or Connect
AppleInsider › Forums › Mobile › iPad › Dell kills 7" Streak as Amazon's profitless Kindle Fire ravages Android tablets
New Posts  All Forums:Forum Nav:

Dell kills 7" Streak as Amazon's profitless Kindle Fire ravages Android tablets

post #1 of 56
Thread Starter 
Dell has thrown in the towel on its last Android-based Streak tablets in the US as new analysts step forward to note that Apple's only competition in tablets is coming from Amazon, although saying it is "needing to do so by selling at cost."

Dell introduced its Streak 5 (originally named Mini 5) as a hybrid small tablet/smartphone in May 2010, with both a 5 inch display and 3G calling features that placed it somewhere between Apple's iPod touch and iPad. It also introduced a 7 inch Streak, which has featured 4G connectivity.

Dell canceled the Streak 5 in August, and is now noting that the online sales of the Streak 7 have also been canceled.

Dell says the Streak 7 will continue to be available through some retail outlets, and continues to sell an Android-based Streak 10 in China. However, the company is recommending both Windows Phone smartphone models and talking about Microsoft's Windows 8, which is expected to support iPad-like devices sometime at the end of next year.

Apple sold more iPads in the last quarter than all the PCs Dell sold in total. While unable to deliver a credible tablet competitor to Apple's iPad using either Google's Android or Microsoft's current Windows 7, the company has had any prospects for selling smaller, low end Android devices destroyed by Amazon's entry of the $199 Kindle Fire.



Analysts see Kindle Fire erasing Android prospects

Evercore Partners analyst Robert Cihra released a note saying he expects Amazon's Kindle Fire to make up half of all Android-based tablets sold in 2012.

Cihra wrote that Amazons Kindle Fire "looks like the only tablet to so far mount any credible iPad challenge," while observing that it "apparently needing to do so by selling at cost."

He added, "Amazons success may just vaporize other for profit Android tablet OEM roadmaps," after noting that his firm sees "Apple maintaining its competitive lead," writing, "meanwhile Apple goes on as the only vendor able to cream off the most profitable segment of each market it targets, whether tablet, smartphone or PC.

Amazon's efforts to sell the low cost Kindle Fire running a custom version of last year's Android 2.3 threatens to completely derail Google's intentions to mount this year's Android 3.0 Honeycomb and Android 4.0 Ice Cream Sandwich as a driving force behind profitable iPad competitors.

Amazon seeks to skirt Jobs' tweener tablet curse

Last October, Apple's then chief executive Steve Jobs predicted that competitors' existing 5 to 7 inch tablets wouldn't ofter enough in functionality to compel smartphone users to carry a second device, while also failing to act as differentiated tablets large enough to run the type of sophisticated apps the iPad could.

Jobs called mini tablets "dead on arrival," and predicted that "manufacturers will realize they're too small and abandon them next year. They'll then increase the size, abandoning the customers and developers who bought into the smaller format."

Amazon hopes to skirt Jobs' dire prediction for 7 inch "tweener" tablets by selling the Kindle Fire as a essentially a big iPod touch, aimed at watching movies, reading ebooks and browsing the web, rather than a fully functional tablet. Amazon has also given up on actually making any hardware profits on its efforts to distribute the Kindle Fire, hoping that its software, media, and cloud service sales will cover its hardware losses.

Apple executives have regularly stated that they intend to run their own iTunes Store and its App Store at "a bit over" break even, and have since released iCloud as a free service, pitting Amazon in a challenge to see which business model works best for sustainable profits, the platform and for users.
post #2 of 56
1) They still have the 10" Streak. You can read the review over at StreakSmart (yeah, that's the website's name).


2) The Kindle Fire may be able to put itself into a profitable sapce with economics of scale. All these devices are risk but this is the first non-iPad tablet that seems to be carving out a sizable unit share niche. If they can get the OS updated in a reasonable time and with a reasonable amount of usablity enhancements I think the Fire has a chance of being the most popular $200 class notebook on the market, though this will end up hurting all the standard Android-based solutions that try to enter the market… but that doesn't concern me

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #3 of 56
Update: The great race for 2nd place in the tablet space continues unabated at a furious pace with iPad remaining, the reigning Ace. All other CEO's should exit the race and save face, with grace, before your shareholders have you replaced, for entering said race and finishing last place.
post #4 of 56
May I be the first to say that Dell (like HP) is in trouble.
post #5 of 56
Quote:
Originally Posted by axual View Post

May I be the first to say that Dell (like HP) is in trouble.

