Amazon on Thursday debuted a set of new, pricier Alexa tablets and said it's ditching its budget-friendly Fire lineup, marking a significant shift in the e-commerce juggernaut's devices strategy.
The company unveiled 8-inch, 11-inch and 12-inch models, which start at $230 and run up to $550. All devices are available for preorder on Thursday and will begin shipping Oct. 14.
Amazon has historically sold its devices at or near the cost of manufacturing them, partly to undercut competitors with extremely cheap prices, but also with the goal of promoting its other products and services. It's hoped that for every $80 Echo smart speaker it sells, users will purchase movies, audiobook subscriptions or items from its sprawling webstore, which tend to have higher margins.
The company has recently taken steps to make more money from its devices business under CEO Andy Jassy, who succeeded founder Jeff Bezos in 2021. Last year, it introduced pricier versions of its Echo smart speakers and began charging non-Prime members a subscription for Alexa+, the souped-up version of its digital assistant.
The $550 Alexa Tablet 12 Pro costs more than double the price of the $155 Fire HD 10, Amazon's base model, and puts it more in line with Apple's iPad, which runs from $449 to $1199.
The launch comes as Amazon and other devicemakers are grappling with a historic surge in memory prices. Amazon in August boosted prices on Echos, Kindles, Fire TVs and other hardware, citing the memory crunch. And earlier this year, Apple raised its prices on MacBooks and iPads, while Nintendo hiked the price of its Switch 2 console.
Amazon denied that rising memory costs played a role in its decision to charge more for the Alexa tablet. But Panos Panay, the company's devices boss, acknowledged that the shortage made it "quite tricky" to build a premium tablet at a reasonable price without making any "trade-offs."
"I think the team did a good job designing without making that trade," Panay told CNBC in an interview. "They gave you the full craftsmanship of a product, but are able to keep it at that price point."
The company said the Alexa tablet's improved speed and performance, artificial intelligence features and upgraded design warrant a higher price tag and put the devices on par with "the best tablets on the market."
Amazon added a sleeker, sturdier aluminum backing, higher resolution display and faster processors. On the Alexa Tablet 12 Pro, the highest-end model, it incorporated "Nanomatte" display technology that was developed in partnership with Corning to "dramatically reduce screen glare."
One of the most notable upgrades is that all of the devices run Google's Android operating system, a major departure from earlier models, which relied on a custom Android version dubbed Fire OS and used Amazon's own app store, limiting the number of apps that were available.
It's also the first time Amazon has attached a set of devices to the Alexa brand, the company's automated assistant first launched in 2014 via the Echo smart speaker. Alexa is front and center in the new tablets, via a "dynamic tab" on the home screen that offers recommendations and lets users quickly pick up where they left off reading or watching a TV show.
The company also introduced a new feature called "On-Screen Intelligence," where users can ask Alexa to look at what's on their screen and make suggestions or take actions.
In a demo, Panay showed how users could watch a TikTok clip of someone cooking on a grill and ask Alexa to shop for a burger press used in the video. Users can also pull up a game schedule and add every date to their calendar, Amazon said.
"She'll do the homework, and if things work out, she's gonna bring up a shopping list where I can just hit buy now," Panos said.
Amazon said it will continue to support the Fire lineup and consumers can continue using their devices as they do today, but it is no longer manufacturing new units. The Fire lineup includes a 10-inch and 8-inch model, as well as two versions targeted for kids.
