or Connect
AppleInsider › Forums › Mobile › iPad › Amazon ramps up Kindle Fire production to 5 million units in 2011
New Posts  All Forums:Forum Nav:

Amazon ramps up Kindle Fire production to 5 million units in 2011 - Page 2

post #41 of 89
I'm sure this is taking away some sales from Apple in the near term.

The effect in the longer term is much less certain.

The key for Amazon is obviously making enough money off of digital content to cover their losses on the hardware. But so far as I can tell, Amazon makes no more money off of digital content than Apple does (in terms of margins), and Apple has always said that they run their digital stores as break-even operations. Maybe Apple isn't being entirely honest about that, but still -- I doubt Apple is making much profit on digital content. So how will Amazon make better margins selling at the same prices as Apple, especially when Amazon has smaller volume on music and apps?
post #42 of 89
Only 6gb of useable onboard storage, no mic, no gyroscope, no bluetooth, no sd card expansion slot for non-kindle apps/storage, no gorilla glass, and customer service reps from India and Pakistan. Should be interesting having to hit a button to switch from landscape to portrait mode, since there is no gyroscope, not to mention lack of games that utilize it. People expecting an ipad-like experience with the Fire are going to be seriously disappointed.

It's also interesting to hear that Amazon plans to outdate the 7" version of the Fire before it's even released to the public. Second quarter sales aren't going to be rosy.
post #43 of 89
I've been giving this "Fire" thing a lot of thought... trying to figure out what's going on.

AFAICT, Amazon has booked somewhere between 20,000 and 50,000 preorders per day since the Sept 28 announce. There are 48 days between announce and availability on Nov 15.


If that holds it means that between 960,000 and 2,400,000 Fires will have been preordered.

There are 46 days between Nov 15 and Dec 31 -- it is possible that the pre-order rate could be sustained (or even increase) as the holidays approach..

So, it is conceivable that Amazon could sell between 2 and 5 million Fires this year.

All the rumors certainly suggest so...


I guess what bothers me is that it's all rumor.

There are no verifiable numbers -- and no apparent way to gain them...

1) Bezos talks in abstracts "well received", "big demand", "millions more than we planned"...

2) Amazon does not report Kindle device sales/inventory/returns...

3) The devices are only sold through the Amazon [online] store...

4) There is no way for anyone to measure sales -- other than a survey as suspect as the recent one under discussion...

5) Predictably, Every Kindle device is reported as a top seller in its category (whatever that is)


We, the outside public, have no way to tie Fire sales to any number (reasonable or unreasonable).


We're left with accepting rumors or doing our own SWAG estimates using the Aborigine Numbering System... somewhere between few and many!

...It's probably more than 200 thousand and less than 2 million, IMO.


The only check we'll have is after the fact when Amazon reports its earnings -- we can estimate a loss of $10-$50 per Fire sold and extrapolate the number in the decline in overall earnings.


So, Bezos is in the middle of kind of a perfect situation in the tablet? wars....


He can just declare victory and retire from the field (knowing that each Fire not sold will improve the bottom line).


Maybe I'll waddle over to asymco and ask Horace if he knows how to quantify this?

"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
post #44 of 89
Quote:
Originally Posted by DrDoppio View Post

You have no estimate of the error in this study.

Actually, I do. Given a random sample, one can calculate the error limits based on any certainty level they choose. Depending on whether you want a 90 or 95% certainty level, the error in this study is a couple of percent - or greater than the number of people who allegedly delayed their iPad purchase.

Quote:
Originally Posted by ConradJoe View Post

Likely you are correct. 74% of the FireBuyers had no plans to buy an iPad.

And Conehead Joe continues his lies.

The study didn't say that 74% of the Fire buyers had no plan to buy an iPad. It said that 26% were going to delay or cancel their planned iPad purchase. The remaining 74% could be in several different categories:
- People who had no plans to buy an iPad
- People who bought a Fire and bought an iPad, anyway
- People who ACCELERATED their iPad purchase when they saw how bad the competition was.

I'm not going to try to put percentages on those options because, unlike you, I don't simply make things up and pretend they're factual. But clearly, the report does NOT support the claim you made.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #45 of 89
Quote:
Originally Posted by skolvikings View Post

Wrong! The Kindle Fire does use gorilla glass for the touchscreen.