And RiM, and Moto. HTC seems to be pulling back up and Samsung is doing well as usual.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #6 of 56
You mean below cost. Yes, Amazon is selling tablets, but it's taking a loss on every single one. Even if they think they'll make it up with digital purchases, not every customer is going to jump on board. Sure, they'll make a profit in the long term, but it won't be anything substantial. Not that we'll ever know, because Amazon never supplies hard numbers...
post #7 of 56
Quote:
Originally Posted by axual View Post

May I be the first to say that Dell (like HP) is in trouble.

Well we all know the advice Michael should take ...
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
Reply
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
Reply
post #8 of 56
Quote:
Originally Posted by Peleas View Post

You mean below cost. Yes, Amazon is selling tablets, but it's taking a loss on every single one. Even if they think they'll make it up with digital purchases, not every customer is going to jump on board. Sure, they'll make a profit in the long term, but it won't be anything substantial. Not that we'll ever know, because Amazon never supplies hard numbers...

I think in the longterm securing their position now is a smart move. They didn't try to outdo the iPad or release it on the heals of the iPad the way Palm foolishly released the Palm Pre right before the iPhone.

I think they'll have to move fast on the OS updates and I think a larger, more full featured tablet would be a way to move on in the future once they feel they will be able to get the number right. As it stands now Asus is releasing great HW running Android 3.x that will run 4.x at $100 below the iPad for the same capacity and display size/type. There battery is good (great for an Android-based product) and their display is great all around.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #9 of 56
Quote:
Originally Posted by digitalclips View Post

Well we all know the advice Michael should take ...

Buy WebOS, shut it down, and give the money back to the shareholders?

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
Reply

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
Reply
post #10 of 56
Where's the fire sales? I got the HP tablet. Its great just for reading news and rumors, while lying on the couch.
post #11 of 56
Quote:
Originally Posted by axual View Post

May I be the first to say that Dell (like HP) is in trouble.

NO - you may not, and due diligence would have told you so.
post #12 of 56
The best that can be said of the Dell Streak is... Good Bye and Good Riddance!

The Kindle Fire, on the other hand, is a brilliant entry-level tablet offering, and Amazon'll likely more than make up for any costs lost in content sales.
"Why iPhone"... Hmmm?
Reply
"Why iPhone"... Hmmm?
Reply
post #13 of 56
Quote:
Originally Posted by lightstriker View Post

Where's the fire sales? I got the HP tablet. Its great just for reading news and rumors, while lying on the couch.

Trouble with firesales (eg HP), is that you can sell it at a loss, but you can't make it up in ancillary sales, as Amazon is doing with the Kindle Fire - which they so much as admit they are selling at a loss. Better to give them away to disadvantaged folks to give them a gateway to the internet, and at least salvage some goodwill from a disastrous business venture.

And, after all, the form factor is much too big for my stocking, as Steve would have predicted ("Tweeners need not apply for stocking-stuffer-status").
post #14 of 56
Its not that the Fire has no profit for Amazon.

Its that it has no MORE profit for Amazon than an iPad running the Kindle app And Amazon is A-OK with that, I suspect.
post #15 of 56
Quote:
Originally Posted by nagromme View Post

Its not that the Fire has no profit for Amazon.

Its that it has no MORE profit for Amazon than an iPad running the Kindle app And Amazon is A-OK with that, I suspect.

At this point I don't think it does if those per unit estimates on cost are even in the ballpark. They dropped their profits by 74% last quarter leaving them with only $10M for the quarter. 6 months from now that could be a different story, and that is about the time we'll know if the Fire is sustainable or just another flash in the pan.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #16 of 56
How can Dell kill something that was already dead?

