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Amazon Adds 3G To Ad-Supported Kindle E-Reader

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After finding smashing success with its Kindle with Special Offers, Amazon.com has introduced a 3G model for $164. Many believe the online retailer's next move will be a tablet computer.

Amazon recently reported the Wi-Fi Kindle with Special Offers has become the best-selling member of the Kindle line of e-readers in the U.S. Now the 3G model will follow in its footsteps to give customers access to money-saving special offers, such as $10 for a $20 Amazon gift card, $500 off HDTVs, and more.

"It's been just six weeks since we introduced the new $114 Kindle with Special Offers, and already customers have made it the best-selling member of the Kindle family," said Jay Marine, director of Amazon Kindle. "In response to customer requests, we're now making these money-saving special offers available for Kindle 3G."

The Tipping Point

What types of ads will users see while reading on an ad-supported Kindle? Ads for cars from Buick, ads for Olay products from Proctor & Gamble, and ads for Visa, among others. These companies are sponsoring the first series of screensavers designed for Kindle's electronic ink display.

Kindle with Special Offers 3G will also offer Amazon deals like $6 for six Audible Books (normally $68), $1 for an album in the Amazon MP3 Store, $10 for $30 worth of products in the Amazon Denim Shop or Amazon Swim Shop, a free $100 Amazon gift card when you get an Amazon Rewards Visa card, and 50 percent off a Roku streaming player.

"When you get below $200 and you start approaching $100, you get into the 'I don't need to ask my wife if I can buy this' category," said Rob Enderle, principal analyst at the Enderle Group. "The break point shoots up the potential audience by a factor of 10 at each point. Being able to hit these price points, or at least get close to them, is working out pretty well for the product. It is clearly critical in competing with tablets, which are finding it far more difficult to drop into this price range."

The Amazon Tablet

So that begs the question: Will Amazon launch a tablet? Many observers have posed the question this week, and Enderle thinks the answer is yes. That's because, as he sees it, the Kindle has to deliver a color model to appease consumers of magazines and picture-rich content. Color E Ink screens haven't offered high quality yet. So if Amazon can't figure out a way to make it work, a tablet is the next evolution.

"I don't think Amazon's druthers to market a tablet, but once they've got it they will undoubtedly connect it to Amazon's movie service and some other cloud services that will backstop it and provide it with a reasonably rich set of Amazon features, including access to cloud storage," Enderle said. "So my expectation is that an Amazon tablet would be a bit unique."

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