Amazon Kindle Fire Sale in IPad Challenge Narrows Margins

kennyc · 10-17-2011, 09:04 PM

Amazon Kindle Fire Sale in IPad Challenge Narrows Margins

Amazon.com Inc. (AMZN)’s profit margins, already at a five-year low last quarter, are set to narrow next year as the world’s largest online retailer sells its new tablet computer for half the price of the iPad.

The Kindle Fire will go on sale next month for as little as $199, compared with $499 for the cheapest tablet from Apple Inc. (AAPL) The lower price will help Amazon sell 4.5 million Kindle Fires in the fourth quarter, according to Barclays Plc, topping the 3.3 million units Apple reported for iPad’s debut quarter. It also means Seattle-based Amazon loses about $10 on each tablet, according to IHS Inc.

“It is possible that in 2012 you’ll have a quarter with negative operating margins,” said Ben Schachter, an analyst at Macquarie Capital in New York. “That typically is a disaster scenario. It’s phenomenal to have this revenue growth, but at some point you want to see them make money on it.”

Chief Executive Officer Jeff Bezos is counting on sales of music, books, movies and merchandise on the tablet to make up for money lost on the device. The Kindle Fire, available Nov. 15, has a 7-inch display, smaller than the iPad’s 9.7-inch screen, Amazon said at a Sept. 28 event in New York. The device will run on Google Inc.’s Android software, have a dual-core processor and offer Wi-Fi connectivity, the company said.

more here:
http://www.bloomberg.com/news/2011-1...gins-tech.html

TallMomof2 · 10-17-2011, 09:26 PM

I'm sure that Amazon will make up the difference from content sales.

wyndslash · 10-17-2011, 10:46 PM

i'm just glad that it will run flash

OtterBooks · 10-17-2011, 11:26 PM

Another journalist stating the unsubstantiated 'subsidized' guessitmate as fact.

covfam · 10-18-2011, 02:02 PM

These guys just dont get it ... amazon isnt planing to make money on the device.. they will make it up on apps,books,movies,,music, tv shows.

Do these journalists really think amazon cares that they lost $10 on selling me the kindle 3 on the cheap last year? when between my wife and i we have purchased and read 70 books in the last year from them?. im not a mathmetician but i think amazon's profit from the 70 books ive bought last year GREATLY exceeds the slight loss on the kindle 3.

Another example, ive purchased over 700 songs, 30 apps 14 movies, 5 complete seasons of tv shows on itunes in the last 3 years with thier idevices.... if i like the kindle fire and it replaces my idevices Amazon will make a MUCH larger amount of money of me in the next 2-3 years than they would lose on the slight loss on the kindle fire.

gweminence · 10-18-2011, 06:37 PM

^^ this.

Jessica Lares · 10-19-2011, 09:45 AM

And obviously Apple could never do the same thing with the jailbreaks, installous, and the only main use for their devices being for app/music usage.

We aren't going to see a fully working rooted KF until a month. By that time most people would have stacked up about $50 worth into their devices. That's like $5mil right there.

gweminence · 10-19-2011, 01:05 PM

Quote:

Originally Posted by Jessica Lares

We aren't going to see a fully working rooted KF until a month. By that time most people would have stacked up about $50 worth into their devices. That's like $5mil right there.

What are you kidding? 48 hours, max. Watch and see.

Jessica Lares · 10-19-2011, 07:49 PM

48 hours maybe, yeah, but not to the point where it's going to be usable to anyone.

kennyc · 10-19-2011, 08:02 PM

Quote:

Originally Posted by gweminence

What are you kidding? 48 hours, max. Watch and see.

Or less.

Oh you said Max. :-)

gweminence · 10-20-2011, 05:17 PM

Quote:

Originally Posted by Jessica Lares

48 hours maybe, yeah, but not to the point where it's going to be usable to anyone.

Devices that are actively protected against rooting (Some android phones. the iphone, others) are generally cracked within 24 hours. And amazon has publicly announced that they're NOT doing anything to prevent it with the fire.

I think my 48 hour prediction is probably 36 hours too long.

SeaKing · 10-20-2011, 07:38 PM

The safe bet is go with Amazon against all the journalists, and other idiots betting against it.

I wouldn't bet against Apple either. They will do fine.

gweminence · 10-20-2011, 07:50 PM

Of course Apple will do fine. The Fire was never targeted at the iPad -- though with millions of likely sales, I'm sure they'll grab a customer or two that might have been considering an ipad.

Now, when (NOT if) Amazon releases a 10.1 version of the fire...then, I think, Apple will at least have to take notice, though iSheep are notorious for being oblivious to such revolutionary ideas as value for your dollar, performance for your dollar, and freedom to do what you like with your devices...so even the 10.1 Fire (or whatever it's called) won't endanger Apple any, thought it might take significant sales.

monkeyluis · 11-09-2011, 03:59 PM

Quote:

Originally Posted by gweminence

Of course Apple will do fine. The Fire was never targeted at the iPad -- though with millions of likely sales, I'm sure they'll grab a customer or two that might have been considering an ipad.

Now, when (NOT if) Amazon releases a 10.1 version of the fire...then, I think, Apple will at least have to take notice, though iSheep are notorious for being oblivious to such revolutionary ideas as value for your dollar, performance for your dollar, and freedom to do what you like with your devices...so even the 10.1 Fire (or whatever it's called) won't endanger Apple any, thought it might take significant sales.

I have an iPad 2 & I ordered a kindle fire. My iPad was well worth the money & I have the freedom to do whatever I want on it. I can pretty much do anything my laptop does. I'm looking forward to the kindle fire though as it will be a content consumption device for me as well, mostly reading, comics, mags, surfing, as I currently do on my iPad. Plus, I'm a gadget hor.

