Amazon has always kept sales figures for its Kindle product line under tight wraps, preferring only to gloat that the ereaders are its top-selling and top-gifted items. With the launch of its Android-powered Kindle Fire tablet, however, the company lifted the veil just a bit, claiming that over the holidays it sold more than one million of the devices every week in December. Now, Stifel Niclaus analyst Jordan Rohan is upping his bet: in a note to investors this weekend, Rohan increased his estimate of the number of Kindle Fires Amazon sold over the holidays to 6 million units—he’d previously estimated Amazon might sell 5 million. The note has been widely reported, with The Wall Street Journal’s AllThingsD apparently getting there first.
Rohan goes on to speculate that high sales of the Kindle Fire—which probably isn’t earning Amazon any money on the hardware front—will translate directly into increased revenue for Amazon’s North American media business, as customers tap into Amazon’s ecosystem of books, music, movies, and television shows from the devices.
The Kindle Fire’s six million units—if true—would make the device the strongest competitor to date with the Apple iPad. Admittedly, it would be a distant second place: during Apple’s just-finished blowout quarter, the company sold 15.4 million iPads.
However, with a price tag a full $300 lower than Apple’s least-expensive iPad, the Kindle Fire’s apparent success could be the first solid indication of a rift in the tablet marke, with the Kindle Fire and similarly priced devices defining the low- and mid-range, with Apple’s premium iPad defining the high end. That pricing structure would actually start to mirror the weakening PC market, where Apple accounts for only a relatively small proportion of total PC sales, but dominates the market for PCs priced over $1,000.
Such a rift might be the inevitable result of the opposite approaches Amazon and Apple have taken with the Kindle Fire and the iPad, respectively. Amazon is selling the Kindle Fire as cheaply as possible, hoping to generate revenue on the back end through content sales. Apple, conversely, makes most of its money on hardware sales, and has consistently proven in the last decade that it doesn’t need to be the cheapest product on the market to succeed. And, apparently, it’s not having any trouble finding customers for the iPad.
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