Don't confuse the Kindle Fire with Amazon's Kindle e-reader devices. They're completely different products. The Kindle Fire is their "tablet" whereas the other Kindle devices have e-ink screens and are designed almost exclusively for "reading."

I wonder why they don't say anything about Gorilla Glass™ on the Kindle Fire website.

Is the display "just like" Gorilla Glass or is it actually Gorilla Glass?

Might be technically irrelevant but it is curious not to mention it by name.
na na na na na...
Reply
na na na na na...
Reply
post #46 of 89
Quote:
Originally Posted by Dick Applebaum View Post

I've been giving this "Fire" thing a lot of thought... trying to figure out what's going on.

AFAICT, Amazon has booked somewhere between 20,000 and 50,000 preorders per day since the Sept 28 announce. There are 48 days between announce and availability on Nov 15.


If that holds it means that between 960,000 and 2,400,000 Fires will have been preordered.

There are 46 days between Nov 15 and Dec 31 -- it is possible that the pre-order rate could be sustained (or even increase) as the holidays approach..

So, it is conceivable that Amazon could sell between 2 and 5 million Fires this year.

All the rumors certainly suggest so...


One day we'll know for sure, Dick, but if I were to guess I'd say a few retailers are taking the same gamble that they took with the Xoom... order the crap out of the product with hopes that it will be a big holiday season seller and then take a loss on the product that is remaining.

Either Bezos actually has a real hit or we'll be able to buy a Fire for $149 in February.

Either way, Amazon is losing money on every unit sold... whether it can be recovered in content sales is yet to be seen.
na na na na na...
Reply
na na na na na...
Reply
post #47 of 89
Quote:
Originally Posted by island hermit View Post

One day we'll know for sure, Dick, but if I were to guess I'd say a few retailers are taking the same gamble that they took with the Xoom... order the crap out of the product with hopes that it will be a big holiday season seller and then take a loss on the product that is remaining.

Either Bezos actually has a real hit or we'll be able to buy a Fire for $149 in February.

Either way, Amazon is losing money on every unit sold... whether it can be recovered in content sales is yet to be seen.

IH...

Are 3rd-party resellers selling the Fire -- I thought it was only Amazon direct sales???
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
post #48 of 89
Quote:
Originally Posted by Dick Applebaum View Post

IH...

Are 3rd-party resellers selling the Fire -- I thought it was only Amazon direct sales???

On edit... the Kindle fire is available through 3rd party resellers.

"Beginning November 15 the new Kindle Fire will be in stock at over 16,000 stores in the U.S. BestBuy, Office Depot, Radio Shack, Sam’s Club, Staples, Target and WalMart will carry the products."
na na na na na...
Reply
na na na na na...
Reply
post #49 of 89
Quote:
Originally Posted by Blastdoor View Post

The key for Amazon is obviously making enough money off of digital content to cover their losses on the hardware. But so far as I can tell, Amazon makes no more money off of digital content than Apple does (in terms of margins), and Apple has always said that they run their digital stores as break-even operations. Maybe Apple isn't being entirely honest about that, but still -- I doubt Apple is making much profit on digital content. So how will Amazon make better margins selling at the same prices as Apple, especially when Amazon has smaller volume on music and apps?

Apple makes a little profit from the App Store and iTunes and whatnot. They just make far more from hardware. That's what they're really trying to sell.

Amazon is going at it from the other direction: small loss on the device in order to become basically THE go-to source for any eBooks or digital movies anybody owns.

Additionally, they're pushing Amazon Prime for this pretty hard. It makes the Fire much more attractive — a free eBook (rental) every month, free movies and TV shows, free shipping through the Amazon store. That $80/year (or whatever it is now) is where they'll make their profit.

And if you already have Amazon Prime (as I do, because the shipping alone makes it worth it to me), then you are far, far, far more likely to pretty much just buy everything you can from Amazon. And why not? The shipping is free.

I expect that's where they'll make back their losses on the device itself and then some.
Multiplex is an online comic strip about the staff of a movie theater.
Reply
Multiplex is an online comic strip about the staff of a movie theater.
Reply
post #50 of 89
Quote:
Originally Posted by paxman View Post

I think the tablet manufacturers that can't back up with extensive content will be the ones most badly affected. Nobody can compete against a loss leader unless they have something else to sell.


