Amazon may have sold 6m Fires says analyst
Wall Street eyes device numbers as retailer prepares to announce Q4 figures, but additional content revenues more important
Published: 31 January, 2012
READ MORE: Metrics | Amazon | Tablet | Android
On the eve of Amazon's results, all Wall Street eyes were on the sales figures for the Kindle Fire, which has already trounced every other tablet except the iPad in a survey of applications activity. Forecasts vary greatly, and Amazon tends to be shy about releasing exact figures for its Kindle devices, but one pundit - Stifel Nicolaus's Jordan Rohan - thinks the Fire alone could have sold six million units.
"Even if Amazon makes no incremental contribution on the sale of the hardware, the fact that the company has used its distribution prowess to define and dominate the low end of the device ecosystem is quite impressive," Rohan wrote in his client note. "And there is significant strategic value in becoming the third major device ecosystem after iOS and Android [Amazon uses a tweaked version of the Google OS]. We believe that shows up in both revenues and margins, longer term."
Others are more cautious - Youssef Squali, an analyst at Jefferies, thinks Amazon built between 5m and 6m Fires and sold about 4m in the fourth quarter, while he predicts the e-reader models will have shifted about 12m units. He adds that Amazon will produce about 4m Fires in the current Q112.
Analysts, who had previously been concerned at the impact of a device business on Amazon's margins, now seem generally more convinced by the profit potential of the increased outlay Fire owners make on content, downloads and subscriptions. A recent calculation by RBS estimated that each Fire generates an additional $136 in revenue for Amazon, even though it loses $2 or $3 on the manufacture and sale. Devices could reach almost 15% of Amazon's total revenue in the Q411 results, some believe.
Of course, the Fire is still well behind the iPad, which sold over 15m units in the fourth quarter and grabbed 57.6% of the total slate market in the period, according to Strategy Analytics. The same study concluded that Android ran on just over 39% of tablets shipped in Q411, up from 29% of a far smaller segment a year before.
Neil Mawston, executive director at the research firm, commented: "Dozens of Android models distributed across multiple countries by numerous brands such as Amazon, Samsung, Asus and others have been driving volumes. Android is so far proving to be relatively popular with tablet manufacturers despite nagging concerns about fragmentation of Android's operating system, user interface and app store ecosystem."
But while Amazon may be worsening the fragmentation of the user experience - the Kindle Fire has its own browser and app store and cannot download from Android Market without a hack - it is certainly leading the apps game. According to data from app analytics firm Flurry, revealed on its blog, the Fire is already the leading Android slate in terms of end user app sessions.
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