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Amazon ramps up Kindle Fire production to 5 million units in 2011 - Page 3

post #81 of 89
Quote:
Originally Posted by MacTel View Post

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.

I can afford to buy it... But I like to think that is because I don't waste money on things I don't need and won't use -- rather, save money for things worthwile...

No slam intended... I just don't understand buying something just because you can.
"...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."
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"...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 -
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post #82 of 89
Quote:
Originally Posted by Mac.World View Post

no mic, no gyroscope, no bluetooth, no sd card expansion slot for non-kindle apps/storage, no gorilla glass

no gyroscope - just like the first iPad
bluetooth - has Apple unlocked Bluetooth for anything more than wireless headsets? If not, it's still pretty useless
no SD card slot - just like every iOS device ever
no gorilla glass - just like iOS devices

and before it comes up...
no camera - just like the first iPad. And taking pictures/video is just sort of silly with a tablet. I saw someone using an iPad as a camera in Disney World back in July and it just looked a bit ludicrous to be holding such a huge device for that purpose.

Quote:
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.

It has an accelerometer that it uses to change screen orientation, just like most every portable electronics device does.

Quote:
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.

What? You mean unsubstantiated rumors? Like the iPad 3 that was supposed to launch before the end of this year (and before the iPad even launched as well)? Or the Apple TV that was supposed to be here for Christmas? Thank goodness every rumor is true.
post #83 of 89
You might also check the "fine print':
Quote:
Pre-order now to reserve your place in line. Orders are prioritized on a first come, first served basis. U.S. only

- Amazon Prime is US-only.
-Amazon Music store is US-only
- Amazon App Store appears to be US-only.

Cheers
post #84 of 89
Quote:
Originally Posted by caliminius View Post

no gyroscope - just like the first iPad
bluetooth - has Apple unlocked Bluetooth for anything more than wireless headsets? If not, it's still pretty useless
no SD card slot - just like every iOS device ever
no gorilla glass - just like iOS devices

and before it comes up...
no camera - just like the first iPad. And taking pictures/video is just sort of silly with a tablet. I saw someone using an iPad as a camera in Disney World back in July and it just looked a bit ludicrous to be holding such a huge device for that purpose.



It has an accelerometer that it uses to change screen orientation, just like most every portable electronics device does.



What? You mean unsubstantiated rumors? Like the iPad 3 that was supposed to launch before the end of this year (and before the iPad even launched as well)? Or the Apple TV that was supposed to be here for Christmas? Thank goodness every rumor is true.

it seems a bit silly to compare the current Fire specs with the specs of an iPad no longer made. as far as the camera is concerned, i actually waited for the iPad 2, knowing that teardowns had shown a place in the frame for one and also knowing that video conferences would be, and have been, in important use of the iPad for me. Also, it might be silly to use an iPad to snap a photo but it makes a great camera for shooting HD video and the iMovie software is extremely easy and intuitive. The machine is also a surprisingly fun gaming device.

Ultimately, Amazon cannot maintain this price point. It is likely that all things taken together, this is a short term money loser for them. And Bezos himself has indicated that and also that the 7" is a stop gap device. Amazon needs to hang on to customers and keep them from getting accustomed to other ecosystems and burning up a little cash to do so in the holiday season is probably a wise decision, but the price, the main attraction, can't last and so the threat this poses to the iPad can't really be determined except in the short term. As others have pointed out, it may have been a better decision to develop an app for Amazon prime customers that could be built into other tablets or devices like the Apple TV or a Google TV device. i watch plenty of Netflix movies by streaming them through my Apple TV and this cost Netflix very, very little money.

We will of course know soon enough how many Fires will be sold but today there emerged one solid piece of evidence: the current wait time for a Fire to ship is 3-5 days, meaning Amazon is likely to have all or almost all of the stock it needs on day one to deliver on it's pre-orders. It's probably getting to be too late for the company to order more to be built in time for the holiday so at some point, if sales are sufficiently robust, the item will sell-out for the holiday. if sales aren't all that great past launch, then there will be plenty of stock. If the former occurs, I could imagine that would redound nicely for the iPad. People who stampede for a $49 DVD player at Walmart get the $99 one if they get to the isle too late. That's why Walmart does that, in order to sell the more profitable item.

Further, I am very interested to see what happens to sales of this device once it is no longer being offered at this loss leader price. If Amazon has to suddenly start selling this for $299 people will feel like it's a rip-off. Ask Netflix. And, as well built as this is, people replace electronics every couple of years. Estimates predict it will take about two years for Amazon to make up for the money lost on the sale of the 7" Fire. But in two years, what if they want something new? More robust? Will they be constantly making software updates to this? That involves a lot of people. If folks replace their Fire in two years with either a new Kindle device then that one can't also be a money loser or they will never catch up. And if they replace it with an iPad (as the much touted survey with it's 26% number implies) then the loss will leader will have led to nothing but an un-recouped loss.
post #85 of 89
Quote:
Originally Posted by strask View Post

Ultimately, Amazon cannot maintain this price point. It is likely that all things taken together, this is a short term money loser for them.

That's where you're wrong. Amazon can maintain that price. Component costs will only drop for the device, which means Amazon only has to hold on long enough for the components to be cheap enough that the device turns a profit. Likewise, if Amazon's content sales spike (mp3s, Kindle books, videos), then they can hold out even longer. And if Kindle Fire sells well enough, they will place larger component orders which will likewise reduce costs. There's no way in hell Amazon is EVER going to increase the cost of this version of the Kindle Fire. That's ludicrous to suggest. Maybe they'll introduce a 10" version that's more expensive (and not sold at a loss) and simultaneously drop the 7" version, but the 7" version isn't going up in price.
post #86 of 89
Quote:
Originally Posted by MacTel View Post

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.

