Amazon.com, Inc. (AMZN)’s Race to the Bottom: Texas Instruments Incorporated (TXN)

Always one to go low, Amazon.com, Inc. (NASDAQ:AMZN) may be about to go even lower with its popular Kindle Fire tablet. TechCrunch is reporting that the e-tail juggernaut is preparing to launch a $99 Kindle Fire with a seven-inch display.

Amazon is reportedly going with a 1280 x 800 resolution along with a processor from Texas Instruments Incorporated (NASDAQ:TXN) . If those specs sound familiar, that’s because the current $199 Kindle Fire HD bears the same characteristics. The company continues to put pressure on Apple Inc. (NASDAQ:AAPL)‘s iPad mini, and also recently dropped the price of its 8.9-inch Kindle Fire HD, which is now $60 cheaper than Apple’s smaller model. A possible $99 model could potentially add even more heat, costing less than a third of an entry-level iPad mini.

Here, have some cost savings
When Amazon.com, Inc. (NASDAQ:AMZN) reduced the price of its bigger tablet, the company said that it was passing along cost savings that have materialized since the initial launch as Amazon increased production volumes. The possibility of a $99 Kindle Fire would follow in those same footsteps, and also implies that costs have come down significantly since launch.

In November, IHS iSuppli estimated that Amazon’s component costs including manufacturing totaled $174, so costs must have had to come down significantly for Amazon to make this move. The largest component for any tablet in general is always the display and touchscreen assembly ($64 of iSuppli’s November estimate). That was five months ago, and any cost reductions related to the display would go a long way in facilitating a retail price drop.