Please update the AppleInsider app to function in landscape mode.

Reply

Please update the AppleInsider app to function in landscape mode.

Reply
post #17 of 56
DELL can't compete with companies that sell hardware at a loss. If they had supplemental revenue to feed that freebee, then DELL can do the same as to what Amazon is doing. Selling a hobbled barely there product at a loss to make sure buyers use the device for easy Amazon store purchasing.
post #18 of 56
Quote:
Originally Posted by SolipsismX View Post

At this point I don't think it does if those per unit estimates on cost are even in the ballpark. They dropped their profits by 74% last quarter leaving them with only $10M for the quarter. 6 months from now that could be a different story, and that is about the time we'll know if the Fire is sustainable or just another flash in the pan.

For the investment to make sense, they are going to need each Fire customer to purchase ~$600 worth of products from them over the next ~2 years (at 30% average margin). While I will admit to spending more than that with them this year, the Fire actually made me re-think my desire to support Amazon. I'm not sure they won't burn some bridges with the Fire (heh), and wind up getting themselves locked out of future markets.

Happy to no longer be an AMZN shareholder...
post #19 of 56
I wonder how Archos is holding up with unit sales and profit?

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #20 of 56
Quote:
Originally Posted by SolipsismX View Post

The Kindle Fire may be able to put itself into a profitable sapce with economics of scale. All these devices are risk but this is the first non-iPad tablet that seems to be carving out a sizable unit share niche.

A couple of points.

First, I'm not sure the Amazon can play the scale game in this case. I keep seeing people draw comparisons between the Kindle Fire and video game consoles which are typically sold below cost with profits coming from game sales. Console makers usually license out their development tools to people who want to develop content specifically for that console. I'm not sure that's analogous to a tablet maker trying to recoup costs by selling content that already exists in other forms and isn't specifically developed for that product and can be obtained on other platforms and in other formats. It's a subtle but important difference, and I'll be curious to see how that plays out for them.

Secondly, it seems to me that Kindle Fire's sale numbers are being inflated a bit. People keep comparing Fire sales to iPad and other tablets, but I'm curious how much Amazon has cannibalized their own sales. You'd have to take into account all the Kindles that Amazon would have sold without the Fire before getting a real sense of how much ground the Fire is taking in the tablet market.
post #21 of 56
Quote:
Originally Posted by inkswamp View Post

A couple of points.

First, I'm not sure the Amazon can play the scale game in this case. I keep seeing people draw comparisons between the Kindle Fire and video game consoles which are typically sold below cost with profits coming from game sales. Console makers usually license out their development tools to people who want to develop content specifically for that console. I'm not sure that's analogous to a tablet maker trying to recoup costs by selling content that already exists in other forms and isn't specifically developed for that product and can be obtained on other platforms and in other formats. It's a subtle but important difference, and I'll be curious to see how that plays out for them.

Secondly, it seems to me that Kindle Fire's sale numbers are being inflated a bit. People keep comparing Fire sales to iPad and other tablets, but I'm curious how much Amazon has cannibalized their own sales. You'd have to take into account all the Kindles that Amazon would have sold without the Fire before getting a real sense of how much ground the Fire is taking in the tablet market.

Excellent points. Amazon is still an unknown which is why I think in 6 months we'll know for sure if their foray into the tablet market is a success or failure. There is still a lot wrong with the Fire's OS that make the user experience poor, something that even people who have free (on contract) touch-based smartphone will be able to gauge.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #22 of 56
Quote:
Originally Posted by SolipsismX View Post

2) The Kindle Fire may be able to put itself into a profitable sapce with economics of scale. All these devices are risk but this is the first non-iPad tablet that seems to be carving out a sizable unit share niche. If they can get the OS updated in a reasonable time and with a reasonable amount of usablity enhancements I think the Fire has a chance of being the most popular $200 class notebook on the market, though this will end up hurting all the standard Android-based solutions that try to enter the market but that doesn't concern me

Amazon is the only tablet maker that has the one thing Dell, HP, Motorola and all the others don't have: an ecosystem.