IMO, that is the fascinating thing about his whole phenomenon.

I'm not sure how the traditional hardware companies will compete at full price. I think that they will have to strike deals with companies who would benefit from the tablets as a retail portal.

Or maybe there will emerge two classes of devices, cheap subsidized ones that are tied to some particular provider using the Amazon formula, and more expensive, unsubsidized tablets that can be used for more different tasks and access more different stuff, like the Galaxy Tab.

It is questionable how much people will pay for limited-use tablets vs. full-featured tablets with robust non-shopping ecosystems.

It is also extremely inefficient for every retailer to develop sufficient apps for its tablet. And yet, anybody who wants to sell a subsidized tablet will need apps to sweeten the deal with a good-enough ecosystem.

It will be very interesting how this all shakes out. One extremely likely scenario, IMO, is that one or more retailers will decide to stop developing their forked OS in time. Whether they adopt a more mainstream OS or forego the subsidized tablet sales at that point remains to be seen.
post #51 of 89
Quote:
Originally Posted by island hermit View Post

I wonder why they don't say anything about Gorilla Glass on the Kindle Fire website.

Is the display "just like" Gorilla Glass or is it actually Gorilla Glass?

Might be technically irrelevant but it is curious not to mention it by name.

Apple never mentioned it by name with the first iPhone and presumably the 3G and 3GS, as well. (Corning's CEO is quoted in the Steve Jobs biography talking about it; that's the first reliable confirmation I've seen anywhere that gorilla glass was used in the iPhone.)

We know that Apple developed (or, more likely, developed with Corning) a new glass for the 4 and 4S, which may or may not be Corning's new lotus glass, though.

I don't think the glass is much of a selling point to anybody outside of gadget nerds (like myself and most of us here), so a company opting not to name it doesn't really strike me as unusual.
Multiplex is an online comic strip about the staff of a movie theater.
Reply
Multiplex is an online comic strip about the staff of a movie theater.
Reply
post #52 of 89
Quote:
Originally Posted by gmcalpin View Post

Apple never mentioned it by name with the first iPhone and presumably the 3G and 3GS, as well. (Corning's CEO is quoted in the Steve Jobs biography talking about it; that's the first reliable confirmation I've seen anywhere that gorilla glass was used in the iPhone.)

We know that Apple developed (or, more likely, developed with Corning) a new glass for the 4 and 4S, which may or may not be Corning's new lotus glass, though.

I don't think the glass is much of a selling point to anybody outside of gadget nerds (like myself and most of us here), so a company opting not to name it doesn't really strike me as unusual.

Amazon disagrees with you. The toughness of the display is one of the Fire's selling points featured on the website. Amazon's target market is quite different from the iPad, I would imagine. Parents would think twice about giving an iPad to a younger child but the price of the Fire makes it attractive as a gift for children under 12, imo. If that's true then the durability of the glass would become paramount.
na na na na na...
Reply
na na na na na...
Reply
post #53 of 89
Quote:
Originally Posted by island hermit View Post

On edit... the Kindle fire is available through 3rd party resellers.

"Beginning November 15 the new Kindle Fire will be in stock at over 16,000 stores in the U.S. BestBuy, Office Depot, Radio Shack, Sam’s Club, Staples, Target and WalMart will carry the products."

Wow!!

That is a surprise! (I yahooed and found some similar information).

AIR, the parts cost estimates for the Fire were right around $200 with total cost to Amazon estimated at $220-$250 -- or a loss of $20-$50 per sale. This would be recovered in subscription and content sales over a 1-2 year period.

I suspect they would need to give resellers a $150-$175 price based on order volume.

I fail to see how this could work at all...

Even if they show well compared to the other tablets sold by the retailers -- that's a pretty big loss to Amazon for each sale.

If they don't sell, then we'll have another TouchPad fiasco...

1) ship back to AMZN incurring additional costs/losses

2) drastic closeout price reductions, by AMZN incurring additional costs/losses

This looks like a lotta' risk with no upside...


