or Connect
AppleInsider › Forums › Mobile › iPad › Amazon "defined and dominated" low-end tablet market with 6 million Kindle Fires
New Posts  All Forums:Forum Nav:

Amazon "defined and dominated" low-end tablet market with 6 million Kindle Fires

post #1 of 127
Thread Starter 
While Amazon isn't selling half as many Kindle Fires as iPads, investment bank Stifel Nicolaus said Monday that first quarter shipments of the new tablet rose to 6 million, placing the Fire's ramp-up on par with that of the original iPad while carving out a strong-hold on the low end of the market this past holiday season.

Analyst Jordan Rohan dubbed it "quite impressive" that the online retailer has used its "distribution prowess to define and dominate the low end of the device ecosystem" in the face of big competition from Apple and other Android device makers.

He said that even if Amazon makes no incremental contribution on the sale of the Kindle Fire hardware, software attach rates for apps and media downloaded to the tablets would correlate inversely with the hardware price and could drive real upside in its North American media segment revenues.

"Amazon's device proliferation strategy has broader implications than most appreciate," Rohan explained in a note to clients. "Tablets including iPad and Kindle Fire are rapidly taking share from PCs and notebooks. Kindle Fire has staked out an important market position due to its loyal Amazon customer base and attractive (low) device pricing."

Amazon's estimated 6 million Kindle Fires represent just a fraction of Apple's record 111% rise to 15.3 million iPad 2 shipments during the same time period. But Rohan argues that there's strategic value in Amazon's Kindle Fire becoming the third major device ecosystem after iOS and Android -- one that will reflect in revenues and margins longer term.



Looking forward, the analyst believes the next logical move for Amazon is to equip the Kindle Fire with a video subscription service to compliment its existing on-demand pay model, and Prime Free Videos service.

Rohan's estimates aside, Amazon has never formally provided sales figures for any of its Kindle-branded hardware products outside of saying last month that it was shipping a combined 1 million units per week. While that practice is expected to remain intact, the online retailer may provide some additional color on the success of Fire when it reports fourth quarter results on Tuesday.
post #2 of 127
Quote:
estimated

Absolutely nothing to see here, people.

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 #3 of 127
I understand that these analysts get paid a lot of money for their reports. Maybe that's why they feel obligated to write such obfuscated language. What the heck does this mean:

"software attach rates for apps and media downloaded to the tablets would correlate inversely with the hardware price"

There must be a plainer way to say this.
post #4 of 127
Defined and dominated how to sell a product at a loss. Next they will be giving books, music or movies for free to keep you from leaving.
post #5 of 127
Wow! Six million KFs, each sold at a loss. Impressive.
post #6 of 127
Quote:
Originally Posted by ddawson100 View Post

I understand that these analysts get paid a lot of money for their reports. Maybe that's why they feel obligated to write such obfuscated language. What the heck does this mean:

"software attach rates for apps and media downloaded to the tablets would correlate inversely with the hardware price"

There must be a plainer way to say this.

As hardware prices drop and more people buy them, more software and media is sold.
post #7 of 127
I wonder how the actual return rate faired compared to the actual sold rate.
iPad, Macbook Pro, iPhone, heck I even have iLife! :-)
Reply
iPad, Macbook Pro, iPhone, heck I even have iLife! :-)
Reply
post #8 of 127
Quote:
Originally Posted by ddawson100 View Post

"software attach rates for apps and media downloaded to the tablets would correlate inversely with the hardware price"

There must be a plainer way to say this.

It seems like that says 'people who spend less on their tablet will generally spend more on software', but in fact, based on what we've seen to date on other devices, I expect the opposite would be the case. In any case, it is amazing how poorly some of these idiots communicate. I can picture one of them saying, to their significant other after an argument, “let’s interface over coffee tomorrow morning.”
The true measure of a man is how he treats someone that can do him absolutely no good.
  Samuel Johnson
Reply
The true measure of a man is how he treats someone that can do him absolutely no good.
  Samuel Johnson
Reply
post #9 of 127
Give Amazon credit. They figured out the "gadget" version of the tablet. Acting superior because it isn't an iPad reminds me of my Mercedes driving friend who looks down on anything that doesn't cost as much. Bad form, and very revealing as to his priorities.
post #10 of 127
Hmmmm... there's that word "shipped" again...
na na na na na...
Reply
na na na na na...
Reply
post #11 of 127
Quote:
Originally Posted by jhromeror View Post

Defined and dominated how to sell a product at a loss. Next they will be giving books, music or movies for free to keep you from leaving.

