In the two weeks it’s been on the market, Amazon rose to become a major tablet player second to Apple. The $199 Kindle Fire shipping estimate for the fourth quarter of this year easily outpaces combined sales estimates for Samsung and HTC tablets and Barnes & Noble’s Nook Tablet. According to research firm IHS iSuppli, Amazon is set to ship an estimated 3.9 million Fires during the last three months of 2011, which echoes today’s estimated by component makers who predicted Fire shipments of four to five million units through holidays.
Shipments of nearly four million Fires will give Amazon an estimated 13.8 percent share of global media tablet shipments in the fourth quarter, IHS iSuppli noted. The research firm compared that to the 4.8 percent held by Samsung, 4.7 percent by Barnes & Noble and 1.3 percent by HTC. Apple’s iPad, of course, commands 65.6 percent portion of the market.
IHS’s Rhoda Alexander was quoted as saying:
Nearly two years after Apple Inc. rolled out the iPad, a competitor has finally developed an alternative which looks like it might have enough of Apple’s secret sauce to succeed. Initial market response strongly suggests that Amazon, with the Kindle Fire, has found the right combination of savvy pricing, astute marketing, accessible content and an appropriate business model, positioning the Kindle Fire to appeal to a brand-new set of media tablet buyers. The production plans make it clear that Amazon is betting big on the product.
The Fire began shipping sixteen days ago following the September 28 introduction, “creating chaos in the Android tablet market” due to its sweet price spot of just $199, IHS noted. They previously estimated Amazon is selling the device at a loss because components needed to make it cost an estimated $201.70.
Amazon “is playing the long game”, IHS explains, adding the online retailer is “developing a business model that looks beyond the device”. Rhoda Alexander writes that Amazon is able to cover the losses through content sales as the Fire is tightly integrated with their content stores and cloud services:
Amazon plans to use the Kindle Fire to drive sales of physical goods that comprise the majority of the company’s business. As long as this strategy is successful, the company can afford to take a loss on the hardware—while its Android competitors cannot.
IHS expects Apple to discount the $499 iPad 2 when iPad 3 is released some time next year, allowing the Cupertino gadget maker to maintain its profit margins on both the iPad 3 and iPad 2 while attacking Amazon on the low-end.
While Apple and Amazon, and to a lesser extent Samsung, are enjoying fruits of their labor, Research In Motion today announced that unsold PlayBook inventory will cost them a whopping $485 million. Just 150,000 PlayBooks shipped into the channel in the third quarter, the company revealed. Due to this charge, BlackBerry outages and sluggish sales, the once mighty company no longer expects to meet its full-year earnings forecast, Reuters reported today.
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