If I were Schiller, I'd get iPad placement next to the Fire at all those resellers


Edit: We'll know before Thanksgiving if we have a roast turkey...
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
post #54 of 89
The Kindle Fire is essentially some Amazon lipstick gloss on an Android pig. Let's wait until this slab hits the street before we crown it as the next big thing, and I'm eagerly awaiting the customer reviews as the silk fantasy meets the harsh reality.
post #55 of 89
Quote:
Originally Posted by markbyrn View Post

The Kindle Fire is essentially some Amazon lipstick gloss on an Android pig. Let's wait until this slab hits the street before we crown it as the next big thing, and I'm eagerly awaiting the customer reviews as the silk fantasy meets the harsh reality.

The big missing piece for the user is:

Where is my stuff?

My pictures, my CDs (that I already own), my home movies, my documents, my social life...

The only thing of mine on there is my email -- everything else is someone else's stuff... that I have to buy...

There's no me there!
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
post #56 of 89
Quote:
Originally Posted by Realistic View Post

This is good news? Amazon loses money on each unit sold. The old I can't make money on each unit sold but I'll make up for that with volume.

do people really believe that retarded 'pricing'?
Household: MacBook, iPad 16gb wifi, iPad 64gb wifi, iPad Mini 32gb, coming iPhone 5S, iPhone 4S 32gb, iPhone 32gb, iPod Touch 4th gen x1, iPod nano 16gb gen 5 x2, iPod nano gen 3 8gb, iPod classic...
Reply
Household: MacBook, iPad 16gb wifi, iPad 64gb wifi, iPad Mini 32gb, coming iPhone 5S, iPhone 4S 32gb, iPhone 32gb, iPod Touch 4th gen x1, iPod nano 16gb gen 5 x2, iPod nano gen 3 8gb, iPod classic...
Reply
post #57 of 89
Quote:
Originally Posted by Dick Applebaum View Post

The big missing piece for the user is:

Where is my stuff?

excellent point. The flip side is that at a $200 price point people may be happy with a web browser, book reader, movie watcher. Basically transient content.
post #58 of 89
The more I learn about this (Amazon's marketing of the Fire), the less I understand.

Seems like Bezos learned the lessons of King Gillette -- but got confused trying to apply them...

...if you give away the razors, you must make enough money on the blades to recover the cost of the razors...

Obviously, the blades are Amazon content and services...

...but if the razors have a net cost of $20 (best case) and you "give away" 5 million razors -- that's $100 million in the hole to start.

Wouldn't it have been better just to write an app for all phones and tablets and give that away?

You could sweeten the pot by giving a free subscription and/or reduced price on content purchases for new users,

I don't know... maybe $4 million to develop the app, $1 million/yr to maintain it and $5 million worth of advertising/promotions...

Wouldn't you get the same bang for 10% of the buck?

...maybe AMZN plans to sell tickets to try the Fire...

...and we learned in history how trial by fire works out...

/ramble

What am I missing?
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
post #59 of 89
Quote:
Originally Posted by markbyrn View Post

The Kindle Fire is essentially some Amazon lipstick gloss on an Android pig. Let's wait until this slab hits the street before we crown it as the next big thing, and I'm eagerly awaiting the customer reviews as the silk fantasy meets the harsh reality.


The Fire ain't no Porker. And it ain't spun silk.
post #60 of 89
Quote:
Originally Posted by ConradJoe View Post

The Fire ain't no Porker. And it ain't spun silk.

We'll see.
na na na na na...
Reply
na na na na na...
Reply
post #61 of 89
Quote:
Originally Posted by Dick Applebaum View Post

Obviously, the blades are Amazon content and services...

...


What am I missing?


The blades are not just content and services.

The blades are everything that Amazon now sells via the website, plus anything and everything that Amazon chooses to sell in the future.

What if there were a fun little tablet that made it so anything you wanted at Mall*Wart appeared magically at your front door a couple of days later? Might that help Wallmart's sales?


Amazon is positioned to do that in a big way. Apple only sells content and apps, B&N is even more limited than Apple, but Amazon sells pretty much everything that anybody might want. And their horizons are unlimited in that regard.

