Amazon to release £33 Fire tablet in time for Christmas

Amazon is planning to sell a tablet for just $50 (£33) this Christmas, halving the price of its current Kindle Fire offerings and even undercutting its cheapest ebook reader. The tablet will be seen as a cheap - almost disposable - way of consuming Amazon's vast online digital library.

The tablet will have a 6in screen, company insiders claim, and will be complemented at a later date by cheap 8in and 10in offerings. Instead of trying to compete against the market-leading iPad at a much higher price range (the iPad mini starts at £239 and the iPad Air is priced from £319), Amazon will look to undercut just about everyone in pursuit of getting its content into as many hands as possible.

Amazon's smallest and cheapest tablet is the Fire HD 6, which has a 6in screen and costs £79. The largest Fire tablet measures 8.9in and is priced from £299. The tablet said to be just half an inch larger than the iPhone 6 Plus is not expected to have phone capabilities.

The company's targeting of the lower end of the market comes after learning a tough lesson with the Fire phone, a smartphone which entered the market as a £400 iPhone rival, but saw its price fall to less than £100 as a result of poor sales. Following several fire sales, the handset is no longer available with no signs of a replacement. In October 2014 the company took a voluntary $170m write-down on unsold Fire phone stock.

But in entering the market at such a low price-point, Amazon will have to make some significant compromises. Insiders speaking to the Wall Street Journal claim the $50 tablet will have a single speaker instead of the two used by many other tablets. Other inferior features are expected to include a lower quality screen, less powerful processor, less storage and a shorter battery life.

However, if the tablet can get Amazon's Prime and Instant Video services into more hands, then it could be seen as a loss-leading success. Amazon boss Jeff Bezos has often said he preferred to sees the company as one which makes money through providing paid-for services rather than hardware sales.