There may be yet another force at play in Amazon’s decision: textbooks. “The education world might play a big role,” says Alexander. Digital textbooks have been slow to emerge, but will almost certainly be in eBook format soon. Many textbooks require color images, so having a device that displays color images and multimedia could be important for Amazon.
The company might also offer the forthcoming tablet at a low price and make up for it by selling content later on. Amazon appears to have used this strategy for the Kindle. Amazon has also experimented with cheaper, ad-supported versions of the device, and it could take that approach with its tablet, offering a cheaper alternative to the iPad.
It’s unlikely the device will be offered anywhere close to cost, however. “There’s just too much risk involved,” says Alexander. Amazon can sell an ad-supported Kindle very cheaply because the single-purpose device is practically useless without further Amazon content. With tablets, that is not necessarily the case. People can—and do—use tablets for other activities. E-mail is still one of the most popular functions of a tablet, said Alexander. Offering the device very cheaply could prove financially dangerous if users did not buy enough content for it.
Some have speculated that Amazon might introduce a tablet with fewer features than other tablets, including the iPad, in order to keep the price low. But Alexander says this would not be a smart strategy. “Compromising quality is not a recipe for success with tablets,” she says, adding that Amazon is fully aware of this and is unlikely to enter into the venture without considering what will make a tablet successful.