Price Cut for Kindle Fire Tied to European, Japanese Launch

Thanks to today's launch of the Kindle Fire HD 8.9-inch tablet from Amazon.com Inc. (NASDAQ: AMZN) in five European countries and Japan, Amazon claims that now "it is able to lower the price" of the devices in the U.S. At least that's the story according to Amazon.

And while Amazon tries to link the launch of the tablet into new markets to the U.S. price drop, the full story is likely to be that full-size tablets are not selling well if recent survey data is any guide.

One of every two tablets sold in the fourth quarter of 2012 had a screen size smaller than 8-inches. The big reason: cost. Consumers like tablets, but small beats big and cheap beats expensive. Even market leader Apple Inc. (NASDAQ: AAPL) has experienced heavier demand for its iPad mini that for the larger iPad. Samsung Electronics and Google Inc. (NASDAQ: GOOG) have also had more sales for the smaller, cheaper tablets.

The WiFi version of the Kindle Fire HD tablet has now dropped in the U.S. from $299 to $269 and the 4G version has dropped in price from $499 to $399. That points to another feature of customer demand. Tablets with WiFi-only sell better than the pricier 4G-enabled devices, which also require expensive data packages.

Amazon's 7-inch version of the Kindle Fire was already available in Europe. And because Amazon does not reveal sales figures for its devices, we'll never know for sure the impact of the launch in European and Japanese markets nor its impact on U.S. sales.

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