So these early forays into tablet sales can easily be at a small loss, if they truly plan to expand the ecosystem. Even with their current ecosystem, they might do very, very well.
post #62 of 89
Quote:
Originally Posted by Dick Applebaum View Post

The more I learn about this (Amazon's marketing of the Fire), the less I understand.

Seems like Bezos learned the lessons of King Gillette -- but got confused trying to apply them...

...if you give away the razors, you must make enough money on the blades to recover the cost of the razors...

Obviously, the blades are Amazon content and services...

What am I missing?

What many might be missing is that, AFAIK, there's never been any confirmation that Amazon really is losing money on each Kindle Fire sale. I know that some analyst(s) guessed that's the case, but there's other sources who believe Amazon is making a slim profit on the hardware sale. One of those is quoted here:

http://www.bgr.com/2011/10/03/amazon...e-50-per-unit/
melior diabolus quem scies
Reply
melior diabolus quem scies
Reply
post #63 of 89
Quote:
Originally Posted by Gatorguy View Post

What many might be missing is that, AFAIK, there's never been any confirmation that Amazon really is losing money on each Kindle Fire sale. I know that some analyst(s) guessed that's the case, but there's other sources who believe Amazon is making a slim profit on the hardware sale. One of those is quoted here:

http://www.bgr.com/2011/10/03/amazon...e-50-per-unit/

I guess that makes sense if you believe that:

1. The units assemble themselves - since there is no cost for assembly in that list
2. The packaging is free
3. There is a 100% yield - no defective units or components ever (even if the component is replaced by the supplier, there's still a cost)
4. QC doesn't cost anything
5. Advertising doesn't cost anything
6. The retailers are paying Amazon full list for the units and selling them at their cost out of the goodness of their hearts
7. Amazon didn't spend a penny modifying Android - and will never have to
8. No one ever has a problem, so there's no need for anyone to work in support
And so on.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #64 of 89
Quote:
Originally Posted by Dick Applebaum View Post

...I suspect they would need to give resellers a $150-$175 price based on order volume.

I don't know, the low-end of that reseller cost seems a bit optimistic to me. I think places like Best Buy, etc. that will be selling the Fire only stand to make (and I'm guessing here) about $25 on it. Then, if that's the case, what's really in it for those retailers? I can't imagine that Amazon would be willing to give them a cut on future app/content revenue. Also, doesn't it seem like it wouldn't be in Best Buy's interest to sell the thing that would help their customers buy stuff from one of their competitors (namely Amazon)? I have to agree with you, this seems to get more and more complicated the more we try to figure it out.
post #65 of 89
Quote:
Originally Posted by jragosta View Post

I guess that makes sense if you believe that:

1. The units assemble themselves - since there is no cost for assembly in that list
2. The packaging is free
3. There is a 100% yield - no defective units or components ever (even if the component is replaced by the supplier, there's still a cost)
4. QC doesn't cost anything
5. Advertising doesn't cost anything
6. The retailers are paying Amazon full list for the units and selling them at their cost out of the goodness of their hearts
7. Amazon didn't spend a penny modifying Android - and will never have to
8. No one ever has a problem, so there's no need for anyone to work in support
And so on.

Exactly. Development costs alone must add at least $10-20 to each unit if 5 million were ordered.

If Amazon is making $50 per then why would they tell investors that they'll be taking a hit.
na na na na na...
Reply
na na na na na...
Reply
post #66 of 89
Wow is there even a single review of this 1.0 product?
post #67 of 89
Kindle Fire will instantly kill off all other Android pads. Its popularity will effectively freeze Android at 2.3 in the pad computing space because developers will ignore all other Android pads. And Amazon can blissfully ignore any newer releases of Android because they have replaced the standard GUI with their own GUI layer. They can customize Amazon shoppers' experience with their own look-and-feel. Honeycomb, Ice Cream Sandwich, and whatever else Google dumps on the market will be irrelevant. Terrible news for Google.

But the worst news for Google is that Amazon has replaced the Android "profit layer" with their own Market. This really hurts, since Google no longer profits from sales and does not benefit from Amazon shoppers' "product affinity" data. The latter is crucial. Just as crucial as Google's statistical analysis of web searches and page hits. Knowing all about customers' preferences and shopping patterns is what made Amazon the giant that it is today.