All those can companies play down the ecosystem and preach "open is better" all they want but it's one of the major reasons that Apple is crushing it in the tablet market.

I'm surprised at two things:

1) why it took Amazon so long
2) They could have done a little better than the Fire (although they had to make that low price point to *really* compete)
post #23 of 56
Quote:
Originally Posted by sticknick View Post

2) They could have done a little better than the Fire (although they had to make that low price point to *really* compete)

This info doesn't seem to be well known: It's based on RiM's PlayBook. Looks like they smartly reduced a lot of HW features but the PlayBook HW seems pretty solid. Also, there is some weak evidence to suggest it's an earlier board than what RiM uses in their PlayBook.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #24 of 56
Quote:
Originally Posted by jd_in_sb View Post

How can Dell kill something that was already dead?

post #25 of 56
The Kindle Fire is only good for Apple if it really does fragment Android. But if the Fire unifies Android by essentially killing all other Android competitors, then the Fire would be very bad news for Apple, because then Apple would be fighting a single, integrated platform rather than a rag-tag mess. If the Fire is able to sustain its success Apple might want to come to terms with Samsung over Samsung's tablets just to help keep the Android ecosystem fragmented.

Also -- don't make the mistake of thinking that Amazon can never have any other business model for the Fire than the one they have right now. Just because they are treating the Fire as a loss leader today, doesn't mean they always have to.

Similarly, just because Apple has no loss-leader iPads today doesn't mean they can't in the future. In fact, if it looks like Amazon is moving from fragmenter to dominator of the Android world, then Apple might want to introduce some kind of subsided iPad (either subsidized by carrier contracts or iCloud/iTunes contracts).

The bottom line here is that this is a platform war, and platform success depends on economies of scale. Right now Apple has a big lead in economy of scale. It's really important that Apple do everything possible to prevent anyone else from achieving similar economies of scale (I'm speaking as an Apple shareholder). If that means admitting somebody else has come up with a business model worth copying, at least in part, so be it.
post #26 of 56
Leave up to DED to fire up the Fan Base!

Dell makes the vast majority of its money in the corporate/enterprise sector these days. As they have been moving more and more in that direction Apple has moved the other way.

No surprises here.
post #27 of 56
Just wondering here. Since Amazon forked Android, is it still really an Android OS? I mean the chances of Amazon re-forking newer versions of Android is possible, but could be very time consuming and expensive. Updating the Fire OS, whatever Amazon does, will not track to Google's releases of new Android versions. Bad for Google.
post #28 of 56
Quote:
Originally Posted by SolipsismX View Post


snip

2) The Kindle Fire may be able to put itself into a profitable sapce with economics of scale.

The problem with this is zero times 1,000,000 still equals zero. Unless Amazon can match Apple's economy of scale, their hardware profit will always be zero!
post #29 of 56
Quote:
Originally Posted by ljocampo View Post

The problem with this is zero times 1,000,000 still equals zero. Unless Amazon can match Apple's economy of scale, their hardware profit will always be zero!

Economics of scale, not making up profit of thin-margin with bulk sales. I'm talking about the cost of the Fire going down substantially if Amazon can put in orders for larger and larger component, manufacturing, and shipping, thus reducing the cost. There is also reduced costs per unit for the OS and SW development as they sell more units. In 6 months we'll know if they made this gamble on this model or if they should have followed B&N's lead with a still very low $250 device.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #30 of 56
Quote:
Originally Posted by inkswamp View Post

snip

Secondly, it seems to me that Kindle Fire's sale numbers are being inflated a bit. People keep comparing Fire sales to iPad and other tablets, but I'm curious how much Amazon has cannibalized their own sales. You'd have to take into account all the Kindles that Amazon would have sold without the Fire before getting a real sense of how much ground the Fire is taking in the tablet market.

+1

I agreed that they are cannibalizing their Kindle profits hoping to make money on content. I don't think this is a sustainable business model. It would had been better to upgrade the software & hardware in the Kindle and opened it up the developers. This way they could still make money on content without losing it on hardware.
post #31 of 56
Quote:
Originally Posted by extremeskater View Post

I think the Kindle Fire is alot like gaming consoles. Its not about selling the hardware its about having hardware that works well with content. To me the Fire was clearly developed to sell content.