Exactly- no one on here understands the whole Kindle modus operandi. Notice how no one mentions wyspersync- the best feature.
post #87 of 89
Quote:
Originally Posted by caliminius View Post

That's where you're wrong. Amazon can maintain that price. Component costs will only drop for the device, which means Amazon only has to hold on long enough for the components to be cheap enough that the device turns a profit. Likewise, if Amazon's content sales spike (mp3s, Kindle books, videos), then they can hold out even longer. And if Kindle Fire sells well enough, they will place larger component orders which will likewise reduce costs. There's no way in hell Amazon is EVER going to increase the cost of this version of the Kindle Fire. That's ludicrous to suggest. Maybe they'll introduce a 10" version that's more expensive (and not sold at a loss) and simultaneously drop the 7" version, but the 7" version isn't going up in price.

That sounds good but in practice it just doesn't work that way. This is a flagship product and is perceived as a lower priced but credible alternative to the iPad and other tables. If the exact same components are used to build this over along period of time it will no longer fit either of those criteria. Apple still makes the iPhone 3Gs but it is now the entry level option of three phones and is available for a lot less money.

And this isn't just a matter of comparison and perception, although that plays a role. Last year's specs don't feel so up to date anymore not just because products have been introduced with better specs but because programmers and content providers work to use up every bit of computing power available to them. So, now we can stream HD video from the web, not just because it's available but because the combination of bandwidth and processing power and cheap RAM have all made it possible for consumers to use such a thing. And the moment some phone maker or chip manufacturer comes out with a fast, more capable product content developers begin to find ways to use it.

So, the Fire can't stay the same forever and still command the same price. AT this exact moment in time it feels like a premium product (which it isn't quite but it's close) at a bargain price (which it is to the point that it's a money loser.) Going forward the options are for it to get cheaper and stay the same, get more expensive and stay the same so as not to be a money loser and then make subsequent improvements based on a profitable price point or to improve the quality and maintain the price, which means it's forever a loss leader that only leads to more losses.

Sadly for Amazon they didn't predict the success of this thing and if they had only brought this item out at a special introductory price of $199 then nobody would feel betrayed when the price went up. but now they are in a bit of a pickle.
post #88 of 89
Quote:
Originally Posted by strask View Post

Sadly for Amazon they didn't predict the success of this thing and if they had only brought this item out at a special introductory price of $199 then nobody would feel betrayed when the price went up. but now they are in a bit of a pickle.

I'm sorry, but that's nonsense. Basically what you're saying is Amazon was hoping this product WOULDN'T sell very well. No company introduces a product with the plan of it failing. Amazon clearly has a plan to make the Fire profitable otherwise they wouldn't have bothered increasing production of it. They would have just let it be sold out or minimally increased production while waiting to release the next model that wasn't sold at a loss. Maybe they're hoping content sales will take it into the black, or that the free month of Prime memberships turn into paying Prime members. They've been rearranging their site to emphasize digital content for months before the Fire was announced. Or maybe they just plan on letting it stay in the red until the next model, hoping to build a name and customer base (like the original X-Box).

The simple fact is they DO have a plan. They didn't just introduce a tablet and wind up going, "Oh crap, people are actually buying these things!"
post #89 of 89
Quote:
Originally Posted by caliminius View Post

I'm sorry, but that's nonsense. Basically what you're saying is Amazon was hoping this product WOULDN'T sell very well. No company introduces a product with the plan of it failing. Amazon clearly has a plan to make the Fire profitable otherwise they wouldn't have bothered increasing production of it. They would have just let it be sold out or minimally increased production while waiting to release the next model that wasn't sold at a loss. Maybe they're hoping content sales will take it into the black, or that the free month of Prime memberships turn into paying Prime members. They've been rearranging their site to emphasize digital content for months before the Fire was announced. Or maybe they just plan on letting it stay in the red until the next model, hoping to build a name and customer base (like the original X-Box).

The simple fact is they DO have a plan. They didn't just introduce a tablet and wind up going, "Oh crap, people are actually buying these things!"

It's not nonsense. Companies do that sort of thing all the time. On the pages of this website you can see plenty of examples in which phone companies sell iPhones at an upfront loss and make the money back over the life of the contract. Most recently, Sprint has said it expects it will be years before what they are paying to sell the iphone is made up for by increased revenue and the cessation of subscriber hemorrhaging.
Look, I wasn't in the boardroom but from what I have read, the 7 inch tablet is being sold at a loss and being used as a stop gap until a profitable 10" form factor is introduced. Amazon traditionally doesn't make it's money by manufacturing devices, they make their money by selling content. But the way to sell content is changing. The advance of streaming formats and downloadable formats have determined that a company like Amazon needs to have a device centered ecosystem. by all accounts, the larger form factor Kindle tablet won't be ready until spring but Amazon, like all retailers, lives and dies by the holiday season. If they went through X-mas 2011 allowing Apple to continue to bring it's own potential customers into the iTunes system by putting an iPad under every tree, the long term effects would be devastating. So, introducing a loss leader product not only gets that product out there but cements a customers base which may have eroded. But when you are selling a loss leader, you expect to limit those losses by capping volume. As I said, that's why Walmart sells those DVD players for $49. They want to run out of them so they can sell you something else while you're standing in the aisle. They don't have someone standing there handing out rain checks.

Don''t get me wrong, I'm sure that Amazon is thrilled in the long term, but short term, it will be a rough quarter and with a stock already selling at 100 times earnings, they may take a beating on Wall Street, too.
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