Amazon doesn't need Google's latest Android releases. And Google gets no profit from sales made on Kindle Fire. And worst of all, Google completely misses out on Amazon shopper demographics and shopping habits. The Kindle Fire has ended the race to be the first successful Android pad. And Google is completely shut out of the profit loop.

Yay open.

Sent from my iPhone Simulator

Reply

Sent from my iPhone Simulator

Reply
post #68 of 89
Quote:
Originally Posted by Gatorguy View Post

What many might be missing is that, AFAIK, there's never been any confirmation that Amazon really is losing money on each Kindle Fire sale. I know that some analyst(s) guessed that's the case, but there's other sources who believe Amazon is making a slim profit on the hardware sale. One of those is quoted here:

http://www.bgr.com/2011/10/03/amazon...e-50-per-unit/

OK!



Now, this I can understand!

If these figures are reasonably accurate... basically, at a cost of $150

1) AMZN can direct sell the Fire through its online store at $25% gross profit

or

2) AMZN can push some or all of that 25% margin to resellers based on volume -- and still break even


What is also interesting is this:

If the chart is Accurate, Apple's cost for a 16GB WiFi iPad 2 would be about $235 with a retail of $500.

1) Apple can direct sell the base iPad 2 through its online store at 50% plus gross profit

and

2) Apple can push half of that margin down to the resellers based on volume -- and still make 25% gross profit.


So the best reseller has these two tablets:

1) Fire @ $200 with $50 profit

2) iPad 2 @ $500 with $125 profit

The reseller cannot reduce Apple's iPad 2 price more than a few dollars.

The reseller can, likely, sell the Fire at any price he cares to.

Lots of ways for the reseller to go here...

1) Bundle accessories, peripherals, content/apps, gift cards, warranties, services (either or both)

2) Heavy discount the Fire as a loss-leader and up-sell the iPad when possible

3) Package the 2 -- 1 for Mom and Dad, 1 for the kids

3) Manufacturer Promotionals/Comps/SPIFFs if any


The question in my mind: when you see the Fire side-by-side with the iPad 2, is MSRP, alone, enough to make the Fire sell -- if not, what then?

With a qualified customer and a knowledgeable salesman -- the Fire could be either a good deal or a bad example!
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
post #69 of 89
Quote:
Originally Posted by Dick Applebaum View Post

OK!



Now, this I can understand!

If these figures are reasonably accurate... basically, at a cost of $150

1) AMZN can direct sell the Fire through its online store at $25% gross profit

or

2) AMZN can push some or all of that 25% margin to resellers based on volume -- and still break even


What is also interesting is this:

If the chart is Accurate, Apple's cost for a 16GB WiFi iPad 2 would be about $235 with a retail of $500.

1) Apple can direct sell the base iPad 2 through its online store at 50% plus gross profit

and

2) Apple can push half of that margin down to the resellers based on volume -- and still make 25% gross profit.


So the best reseller has these two tablets:

1) Fire @ $200 with $50 profit

2) iPad 2 @ $500 with $125 profit

The reseller cannot reduce Apple's iPad 2 price more than a few dollars.

The reseller can, likely, sell the Fire at any price he cares to.

Lots of ways for the reseller to go here...

1) Bundle accessories, peripherals, content/apps, gift cards, warranties, services (either or both)

2) Heavy discount the Fire as a loss-leader and up-sell the iPad when possible

3) Package the 2 -- 1 for Mom and Dad, 1 for the kids

3) Manufacturer Promotionals/Comps/SPIFFs if any


The question in my mind: when you see the Fire side-by-side with the iPad 2, is MSRP, alone, enough to make the Fire sell -- if not, what then?

With a qualified customer and a knowledgeable salesman -- the Fire could be either a good deal or a bad example!

None of that is even remotely accurate. See my previous post to see a partial list of things that are not included in their 'cost' figure.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #70 of 89
Quote:
Originally Posted by island hermit View Post

We'll see.

Here's some more poll results that I hadn't seen before, with a slightly different twist on the matter:




http://technolog.msnbc.msn.com/_news...pad-domination


I'm surprised by what the graph says. Is it possible that the Fire might outsell the iPad this Christmas season? Seems unlikely to me.

