Kindle Fire HD 8.9 vs. iPad 3: Is the Apple Experience really worth $200?

On paper, the new Amazon Kindle Fire HD 8.9 blows the iPad 3 out of the water. The Fire HD is thinner, lighter, and smaller than the iPad 3. The Fire HD has dual stereo speakers with Dolby Digital Plus, while the iPad has a single mono speaker. Where the iPad 3 is capable of 22Mbps 802.11n WiFi, the Fire HD has a MIMO antenna capable of 31Mbps.

But most importantly, the 16GB Fire HD — with its 1920×1200 (254 PPI) Retina-equivalent screen! — is a full 200 dollars cheaper than the 16GB iPad 3. If you step up to the 32GB models, or the 4G LTE models, the price difference jumps to $230.

Now, for a start, this price disparity gives you some idea of Apple’s ludicrous profit margins, but it also illustrates the very different tack that Amazon is taking. The 16GB WiFi iPad 3, at launch, cost roughly $300 to build. Given its slightly cheaper materials (plastic chassis rather than aluminium) and Amazon’s weaker supply chain, the 16GB Kindle Fire HD 8.9 probably costs around $300 as well.

Instead of making a huge profit on every device, Amazon instead opts to sell its tablets at cost price, relying on aftermarket purchases (Prime, movies, e-books, music, TV shows) to turn a profit. For this technique to work, Amazon has to sell a lot of tablets — but considering the first-generation Kindle Fire sold somewhere in the region of 6 million units in its first 9 months in the US, comfortably outselling every tablet except for the iPad, I don’t think Amazon will have a problem moving units.

The original Kindle Fire didn’t go up against the iPad, though — it was a cheap, chunky, 7-inch device that stood alone until the Nexus 7 appeared a few months ago. It was the perfect Christmas present, or the ideal buy for someone who was thinking about getting a tablet, but didn’t want to plunk down $500 for an iPad or Galaxy Tab.

The Fire HD, with an impressive screen, fancy speakers, and svelte form factor, is obviously targeted straight at the iPad (and indeed, both Jeff Bezos’ presentation and the Amazon.com product page for the Fire HD draw comparisons with the iPad 3). The question is, does the Kindle Fire HD 8.9 have what it takes?