Sources: Amazon, The Verge
quote: Five million Kindle Fire units becomes the first reliable estimate of Kindle sales (based on Apple, Samsung and Amazon supplied information rather than guesses from analysts.)So the question now is whether this is consistent with the hypothesis that the Fire is disrupting the tablet business.Bearing in mind that this 5 million total was reached with prominent placement on Amazon.com and a loss-leading pricing, I would conclude that this is not an auspicious start for a disruptive product.As I argued nearly a year ago, the business model for the Kindle is limited to the footprint of the Amazon franchise, which is small internationally. Amazon itself implicitly admitted that the product was a US-only phenomenon. Further worry comes from the way the company approached production. It was not planning it as a maximization of reach into the market. What they did was order a batch production and then wait for it to be sold through.Perhaps Amazon is being patient for growth, but I don’t see a hunger for profit in this strategy. We know that Kindle probably lost money at the price charged. Perhaps it’s on the order of $40 per unit. Five million units would imply a charge against the business of $200 million. Did Amazon earn a profit on content sales of $40 on each of those five million units? The margins on content sold through Amazon are so low that I have a hard time imagining that Fire users are that ravenous in their consumption.
quote: As usual Horace Dediu at Asymco does the most rigorous and objective data analysis on Kindle sales.
quote: We know that Kindle probably lost money at the price charged. Perhaps it’s on the order of $40 per unit.