What about the Fire and the new Nook combined? Maybe those together will outsell the iPad? More than likely, IMO.
post #71 of 89
Quote:
Originally Posted by Dick Applebaum View Post

With a qualified customer and a knowledgeable salesman -- the Fire could be either a good deal or a bad example!


Agreed. But this stuff gets sold in self-service stores, like Wallmart, and through mail order too.

And even in stores with salespeople, most of them would be happy to sell a steady stream of product, even if they make less per item than the premium brand.
post #72 of 89
Why are the Fandroids going all gaga over the Kindle Fire?

Just a short while ago, I bet that many of these same Fandroids were saying that Apple was bad, it's evil, it has a closed ecosystem, it's a walled garden and Android is so much better because it's "open".

And along comes an Amazon skinned Android mini-tablet, that also has a closed ecosystem and a walled garden and all of a sudden, some pathetic people are claiming that it's going to eat into iPad sales.

These hypocritical fools need to get their brains checked out.

I do find it quite hilarious though that one of the most selling Android tablets might turn out to be behind a walled garden. Hahahaha. Fandroids disgust me. They are liars and hypocrites.
post #73 of 89
Quote:
Originally Posted by jragosta View Post

None of that is even remotely accurate. See my previous post to see a partial list of things that are not included in their 'cost' figure.

Yeah! I saw that and I agree.

The costs you mention aren't itemized.... but some of these are, likely, included in the "other".

Some things may not be broken out as direct costs at the product level but part of G&A expenses.

The component costs shown are [intelligent?] estimates by someone -- Who says the processor costs are this low (or this high). Doesn't Apple get better prices on all these components (as well as mfg costs, etc.) based on volume?

The value of a chart like this is the figures shown are, likely, reasonable ± 10%...

So, if we put aside the unknowns, and assume that the numbers shown are not biased -- we can make some reasonable comparisons.

We can conclude that these numbers are likely the most favorable to Amazon and Apple (unless there are some under-the-table payola deals going on).

So, At best, AMZN has $50 (25%) to play with and Apple has $250 ($50%) to play with.

In Apple's case we can test these numbers by the numbers that Apple reports.


What I was trying to determine is side-by-side Fire and iPad 2:
-- how well the Fire would sell?
-- why?
-- what could be done to make the Fire sell better?
-- is the Fire displacing iPad 2 sales?
-- what if anything, needs to be done to protect the iPad 2 from competition like this?
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
post #74 of 89
Face it the US is not where the action, now it is greater China as defined by Apple and the world.

So where is the Fire available?
post #75 of 89
Quote:
Originally Posted by ConradJoe View Post

Here's some more poll results that I hadn't seen before, with a slightly different twist on the matter:




http://technolog.msnbc.msn.com/_news...pad-domination


I'm surprised by what the graph says. Is it possible that the Fire might outsell the iPad this Christmas season? Seems unlikely to me.

What about the Fire and the new Nook combined? Maybe those together will outsell the iPad? More than likely, IMO.

We'll see.
na na na na na...
Reply
na na na na na...
Reply
post #76 of 89
Quote:
Originally Posted by ConradJoe View Post

IMO, that is the fascinating thing about his whole phenomenon.

I'm not sure how the traditional hardware companies will compete at full price. I think that they will have to strike deals with companies who would benefit from the tablets as a retail portal.

Or maybe there will emerge two classes of devices, cheap subsidized ones that are tied to some particular provider using the Amazon formula, and more expensive, unsubsidized tablets that can be used for more different tasks and access more different stuff, like the Galaxy Tab.

It is questionable how much people will pay for limited-use tablets vs. full-featured tablets with robust non-shopping ecosystems.

It is also extremely inefficient for every retailer to develop sufficient apps for its tablet. And yet, anybody who wants to sell a subsidized tablet will need apps to sweeten the deal with a good-enough ecosystem.

It will be very interesting how this all shakes out. One extremely likely scenario, IMO, is that one or more retailers will decide to stop developing their forked OS in time. Whether they adopt a more mainstream OS or forego the subsidized tablet sales at that point remains to be seen.

