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

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  • Reply 61 of 88
    gatorguygatorguy Posts: 20,694member
    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/
  • Reply 62 of 88
    jragostajragosta Posts: 10,473member
    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.
  • Reply 63 of 88
    rob55rob55 Posts: 1,255member
    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.
  • Reply 64 of 88
    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.
  • Reply 65 of 88
    Wow is there even a single review of this 1.0 product?
  • Reply 66 of 88
    sockrolidsockrolid Posts: 2,788member
    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.
  • Reply 67 of 88
    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!
  • Reply 68 of 88
    jragostajragosta Posts: 10,473member
    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.
  • Reply 69 of 88
    conradjoeconradjoe Posts: 1,887member
    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.
  • Reply 70 of 88
    conradjoeconradjoe Posts: 1,887member
    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.
  • Reply 71 of 88
    apple ][apple ][ Posts: 8,680member
    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.
  • Reply 72 of 88
    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?
  • Reply 73 of 88
    adamcadamc Posts: 573member
    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?
  • Reply 74 of 88
    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.
  • Reply 75 of 88
    paxmanpaxman Posts: 4,602member
    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.
  • Reply 76 of 88
    jragostajragosta Posts: 10,473member
    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.
  • Reply 77 of 88
    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.
  • Reply 78 of 88
    nealgnealg Posts: 132member
    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
  • Reply 79 of 88
    mactelmactel Posts: 1,275member
    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.
  • Reply 80 of 88
    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.
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