Amazon is offsetting the price cuts with screensaver ads and special offers

Sep 7, 2012 07:24 GMT  ·  By

For all the rumors, leaks and hype, Amazon still managed to surprise, revealing not one new Kindle Fire, not two, but three new tablets. At this point, Amazon is covering a much bigger price range of the tablet market, from the very low end, with the slightly updated original Kindle Fire at $159, €126 to the high end with the $499, €395 8.9 inch Kindle Fire HD with LTE.

Amazon has always competed on price and, apart from the LTE version, that's still true. But, much like with the fourth generation Kindles, Amazon was able to drop the price on its tablets even further by bundling ads with them.

There was some speculation on this move and it turned out to be accurate. All the Kindle Fires come with ads, all the way up to the $499 model, as a way to offset some of the cost.

As we predicted, ads made it possible for Amazon to drop the price on the original Kindle Fire, which is still being sold, also as we predicted, considerably.

Like with the Kindle ereaders, the offers will be displayed on the lockscreen. That's actually not as bad as it sounds, LCD screens don't stay on like e-Ink ones, not unless you want to wear out the battery in a few hours, so you'll only be seeing the ads for a very short time and only when you turn off or turn on the screen.

However some of these ads will also be displayed on the home screen. "Your offers display on the lock screen and lower left hand corner of the home screen—they don't interrupt use of the device," Amazon explained.

There will also be "special offers" built into the experience, though the details are few. These offers may pop up when you buy something, a movie, an actual item on Amazon.com, etc.

"Movie, music, and book covers for upcoming titles; Deals on digital content, for example: 1 of 10 top-rated Kindle books for $1, or $5 to spend in the Amazon MP3 Store; Deals on consumer electronics, for example: save up to $500 on select HDTVs," Amazon listed some of the offers you will see.

There is talk about in-app offers for third-party apps, games in particular, so that's one way Amazon will be making ad money from its new devices.