Whatever happens I am sure that Amazon's move will change the landscape significantly. I suspect Amazon is ushering in an unsustainable netbook like race to the bottom where the market will be flooded with cheap underpowered devices. I suspect everybody will loose except perhaps Apple. If Amazon can sell enough devices and hook millions of users into their eco system, then perhaps they will win. It certainly is a very bold move.
post #77 of 89
Quote:
Originally Posted by ConradJoe View Post

Here's some more poll results that I hadn't seen before, with a slightly different twist on the matter:




http://technolog.msnbc.msn.com/_news...pad-domination


I'm surprised by what the graph says. Is it possible that the Fire might outsell the iPad this Christmas season? Seems unlikely to me.

What about the Fire and the new Nook combined? Maybe those together will outsell the iPad? More than likely, IMO.

That's horribly misleading.

First, look at the green bars. They are asking tablet owners if they plan to buy an iPad or a Fire. But if they're an existing tablet owner, they probably already have an iPad, so the choice would be a second iPad or a Fire to go with the iPad. For many people, one iPad is enough and a second Fire just for reading would be perfect. So the "Tablet owners" result is biased.

Second, look at the pie chart in the above link. It doesn't really tell you anything. So 44% would CONSIDER the Fire. Big deal. How many actually buy one is what matters.

Finally, it's like asking how many people buy a Kia vs a Rolls Royce (or pick your own analogy). The Fire is $200 and the iPad is $500 to $850 (plus data plan for some models). They're not really the same market. It wouldn't surprise me to see a $200 item outsell an item that's 3-4 times the price. Besides, $200 is in the range that a LOT more people would give it as a gift than $500 and up.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #78 of 89
Quote:
Originally Posted by jragosta View Post

That's horribly misleading.

First, look at the green bars. They are asking tablet owners if they plan to buy an iPad or a Fire. But if they're an existing tablet owner, they probably already have an iPad, so the choice would be a second iPad or a Fire to go with the iPad. For many people, one iPad is enough and a second Fire just for reading would be perfect. So the "Tablet owners" result is biased.

Second, look at the pie chart in the above link. It doesn't really tell you anything. So 44% would CONSIDER the Fire. Big deal. How many actually buy one is what matters.

Finally, it's like asking how many people buy a Kia vs a Rolls Royce (or pick your own analogy). The Fire is $200 and the iPad is $500 to $850 (plus data plan for some models). They're not really the same market. It wouldn't surprise me to see a $200 item outsell an item that's 3-4 times the price. Besides, $200 is in the range that a LOT more people would give it as a gift than $500 and up.

You must not have got the memo. If the Fire sells even 10 more tablets than the iPad it will be undeniable proof that Apple is doomed or some other crazy ass idea like that.

The Fire will do fine during the holiday season... it's what comes after that that interests me.
na na na na na...
Reply
na na na na na...
Reply
post #79 of 89
The Kindle Fire sounds like a nice device if all you want to do is web surfing, reading and maybe watching some movies. If it works as advertised, it should sell well. There are some questions for me though.

What was the intent of this study? How many here are clear about what the poll was trying to ask and what their results were? I have read the article a couple of times from a couple of different sources and I am still not sure what they meant or were measuring. Or maybe I am the only one who sees it this way.

Has anyone actually had hands on with the device for an extended period of time? I have yet to see a review outside of just talking about specs.

At the announcement, if I am remembering correctly, no one was able to play with the device. Why would that be?

November 15 is an unusual date for a product release, especially for this type of device, with the holiday buying season already in full swing. Why did they pick that date for a release? Could this mean that something isn't ready in terms of the software and could it be possible that the ship date could slip?

This seems more of a tablet for adults and not for kids. I wonder how many are buying this for kids and will they be satisfied with the limitations, especially in terms of game playing?

Does Amazon's decision to sell the Fire through third parties mean that the analysts are wrong with their cost projections for the device? This seems to fly in the face of last CC where Amazon said that their profitability during the holiday quarter will take a hit. So then why sell this through third parties which would further erode margins?

Neal
post #80 of 89
I might buy one just because it seems to be a good product with plenty of content and is at a price I believe is very reasonable.
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: iPad
  • Amazon ramps up Kindle Fire production to 5 million units in 2011
AppleInsider › Forums › Mobile › iPad › Amazon ramps up Kindle Fire production to 5 million units in 2011