Even before the Fire, Kindle software and apps were available on just about everything, Amazon seems to be focused on selling content to make the profit not hardware.

Sure, but I guarantee you that $50 loss per device (if true) is not sustainable and that Amazon will be fighting to make this at least a break-even product. Making Apple's margins simply aren't feasible from any angle I look at it, but I think Dell and HP cheap PC margins are.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #32 of 56
Quote:
Originally Posted by ljocampo View Post

It would had been better to upgrade the software & hardware in the Kindle and opened it up the developers. This way they could still make money on content without losing it on hardware.

They might do that, but that's not easy. Look at Apple with their iOS SDK and Palm with WebOS SDKs. How long before Google had a native SDK for Android?

The one thing Amazon has knowledge of is the store end, but I would be surprised if they opened it to any 3rd-party devs is less time than Palm (with their 2nd SDK) and Apple.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #33 of 56
Quote:
Originally Posted by SolipsismX View Post

Economics of scale, not making up profit of thin-margin with bulk sales. I'm talking about the cost of the Fire going down substantially if Amazon can put in orders for larger and larger component, manufacturing, and shipping, thus reducing the cost. There is also reduced costs per unit for the OS and SW development as they sell more units. In 6 months we'll know if they made this gamble on this model or if they should have followed B&N's lead with a still very low $250 device.

I just don't see Amazon being able to do that with scaling components to lower the unit price, particularly that Apple scoops up most these components now. I hope they can win because there is a segment of the tablet market that will never be able to afford iPad prices.
post #34 of 56
Some people say that Amazon will recoup the money they're losing on every device sold through content purchase, but that remains to be seen.

People are attracted to the Kindle Fire just because it is cheap. There is no logical reason to claim that cheap people will be buying lots of content.

Many of these people will be downloading the free app of the day and that's probably about it.

People who are so cheap that they whine about a few hundred dollars are not going to be buying hundreds in content. We shall see if Amazon's plan works out. I have my doubts.
post #35 of 56
The real message here is 'forking Android'. If Amazon can do it, everyone can do it.

As this is a platform war of closed ecosystems, other players will be forced to
A) build their own ecosystem
B) close it up

Facebook might be next to fork Android, HTC, Sony, Samsung, Nokia around the corner. In this game all Apple has to do is keeping the current status quo where consumers decision is 'choose Apple or something other'.

Currently there is no one who can compete with Apple where mobiles are starting to become the 'personal technological hub' for everyone: you can buy thousands of accessories plugging and playing with your mobile: from wristbands to Airplay-equipped AV receivers, car stereos, TVs, blood pressure measuring, etc etc. The sheer mass of iDevices together with Apples conservative and well predictive product cycles regarding screen sizes, -resolutions, connectors, comm protocols makes it attractive for all industries to develop for.
post #36 of 56
Quote:
Originally Posted by AppleInsider View Post


Dell introduced its Streak 5 (originally named Mini 5) as a hybrid small tablet/smartphone in May 2010, with both a 5 inch display and 3G calling features that placed it somewhere between Apple's iPod touch and iPad. It also introduced a 7 inch Streak, which has featured 4G connectivity.



I remember when the 5" came out. It was one of the first Android devices to be sold by ATT.

It was a POS then, and it is now an obsolete POS. Good riddance.

The 5 inch model is the wrong size to sell with calling features. It doesn't work well as a tablet either, as even 7 inch tabs are a bit small. The 7" Streak may be OK, but even so, there are many better ones to choose from now.

The 5" was an early stab by Dell. It didn't work. The 7" was just uninspired, with nothing to particularly recommend it.
post #37 of 56
Quote:
Originally Posted by ljocampo View Post

I just don't see Amazon being able to do that with scaling components to lower the unit price, particularly that Apple scoops up most these components now.

From the teardown details Apple doesn't seem to be affecting the Kindle Fire much. Perhaps with NAND, but they aren't using that much per unit. Even the Galaxy Nexus comes with 32GB internal as standard, which is a nice trend for a non-iPhone smartphone.

