The iPad from Apple was and continues to be extremely popular, selling millions of iPads and pulling in huge revenue for Apple. Every firm’s goal is to maximize profit, and Amazon is doing so by creating an Android Tablet that will compete with the iPad. This tablet is a 7-inch touch-screen, slightly small than that of the iPad, but has additional features that the iPad does not, such as higher resolution. In terms of technology improvements, this device is not significantly more advanced or improved than the iPad, so Amazon will compete with Apple on price. They are going to price the Android Tablet at a lower price than the iPad. Consumers will buy the cheaper product out of their self-interest, and by pricing the Android Tablet at an obviously lower price to grab attention, Amazon hopes to win over consumers’ purchases. Analysts have made predictions that the Amazon will be Apple’s top competitor in tablets, and that the tablet is “going to be a big deal.” As of right now, Apple dominates the tablet market. Other companies such as HP and Blackberry have tried to do what Amazon will be doing, but have failed because their tablets were not able to compete with Apple and had to be taken out of the market. Amazon on the other hand is likely to stay in the market if they “compete on price, content, and commerce,” states Rotman Epps. Amazon plans to price the tablet at a lower price than the iPad, and by lowering the price, they hope demand for their product will go up. This would follow the law of demand which states that as price decreases, demand for the good increases. They hope consumers will notice both the lower price as well as the quality and features the Android Table has to offer.
http://money.cnn.com/2011/09/23/technology/amazon_tablet/index.htm