10-17-2011, 09:04 PM	#1
kennyc The Dank Side of the Moon Posts: 35,891 Karma: 119230421 Join Date: Sep 2009 Location: Denver, CO Device: Kindle2; Kindle Fire	Amazon Kindle Fire Sale in IPad Challenge Narrows Margins Amazon Kindle Fire Sale in IPad Challenge Narrows Margins Amazon.com Inc. (AMZN)’s profit margins, already at a five-year low last quarter, are set to narrow next year as the world’s largest online retailer sells its new tablet computer for half the price of the iPad. The Kindle Fire will go on sale next month for as little as $199, compared with $499 for the cheapest tablet from Apple Inc. (AAPL) The lower price will help Amazon sell 4.5 million Kindle Fires in the fourth quarter, according to Barclays Plc, topping the 3.3 million units Apple reported for iPad’s debut quarter. It also means Seattle-based Amazon loses about $10 on each tablet, according to IHS Inc. “It is possible that in 2012 you’ll have a quarter with negative operating margins,” said Ben Schachter, an analyst at Macquarie Capital in New York. “That typically is a disaster scenario. It’s phenomenal to have this revenue growth, but at some point you want to see them make money on it.” Chief Executive Officer Jeff Bezos is counting on sales of music, books, movies and merchandise on the tablet to make up for money lost on the device. The Kindle Fire, available Nov. 15, has a 7-inch display, smaller than the iPad’s 9.7-inch screen, Amazon said at a Sept. 28 event in New York. The device will run on Google Inc.’s Android software, have a dual-core processor and offer Wi-Fi connectivity, the company said. more here: http://www.bloomberg.com/news/2011-1...gins-tech.html

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10-17-2011, 09:26 PM	#2
TallMomof2 Kindlephilia Posts: 2,017 Karma: 1139255 Join Date: Nov 2007 Location: Snowpacolypse 2010 Device: Too many to count	I'm sure that Amazon will make up the difference from content sales.

10-17-2011, 10:46 PM	#3
wyndslash Wizard Posts: 2,951 Karma: 3000001 Join Date: Feb 2011 Device: Kindle 3 wifi, Kindle Fire	i'm just glad that it will run flash

10-17-2011, 11:26 PM	#4
OtterBooks Wizard Posts: 1,262 Karma: 2979086 Join Date: Nov 2010 Device: Kindle 4, iPad Mini/Retina	Another journalist stating the unsubstantiated 'subsidized' guessitmate as fact.

10-18-2011, 02:02 PM	#5
covfam Addict Posts: 304 Karma: 1139862 Join Date: Dec 2010 Device: Ipod Touch,Ipad3,Kindle fire, Samsung Galaxy tab, Samsung Galaxy S3	These guys just dont get it ... amazon isnt planing to make money on the device.. they will make it up on apps,books,movies,,music, tv shows. Do these journalists really think amazon cares that they lost $10 on selling me the kindle 3 on the cheap last year? when between my wife and i we have purchased and read 70 books in the last year from them?. im not a mathmetician but i think amazon's profit from the 70 books ive bought last year GREATLY exceeds the slight loss on the kindle 3. Another example, ive purchased over 700 songs, 30 apps 14 movies, 5 complete seasons of tv shows on itunes in the last 3 years with thier idevices.... if i like the kindle fire and it replaces my idevices Amazon will make a MUCH larger amount of money of me in the next 2-3 years than they would lose on the slight loss on the kindle fire.

10-18-2011, 06:37 PM	#6
gweminence Fat Guy Posts: 408 Karma: 24165 Join Date: Jun 2010 Device: Kindle Voyage	^^ this.

10-19-2011, 09:45 AM	#7
Jessica Lares Wizard Posts: 2,240 Karma: 5759170 Join Date: Jun 2011 Location: Near Dallas, Texas, USA Device: iPad Mini, iPod Touch (5th gen)	And obviously Apple could never do the same thing with the jailbreaks, installous, and the only main use for their devices being for app/music usage. We aren't going to see a fully working rooted KF until a month. By that time most people would have stacked up about $50 worth into their devices. That's like $5mil right there.

10-19-2011, 07:49 PM	#9
Jessica Lares Wizard Posts: 2,240 Karma: 5759170 Join Date: Jun 2011 Location: Near Dallas, Texas, USA Device: iPad Mini, iPod Touch (5th gen)	48 hours maybe, yeah, but not to the point where it's going to be usable to anyone.

10-20-2011, 07:38 PM	#12
SeaKing Frequent Flier Posts: 1,282 Karma: 2058993297 Join Date: Oct 2011 Device: KB kindle aboard, Galx Tab 7.0 Plus, trying out Droid 1 as mini-tab	The safe bet is go with Amazon against all the journalists, and other idiots betting against it. I wouldn't bet against Apple either. They will do fine.

10-20-2011, 07:50 PM	#13
gweminence Fat Guy Posts: 408 Karma: 24165 Join Date: Jun 2010 Device: Kindle Voyage	Of course Apple will do fine. The Fire was never targeted at the iPad -- though with millions of likely sales, I'm sure they'll grab a customer or two that might have been considering an ipad. Now, when (NOT if) Amazon releases a 10.1 version of the fire...then, I think, Apple will at least have to take notice, though iSheep are notorious for being oblivious to such revolutionary ideas as value for your dollar, performance for your dollar, and freedom to do what you like with your devices...so even the 10.1 Fire (or whatever it's called) won't endanger Apple any, thought it might take significant sales.

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