Most of the other components don't seem to be a direct comparison to what Apple is using across the board.
Quote:
I hope they can win because there is a segment of the tablet market that will never be able to afford iPad prices.

I'll still have hope for Amazon until I see major negative shift in their focus on the Fire, but I am not sure the cost of the iPad is a deal breaker.

My reasoning is that $500 PCs are well below the average PC cost and probably what Americans spend when they are going for a cheap notebook. Of course, the desktop and notebook PC markets aren't the same as the tablet market in the way we see their cost and value. But I think that is changing. THe iPad is now fully independent of a traditional PC, and though syncing with iTunes is likely the norm I know plenty of people that simply don't use their iPhone or iPad for iTunes stored content and have moved almost completely to the iPad for the majority of their computing needs.

Then you have to consider those that are thinking about buying a new cheap PC for $500-700 but decide to get an iPad instead for the same money. I think that could be common, too. Overall I hope Amazon can make this work because I think the cheap tablet they offer, while not great ormagical could be a trainer tablet for many who realize the form-factor works for them but decide they want to get a better tablet for their next option. This is why I expect Amazon to push their OS further and eventually offer a larger option.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #38 of 56
Quote:
Originally Posted by Apple ][ View Post

Some people say that Amazon will recoup the money they're losing on every device sold through content purchase, but that remains to be seen.

People are attracted to the Kindle Fire just because it is cheap. There is no logical reason to claim that cheap people will be buying lots of content.

Many of these people will be downloading the free app of the day and that's probably about it.

People who are so cheap that they whine about a few hundred dollars are not going to be buying hundreds in content. We shall see if Amazon's plan works out. I have my doubts.

I'm not disagreeing with what you're saying. The cheapos are just that. But there is another variable. Poorer families and elderly people on fixed budgets still can buy reasonably priced content. They just can't manage larger priced items like an iPad. This segment can make Amazon's gamble work. I see these people always picking through the $5 video bin at Walmarts and they buy a lot in the long run for their children or themselves.
post #39 of 56
Quote:
Originally Posted by extremeskater View Post

I think the Kindle Fire is alot like gaming consoles. Its not about selling the hardware its about having hardware that works well with content. To me the Fire was clearly developed to sell content.

Even before the Fire, Kindle software and apps were available on just about everything, Amazon seems to be focused on selling content to make the profit not hardware.

The difference is that game consoles sold cheap (often loss leader) hardware to an audience that was compelled to buy $50-$70 games in an environment where the only alternative to buying those games was to buy PC games for the same price.

Additionally, PC game makers license their software to build in a platform tax, both during development and in the retail sale. Even so, Sony and MS and Nintendo are not doing really well in making lots of money on console games.

The Kindle Fire is designed to enable users to buy $1-4 apps, rather inexpensive / low margin ebooks and magazines, and browse the web and listen to music. There's plenty of free apps and free music (and most people already have digital music collections). The web is free. There are lots of significantly better clients for browsing the web for the same free cost of doing so.

Amazon has no way to significantly "tax" sales of content. So it can only charge the razor thin margins it has been, which are much lower than general retail. Apple itself takes only a 30% cut in iTunes, and that just better than breaks even Apple's operational expenses.

Amazon is not going to make any money on the Kindle Fire. It's hoping to stay relevant and afloat. The Kindle is looking into the face of death and trying to survive. It is being described as an iPad killer. It is most certainly not.

It's more like Amazon is under siege and has resorted to eating its own children to stay alive. It's desperate.
post #40 of 56
Great article headline

Apple could not have sent a more accurate missile into the heart of Google's tablet plans. The Fire is going to single-handidly destroy the Android tablet market

Windows survivor - after a long, epic and painful struggle. Very long AAPL

Reply

Windows survivor - after a long, epic and painful struggle. Very long AAPL

Reply
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: iPad
  • Dell kills 7" Streak as Amazon's profitless Kindle Fire ravages Android tablets
AppleInsider › Forums › Mobile › iPad › Dell kills 7" Streak as Amazon's profitless Kindle Fire ravages Android tablets