came out last November, “never really, well, caught fire,” as Wired's Christina Bonnington puts it. Nevertheless, 10 months after its release, the original full-colour, 7-inch touch-screen tablet has sold out, and Amazon has captured 22 percent of the U.S. tablet market, regaining the position it first won in December of last year as the second-strongest tablet brand in the United States.

Amazon CEO Jeff Bezos announced this triumphant statistic yesterday, in what has been called an Apple-like event at a hangar in Santa Monica, California, where he announced the newest additions to the Kindle line.

While professing that “these are huge, huge markets, with room for lots of winners,” Bezos acknowledged that Apple is a “major player in this arena” and made it clear that Amazon was stepping up its game against the tablet market’s monarch by unveiling three new high-definition Kindle Fire devices that undercut the price of the iPad.

While the latest version of the iPad starts at $500 (the early model is $400), the brand new mid-sized Kindle Fire HD (with a screen size of 8.9 inches compared to the iPad's 9.7 inches) goes for $299. The smallest of the new range has the same screen-size and price-point as its predecessor (7 inches and $199), representing a $301 savings on the iPad in the U.S.

The new HD tablets boast a slew of technical improvements, such as more storage space, better battery life, a front-facing HD camera and an interactive “Xray” movie system. However, it is clear that the Kindle Fire's primary selling point remains its low price, followed closely by the range of content it channels through Amazon's online marketplace.

Indeed, the two are linked: the company’s ability to engage so aggressively in price competition is founded partially in its content-first strategy. (Another element in its pricing, a system of built-in advertisements on lock and home screens, has been controversial).

“People don’t want gadgets, they want services,” Bezos told the gathered journalists  yesterday; “we want to make money when people use our devices, not when they buy our devices,” he said, making a point that likely resonated with a room full of people who trade in the content that makes tablets useful.

“Consumers buy tablets for what they can do with them,” agrees Sarah Rotman Epps, a Senior Analyst at Forrester Research and a tablet expert in a post for Forbes. She goes on to say that “this is an important launch for Amazon, as it continues to evolve its strategy of service syndication… making it more convenient and pleasurable for consumers to buy Amazon stuff."

"Amazon’s services are the core of its devices, and devices enhance Amazon’s service: A virtuous cycle where Amazon gains an increasing share of consumers’ wallets,” she continued.

Amazon Prime is one example of the company’s emphasis on content. It is a club allowing members unlimited streaming of television episodes and films, free two-day shipping on “millions of” items from the online retailer, and the right to borrow one free e-book a month from the Kindle Lending Library.

The U.S. Kindle Newsstand also offers 202 newspapers such as The New York Times and the Financial Times, and more than 547 magazines including The New Yorker and National Geographic. Earlier criticised for poor readability due to the small screen, the new Kindle Fire's reader is designed for easy magazine perusal: “tap the cover to go directly to an article, double tap an article for easier reading view, and bookmark your favourite articles for future reference,” says the website.

News content is additionally offered on Amazon’s less expensive e-readers, updated versions of which Bezos also announced yesterday, directly challenging Barnes & Noble’s Nook and the Kobo, which was holding a concurrent press conference in Toronto yesterday. The new Kindle Paperwhite reader swipes at the Kobo Glo and Nook GLowLight by knocking $10-20 off the price tag ($119 for the Paperwhite with advertising vs. $129 for the Glo and $139 for the GlowLight) and adding features such as a “whiter and brighter screen” with 62 percent more pixels and 25 percent more contrast, pages that turn 15 percent quicker than the last model’s. Its base-level e-reader is now priced at a modest $69.

In an August survey by Forrester, it was found that 31 percent of the 4,650 U.S. consumers examined in August 2012 claimed to have a credit card on file with Amazon. Compare this to 18 percent with Apple and 5 percent with Google, and it is obvious not only that subscription-based services are “key to Amazon’s future success,” but that those who create and profit from these services (i.e. news organisations) would do well to make their product look great on a Kindle.

Amazon may not have set the tablet world on fire just yet, but in the United States there is a faint smell of lighter fluid in the air.

Source: Forbes, Quill & Quire, GigaOM, Huffington Post, Wired, NYTimes, Washington Post, Amazon (1) (2)

Photo courtesy of Amazon