If you're an Amazon Prime member (and all Kindle Fires come with a trial), then you get a lot of free books and movies. It's a very good deal, and it absolutely does keep customers coming back and spending money on other things.

I love my Kindle Fire and over the course of the year, I'm sure it will get Amazon a profit. The device is a loss leader, yes, but it serves as an entry point into their media ecosystem.
Quote:
Originally Posted by island hermit View Post

Hmmmm... there's that word "shipped" again...

I would be surprised if people didn't buy the vast majority of Fires directly from Amazon, so "shipped" here is probably a better estimate than most other Android tablets. (Better, mind you — not perfect.)
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 #12 of 127
Quote:
Originally Posted by AppleInsider View Post

While Amazon isn't selling half as many Kindle Fires as iPads, Stifel Nicolaus said Monday that first quarter shipments of the new tablet rose to 6 million, placing the Fire's ramp-up on par with that of the original iPad while carving out a strong-hold on the low end of the market this past holiday season.

Rohan's estimates aside, Amazon has never formally provided sales figures for any of its Kindle-branded hardware products outside of saying last month that it was shipping a combined 1 million units per week. While that practice is expected to remain in tact, the online retailer may provide some additional color on the success of Fire when it reports fourth quarter results on Tuesday.

Looks like Rohan can't read.

Amazon said that they were shipping 1 M Kindles per week - of all types combined. The Fire was out for 6 weeks. So how in the world could anyone plausibly conclude that there were 6 million Fires sold?
"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 #13 of 127
Quote:
Originally Posted by AppleInsider View Post


a video subscription service to compliment its existing on-demand pay model, and Prime Free Videos service.

.


Uh, complement I suspect. Unless its just saying nice things about the other services.
post #14 of 127
Quote:
Originally Posted by jragosta View Post

Looks like Rohan can't read.

Amazon said that they were shipping 1 M Kindles per week - of all types combined. The Fire was out for 6 weeks. So how in the world could anyone plausibly conclude that there were 6 million Fires sold?

This is exactly what I was thinking. The math just doesn't add up. But the guy is an analyst, so we must forgive him. We all know not a single one of them knows how to add.
post #15 of 127
Quote:
Originally Posted by island hermit View Post

Hmmmm... there's that word "shipped" again...

For Amazon... shipped is sold.

I really have trouble believing this is possible. It would mean that 50% of the tablets sold in the US were Kindle Fires. I could guess that 25% is within the realm of possibility based on the few that I have seen in the wild, which should put them under 2MM units. 2MM units also seems more in line with a production ramp-up, although they could have built stock up before launch.
post #16 of 127
Quote:
Originally Posted by aaarrrgggh View Post

For Amazon... shipped is sold.

I really have trouble believing this is possible. It would mean that 50% of the tablets sold in the US were Kindle Fires. I could guess that 25% is within the realm of possibility based on the few that I have seen in the wild, which should put them under 2MM units. 2MM units also seems more in line with a production ramp-up, although they could have built stock up before launch.

Shipped is sold?

I'm not so sure.

The Fire was sold by a lot of retailers. For all we know half of the Fires were shipped to retailers and half of those could still be sitting in the channel. Ask Motorola. Or Samsung.
na na na na na...
Reply
na na na na na...
Reply
post #17 of 127
"defined and dominated"......... Until Apple redefines the low end by releasing a cheaper iPad 2, when the iPad 3 comes out.........
post #18 of 127
Quote:
Originally Posted by jhromeror View Post

Defined and dominated how to sell a product at a loss. Next they will be giving books, music or movies for free to keep you from leaving.

Quote:
Originally Posted by RegurgitatedCoprolite View Post

Wow! Six million KFs, each sold at a loss. Impressive.

It worked for MS getting the xBox a foodhold in the console gaming market.

Besides, if Amazon what's to lose money on them to the benefit of customers who maybe just want an inexpesive tablet, then we, the customer wins. If your main reason for wanting a tablet is to consume media, the Fire seems a fine option. Especially if there is a risk of theft, loss, or damage...would you prefer to risk a $200 Fire or a $500+ iPad? (Think, kids watching movies in the car, or big city public transit where thefts and "leave behinds" are common.)

Edit: And just by way of another example... low-end ink jet printers are aften sold at/near cost and they make their money selling ink. Just like Amazon hopes to make money selling/renting content.
post #19 of 127
The horse is dumb and the mouth pice is guessing.

