Tablet market is splitting into Lexuses and Camrys

Amazon's new Kindle Fire is getting lots of attention this morning, with all the usual gee-whiz demonstrations. But what's interesting is how Amazon hasn't pushed the device, priced at $199, as being all things to all users. As Dan Gilmour explains, the Fire seems functional but not elegant - and certainly not as powerful as the iPad (not having 3G capability would seem to be a big drawback). From the Guardian:

For my purposes, the 7-inch size is ideal. That's why I believe Amazon is doing the right thing with its first tablet by keeping it small, especially given that Amazon's major goal is to have customers use it as a media consumption device, which also runs Android games and other apps. I will also take bets that Apple, despite Jobs's pronouncement that he would never sell a tablet of that size, will reconsider and do so at some point; the value proposition is too obvious.

The Fire's relatively low price reflects Amazon's business model, and the company's insistence that the devices should be seen as one element in a larger collection of services. It has a growing collection of media it can sell or rent to its customers. To some degree, Apple's media sales and rentals are aimed at selling expensive hardware, but Amazon's experience with the Kindle has been more about selling cheap hardware to sell more books.

Demo from Business Insider: