Legendary Amazon boss Jeff Bezos unveiled a 7-inch tablet he dubbed Amazon’s “Kindle Fire” at a highly publicized press conference on September 28, 2011 in New York City.

Of all the bells and whistles that accompanied what Bezos narrated, the only thing that stood out to me was its price.

It was priced at $199.

The cheapest Apple iPad is $499 (that is, if you can get it at that price, brand new).

The first exclamation point in my mind was: wow! Could this be an iPad “killer”?

When my excitement subsided, my rational mind took over.

Of course, it’s not an Apple to Apple comparison (pun intended). The Amazon Kindle Fire is an “orange”, while the Apple Ipad, well, an “apple”. For one, the size of the Ipad is about 10 inches while the Kindle Fire is about 7 inches.

But… the price, oh, the price.

At $199, they’re deeply undercutting the tablet PC competition. Even the Archos, the cheapest iPad contender, misses out by around $250. The others (Sony, Asus, Samsung) have priced theirs at or near the price of the Ipad… as if they had the apps and the trust in the brand that accompany them.

So let me explain why the Amazon Kindle Fire may have such a low price.

It’s not that Bezos suddenly turned philanthropic. It’s just that the marketing genius behind his ears is gearing up at full speed.

Let me explain by analogy.

1. The razor blade business model

In the early 1900s, the Gillette company (founded by another legend, King Camp Gillette), invented the marketing model now taught in business schools as the “razor blade” business model.

In short, he sold razors so cheap that one would be an idiot conservative not to consider switching to cheap, expendable razors instead of sticking to his inconvenient but reliable long razor blade, which would require a safety sheath and regular razor blades. sharp.

Gillette priced razor blades so low that it created a new, lucrative, huge and expanding market for razor blades… A market that Gillette created with all its “first-in” advantages and brand recognition.

2. The printer market

HP sells its printers cheap. Why? Because they will recoup their losses on the printer ink you have to buy (from them) so you can use your HP printer.

Do you realize that at the price of 2-3 HP ink cartridges, you could already buy a new HP printer?

3. The market for glucometers for diabetes

My wife is diabetic. She tests her “blood sugar” almost 3-4 times a day using a “test strip” that is read by a machine called a “glucometer.” The price of the glucometer? “Too low to show” (as Amazon says), even given free as a promotion by sales agents.

But the price of the test strip? Almost $1 per strip!

4. The film market (before it was “killed” by digital)

Remember the days from the 1980s to the early 2000s, when photographs were taken with 35mm film cameras? Do you remember the film brands “Kodak” and “Fuji”…they sold their cameras cheap?

But they profit immensely from the sale of the film from their cameras.

(Until the “film” digital camera crashed the party and ate all the food… well, that’s another story.)

So… why can Amazon Kindle Fire be sold so cheap compared to the competition?

If you still don’t know the answer, head over to the kindle department of Amazon’s website and be amazed at the myriad of book, movie, music, and game products you can load up (and buy) once you get your hands on the Amazon Kindle Fire.