Kind of wonder why they are paid to guess.
post #20 of 127
Amazon is selling tablets to those who would not have bought an iPad [as noted by Tim Cook based on iPad sales data] that is bringing a new market segment to bear. Whether this will be a threat to Apple iPad is TBD, but to the Android tablet community its a disaster.

Amazon is selling its curated and exclusive environment [with more to come] and they make money NOT on the hardware, but rather on the services. This makes competing very difficult for hardware manufacturers.

So they must compete with Apple at the mid and high range [demonstrably hard to do and make money and/or volume] and at the low end with Amazon, who is selling hardware at a loss or break-even.

Therefore, I think Apple's view that Amazon is going to make the tablet Android market very hard for non-Apple vendors and oh by the way cut Google out of the ad business, just like Facebook is doing.

What happens when Facebook introduces a phone and tablet at near cost or even at a loss and makes money on ads and sales. Again Hardware OEMs and Google are in a tough place.

The disruption that Amazon is pioneering may in the long run effect Apple but they will be a major problem for current Android OEMs and Google in 2012. Facebook just compounds the problem for Google and Android.
post #21 of 127
Quote:
Originally Posted by gprovida View Post

Amazon is selling tablets to those who would not have bought an iPad [as noted by Tim Cook based on iPad sales data] that is bringing a new market segment to bear. Whether this will be a threat to Apple iPad is TBD, but to the Android tablet community its a disaster.

Amazon is selling its curated and exclusive environment [with more to come] and they make money NOT on the hardware, but rather on the services. This makes competing very difficult for hardware manufacturers.

So they must compete with Apple at the mid and high range [demonstrably hard to do and make money and/or volume] and at the low end with Amazon, who is selling hardware at a loss or break-even.

Therefore, I think Apple's view that Amazon is going to make the tablet Android market very hard for non-Apple vendors and oh by the way cut Google out of the ad business, just like Facebook is doing.

What happens when Facebook introduces a phone and tablet at near cost or even at a loss and makes money on ads and sales. Again Hardware OEMs and Google are in a tough place.

The disruption that Amazon is pioneering may in the long run effect Apple but they will be a major problem for current Android OEMs and Google in 2012. Facebook just compounds the problem for Google and Android.

Well said.
post #22 of 127
Quote:
Originally Posted by RegurgitatedCoprolite View Post

Wow! Six million KFs, each sold at a loss. Impressive.

Everybody I know who bought a Kindle Fire returned it and bought an iPad.
post #23 of 127
Quote:
Originally Posted by RegurgitatedCoprolite View Post

Wow! Six million KFs, each sold at a loss. Impressive.

Everybody I know who bought a Kindle Fire returned it and bought an iPad.
post #24 of 127
Quote:
Originally Posted by gprovida View Post

Amazon is selling tablets to those who would not have bought an iPad [as noted by Tim Cook based on iPad sales data] that is bringing a new market segment to bear. Whether this will be a threat to Apple iPad is TBD, but to the Android tablet community its a disaster.

Amazon is selling its curated and exclusive environment [with more to come] and they make money NOT on the hardware, but rather on the services. This makes competing very difficult for hardware manufacturers.

So they must compete with Apple at the mid and high range [demonstrably hard to do and make money and/or volume] and at the low end with Amazon, who is selling hardware at a loss or break-even.

Therefore, I think Apple's view that Amazon is going to make the tablet Android market very hard for non-Apple vendors and oh by the way cut Google out of the ad business, just like Facebook is doing.

What happens when Facebook introduces a phone and tablet at near cost or even at a loss and makes money on ads and sales. Again Hardware OEMs and Google are in a tough place.

The disruption that Amazon is pioneering may in the long run effect Apple but they will be a major problem for current Android OEMs and Google in 2012. Facebook just compounds the problem for Google and Android.

Mostly correct, but I question the bolded part.

Amazon HOPES to make money on the services and software. There's no evidence yet that they make anywhere near enough to cover losses on the hardware, much less make a reasonable profit.

(Note: Amazon is down more than 3.5 points so far today while Apple is up more than 5.
"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 #25 of 127
Quote:
Originally Posted by jragosta View Post

Looks like Rohan can't read.

Amazon said that they were shipping 1 M Kindles per week - of all types combined. The Fire was out for 6 weeks. So how in the world could anyone plausibly conclude that there were 6 million Fires sold?

by pulling numbers out of his butt. like so many of these pretend "analysts" do.

but one thing everyone does agree about: the Fire killed sales of all the other Android tabs. like the Xoom, just 200,000 "shipped" same quarter. at least Moto had the guts to report that. Samsung ain't talking about its Galaxy, but there had to be awful numbers for them too.
post #26 of 127
Quote:
Originally Posted by gprovida View Post

Amazon is selling tablets to those who would not have bought an iPad [as noted by Tim Cook based on iPad sales data] that is bringing a new market segment to bear. Whether this will be a threat to Apple iPad is TBD, but to the Android tablet community its a disaster.

