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By Chris Meadows

Is Amazon going to stay in the hardware business, or is it going to farm production of its tablets out to other Android device makers? CNet carries some speculation on the matter.

Pointing out that the Fire’s explosive sales debut (compared to HP’s TouchPad fizzle) proves that devices need compelling content services in order to sell, and that Amazon is (allegedly) selling the Kindle Fire at cost as a way to boost those services, the CNet article quotes analysts who think Amazon will entice tablet makers into partnerships. Richard Windsor, global technology specialist for Nomura Securities, had this to say:

"I’m not convinced Amazon’s going to stay in the hardware business very long. Look at their business model–they are selling this thing at cost in order to make money on content. So if you can get someone else to make the tablet for you and sell it with your user experience on it, what do you care?"

I’m not so sure I can really see that, though. For one thing, if Amazon went into partnership with other tablet makers, those other makers certainly wouldn’t be able to sell them as cheaply as Amazon is selling the Fire. That would mean fewer people would buy them, which would in turn mean fewer people would buy Amazon’s content. And Amazon would lose some of its total control over the user experience, And as other analyses I’ve posted have shown, it’s not really clear whether Amazon is actually selling the Kindle Fire “at cost” to begin with.

Analysts will analyze and pundits will pund however they like, but I just can’t see Amazon rushing to change a system that is clearly working pretty well for the company already. It will keep making the Kindle apps available for all platforms, of course, but the Kindle Fire is the bait Amazon dangles to tempt consumers’ gadget lust. (My uncle, who already owns an e-ink Kindle and has been very happy with it, is already talking about selling it to get a Kindle Fire after falling in love with the one he got for his wife for Christmas.) I can’t see the company leaving that in someone else’s hands.

 
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