Great stuff from Rene Ritchie:
It’s hard to imagine a $200 7 inch iPad having huge margins, but it was hard to imagine a $500 9.7 inch iPad having huge margins in 2010. Now the entry-level 9.7 inch iPad 2 sells for $400.
He goes on to say:
Amazon will more than likely bring a Kindle Fire 2 to market at some point as well, and they’ve shown a similar willingness to take a cut in hardware profits in order to make money on content. (The first Kindle Fire is more front-end for the Amazon U.S. store than it was real tablet — so much so it’s almost useless outside the U.S.)
The thing is, Amazon hasn’t shown any ability to do proper software, so I don’t think the Fire factors into Apple’s release of a 7” iPad at all. I do however agree that if the Nexus 7 doesn’t push Apple to respond, it’s likely that nothing will.