Amazon is selling its curated and exclusive environment [with more to come] and they make money NOT on the hardware, but rather on the services. This makes competing very difficult for hardware manufacturers.

So they must compete with Apple at the mid and high range [demonstrably hard to do and make money and/or volume] and at the low end with Amazon, who is selling hardware at a loss or break-even.

Therefore, I think Apple's view that Amazon is going to make the tablet Android market very hard for non-Apple vendors and oh by the way cut Google out of the ad business, just like Facebook is doing.

What happens when Facebook introduces a phone and tablet at near cost or even at a loss and makes money on ads and sales. Again Hardware OEMs and Google are in a tough place.

The disruption that Amazon is pioneering may in the long run effect Apple but they will be a major problem for current Android OEMs and Google in 2012. Facebook just compounds the problem for Google and Android.

Good analysis. Definitely bad news for Googe!

Where do Steifel Nicolaus get their Kindle sales numbers from? Amazon have so far refused to disclose them?

Interesting contrasting strategies?

Amazon sells Kindle Fires at a loss, hoping to make up the losses from sales of media, a large amount of which they are giving away for free and the remainder on razor thin margins of around 2%?

Apple sell every iPad with a hefty profit margin and make 30% margin on much of the media they sell.? Media sales forms only a small part of Apple's total profits. Apple is well able to drop they media selling prices dramatically without significantly affecting their bottom line. But how would this affect Amazon's strategy to recover their losses from Kindle Fire subsidies?
post #27 of 127
In smartphones it is an Apple/Samsung game.
In tablets it is an Apple/Amazon game.

The interesting aspect of Amazon, however, is they have fully forked Android and cut out Google from very lucrative advertising streams.
post #28 of 127
Quote:
Originally Posted by Wiggin View Post

And just by way of another example... low-end ink jet printers are aften sold at/near cost and they make their money selling ink. Just like Amazon hopes to make money selling/renting content.

By the same token, reversing the tables, assuming Apple and Amazon pay the same for their content, Apple could drop their content prices to just break even. According to Apple they barely make money on the content but I am sure there is some room for manoeuvre. I can't see this happening as Apple just doesn't need to do it.... but if they did Amazon would be in trouble
post #29 of 127
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

Everybody I know who bought a Kindle Fire returned it and bought an iPad.

I have seen 2-3 in steady use at the local coffee shop. Still greatly outnumbered by iPads but a respectable showing and the users seem to like the Fire.
post #30 of 127
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

Everybody I know who bought a Kindle Fire returned it and bought an iPad.

How many people would that be exactly?

Quote:
Amazon's estimated 6 million Kindle Fires represent just a fraction of Apple's record 111% rise to 15.3 million iPad 2 shipments during the same time period.

The phrase 'just a fraction' is usually used to denote a very small percentage. I don't call 39% a small percentage.

Meanwhile, AI seems awfully quiet on Samsung's recently announced profits. Amazing how their margins are so low they hardly make a cent selling phones. Their telecoms division made a quarterly profit of $2.355 B, up 90% yoy.

I suspect the Galaxy Note is the one to watch. At $299 on AT&T, I would not be surprised to see it take a chunk out of iPad sales.
post #31 of 127
I have no idea why y`all keep bashing this little tablet.

I`m an Apple fan but am heavily invested in the Amazon ecosystem and I`m telling you this strategy is making them money.

I`ve spent a couple hours on one of these things and they`re fast, intuitive, and sensitive.

It`s actually the best Android tablet I`ve seen yet.
post #32 of 127
Quote:
Originally Posted by aaarrrgggh View Post

For Amazon... shipped is sold.

No, it isn't. Amazon ships and sells through other retailers, and there were many Kindle Fire returns. While I am sure they did sell a pretty hefty number, shipped is not sold in this case.
The true measure of a man is how he treats someone that can do him absolutely no good.
  Samuel Johnson
Reply
The true measure of a man is how he treats someone that can do him absolutely no good.
  Samuel Johnson
Reply
post #33 of 127
Quote:
Originally Posted by gprovida View Post

Amazon is selling tablets to those who would not have bought an iPad [as noted by Tim Cook based on iPad sales data] that is bringing a new market segment to bear. Whether this will be a threat to Apple iPad is TBD, but to the Android tablet community its a disaster.

