Samsung Galaxy Tab 7.0 the True Rival to Amazon Kindle Fire

News Analysis: Even before it starts shipping, the Amazon Kindle Fire has been anointed as a sure hit in the field of 7-inch tablets. But with this distinction comes notice that a strong rival has already been identified-the Samsung Galaxy Tab 7.0.

Yes, I know that there's a lot of talk out there about how the Kindle Fire is an iPad killer or that it will at least drastically cut into the sales of the iPad. Such speculation is basically hooey. So you can laugh dismissively when you read articles. After all you know better. The Kindle Fire and iPad 2 are two different tablets designed for two different markets and will have little impact on each other.

But the world of 7-inch tablets is a different story. The Kindle Fire is built on a 7-inch platform that's relatively free of most of the typical high-end tablet features. It only has 8GB of memory, there's no Bluetooth, no camera, no 3G, but also no high price.

At $199 the Kindle Fire is designed to be a low-priced 7-inch tablet designed for people who have fairly simple requirements, such as Web browsing, listening to music and reading. Part of the reason it's so cheap (other than the fact that it's subsidized by Amazon) is that it doesn't have a lot of features.

But for many readers, it doesn't need a lot of features. It's got exactly what a lot of users want, mainly a low price and ease of use.

But there are still plenty of users out there who want more. They need Bluetooth, they want 3G, and they want Android 3.2 ("Honeycomb"). This is what Samsung is offering in its new Galaxy Tab 7.0 Plus tablet. The new Galaxy Tab 7.0 Plus is basically a power users' wish list. It'll handle 802.11n bonded channels, so that you can easily exceed the bandwidth of any known Internet connection. The Tab 7.0 will feature HSPA+ so that AT&T can offer it at a subsidized price. If features a full HD screen. I could go on, but you can see for yourself on the Samsung site.

Samsung is launching the device in Indonesia and Austria first, but the U.S. is high on the list. The Tab 7.0 Plus should be here in time for the holidays. But how will it fare in the face of competition from the Amazon Fire? Probably very well. There are several reasons why.

The Samsung Galaxy Tab 7.0 is already inexpensive. You can buy one over the Internet from Amazon and other stores for around $300. Considering the added features such as the cameras, the Android 3.2, the 11n speed and the 3G connectivity, Samsung should be able to make a case for the extra cost if it's able to maintain the $300 street price.

Equally important, the Kindle Fire will have firmly established the 7-inch tablet in buyers' minds. Plus with a basic tablet and e-reader selling for $200, it's unlikely to be much of a stretch to spend an extra hundred on some nice add-on features. Plus, you can get the Kindle client for Android already, so you won't be giving up the e-reader capabilities.

Of course, that's assuming that Samsung can hold the lid on prices. If the Galaxy 7.0 Plus is launched competing with the iPad in terms of price, then it's going to get the typical lackluster reception we have come to expect for other expensive tablets that don't carry an Apple logo.

Considering that Amazon has already sold more than 100,000 preordered Kindle Fires, it's clear that the market is ready for an inexpensive tablet of some sort. It's also clear that Samsung can make a tablet that's reasonably priced. The question is, will it?

If Samsung can release the Galaxy Tab 7.0 Plus at street prices in the $250 to $350 range, they'll probably sell like iced watermelon in August. More than that, and the sales levels will drop steeply. But I don't think that will happen. Samsung has a pretty good track record of figuring out how low it needs to sell a device to make money, and chances are good that it'll do that with the Galaxy Tab 7.0 Plus as well.

Samsung, and by extension the other makers of 7-inch tablets, has choices to make. Amazon has clearly staked out the price point for a low-to-midrange 7-inch tablet. There is room for tablets on the high end, which could include Samsung. But where does the high end become too high? Probably when it starts bumping into the pricing of the iPad. I suspect that many people would object to paying $450 for a 7-inch tablet, no matter how good, if for 50 extra bucks they can buy an iPad.

If Apple does what I think it might do and continue to sell the iPad 2 at a lower price once the iPad 3 is introduced, then the pressure on the 7-inch tablet market really increases. Basically, there would be a $100 range between the bottom and top of the market before you start getting into the iPad territory.

So Samsung has an option of trying to price for the high end and maybe doing OK in terms of sales, or pricing the new Galaxy 7.0 Plus aggressively so that it's not much more expensive than the Fire and really taking a huge bite out of the 7-inch tablet market share. In the process, Samsung could go a long way in helping Amazon define the 7-inch tablet as a preferred platform and opening up the market even more than Amazon already is.