Kindle Fire HD means price is now everything for Microsoft

So Amazon has launched its Kindle Fire range in the UK, and it’s no understatement to say the two we’re getting in the UK come with sizzling price tags. A 7in Android 4 device with an IPS screen and access to all of Amazon’s various media libraries and services? That’ll be £159 for the 16GB model. Yes, £159.

If you don’t mind a lower resolution and some lesser specs, that falls to a faintly ridiculous £129 – and that’s for a 7in tablet that’s fully capable of playing video, downloading magazines and doing all the things an Android tablet normally does.

It’s almost enough to make the Nexus 7 look a bit overpriced. Google and Asus sell their superb tablet at the same price as the 7in Kindle Fire HD, but with half the storage. You do get NFC included, for whatever that’s worth, and the Nexus is 54g lighter, but on the other hand Amazon claims its innards are faster than the Nexus 7’s Tegra 3, and it has dual-band Wi-Fi. Horses for courses.

It’s exciting, but this blog isn’t about the battle between Google and Amazon – from what we’ve seen both will do just fine out of this new 7in tablet push. No, I’m here wondering what the ruddy heck Apple and Microsoft are going to do next.

There’s no official iPad mini yet, but the industry seems to have decided it’s definitely coming within months. Taken in isolation you’d expect Apple to look at the £399 of the existing iPad and opt for a nice, clean £299 for the smaller version. At a push we might accept that Apple would squeeze that to £249, but it would be a huge departure for such a company to match the prices of its new tablet rivals.

Would an iPad mini at £299 appeal? Of course, to the Apple hardcore it would be a natural progression from the iPad, with apps already purchased and ready for install. But charging a premium is easy when you’re first to market with an exciting new product; it’s something else entirely when – for once in Apple’s case – you’re playing catch-up.

What about Windows RT?

Apple can do what it likes with pricing, such are its margins, but things look shakier for Microsoft. Its Surface RT tablet was a pleasant surprise when it was unveiled in all its multicoloured glory, but that was way back in June when the tablet market was simpler. Eight days later Google showed the world that you could sell a great 7in tablet for £159.

Now, into September but with still no sign of a Surface RT price, all of a sudden US consumers can buy an 8.9in Kindle Fire HD – that’s going to be closer in feel to 10in than 7in – for just $299. When Microsoft said it would price the Surface RT against consumer tablets, do you think Redmond bigwigs had such a low figure in mind?

So Microsoft has to make a decision. Will it choose to pit its consumer tablet against the iPad, and hope the coloured keyboards, bundled Office and familiarity of Windows differentiate it enough that consumers will be willing to pay £399 or more? Or, a lot less likely, will it re-evaluate after seeing what Google and Amazon have done, and market the Surface RT aggressively on price?

Either way it’s an uphill struggle. Consumers are now seeing affordable tablets from big names on a daily basis. They’re watching BBC reports about a Kindle that looks like an iPad but only costs $299, and they know they want one. The tablet market hasn’t been this interesting since Boots started selling Viagra, and Microsoft currently isn’t in it. When it does finally arrive, pricing is absolutely everything.