Amazon is selling its curated and exclusive environment [with more to come] and they make money NOT on the hardware, but rather on the services. This makes competing very difficult for hardware manufacturers.

So they must compete with Apple at the mid and high range [demonstrably hard to do and make money and/or volume] and at the low end with Amazon, who is selling hardware at a loss or break-even.

Therefore, I think Apple's view that Amazon is going to make the tablet Android market very hard for non-Apple vendors and oh by the way cut Google out of the ad business, just like Facebook is doing.

What happens when Facebook introduces a phone and tablet at near cost or even at a loss and makes money on ads and sales. Again Hardware OEMs and Google are in a tough place.

The disruption that Amazon is pioneering may in the long run effect Apple but they will be a major problem for current Android OEMs and Google in 2012. Facebook just compounds the problem for Google and Android.

yup. as Amazon, Facebook, and big OEM's like Samsung, LG, and Sony all rush to establish their own "walled garden" "ecosystems" of hardware/services, trying to replicate what Apple has as much as they can, Google is getting left out in the cold. they might use some forked version of Android, but not the Google+/cloud version.

for years Google ripped off everyone else and laughed all the way to the bank. so now, turnabout is fair play too.
post #34 of 127
Quote:
Originally Posted by ddawson100 View Post

I understand that these analysts get paid a lot of money for their reports. Maybe that's why they feel obligated to write such obfuscated language. What the heck does this mean:

"software attach rates for apps and media downloaded to the tablets would correlate inversely with the hardware price"

There must be a plainer way to say this.

The poorer the quality of the meat -- the more spices you put on it!
"...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 #35 of 127
I have played with a few that friends and family bought. They work as well as the iPad (Screen is a little too small) for most media related things. It seems like a good device for the price. This is the first tablet that should give Apple a little competition...
post #36 of 127
Apple could probably provide a lower end iPad that performs reasonably well sometime in the next year without usability sacrifices to add competition on the (previously nonexistent) low-end of the market.

I think it may be more interesting if Apple creates a scaled up version of the iPod Touch to compete with the fire. No iPad apps, but would work fine for iBooks, movies and games. The retina display resolution on the iPod touch gives them a lot of leeway to create a 7" device with a reasonable (non-retina) resolution. With all the rumors of a 7" iPad, I wonder if Apple may be experimenting with a larger iPod Touch. Downsizing the iPad doesn't make any sense because that would put a lot of extra burden on developers. Making the iPod touch larger would just work. I bet Apple could match (or at least be in the ballpark of) the price of the fire without subsidizing. I think it makes sense to have a big and small iPod touch and a retina and non-retina iPad. A big iPod touch would work well as a gateway device before getting a real iPad and it would also be appealing to families buying devices for children.

Of course if Apple didn't respond at all, the Fire could work to kill innovation in the Android market because developers would have no incentive to target the last two major releases of Android. However, this may just work in the short run. It would make sense that Amazon would refresh the Fire with newer hardware eventually and update the operating system to something newer. Regardless, Amazon may completely take over the Android market. That isn't necessarily good for Apple because it would provide a strong competitor instead of many weak competitors. It also isn't good for Google, but I don't see a clear way Google will come out ahead in the tablet market no matter what happens.
post #37 of 127
Quote:
Originally Posted by sranger View Post

I have played with a few that friends and family bought. They work as well as the iPad (Screen is a little too small) for most media related things. It seems like a good device for the price. This is the first tablet that should give Apple a little competition...

Competition? What planet are you from anyway? Is KIA competing with BMW? Two completely different markets. I really don't grok posts like yours.
post #38 of 127
gprovida: "The disruption that Amazon is pioneering may in the long run effect Apple but they will be a major problem for current Android OEMs and Google in 2012. Facebook just compounds the problem for Google and Android."

Quote:
Originally Posted by Wiggin View Post

Well said.

Yah, expect for confusing affect and effect...

Macintosh 512Ke.......

Reply

Macintosh 512Ke.......

Reply
post #39 of 127
With all this "competition" from the Fire I'm beginning to wonder why AAPL is up $5 today.
post #40 of 127
Quote:
Originally Posted by lkrupp View Post

Competition? What planet are you from anyway? Is KIA competing with BMW? Two completely different markets. I really don't grok posts like yours.

Apple has no competition.
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: iPad
  • Amazon "defined and dominated" low-end tablet market with 6 million Kindle Fires
AppleInsider › Forums › Mobile › iPad › Amazon "defined and dominated" low-end tablet market with 6 million Kindle Fires