updated 05:05 pm EDT, Tue October 25, 2011
Amazon hints taking big price hit for Kindle Fire
Amazon on Tuesday revealed that it had very strong demand for its Kindle Fire tablet and Kindle Touch reader. CEO Jeff Bezos claimed that pre-orders were so strong that Amazon was bulking up production at Quanta to handle the load. "Millions more" were being made, Bezos said.
Even the traditional e-paper updates, the fourth-generation Kindle and Kindle Touch, got twice as many orders in the first three weeks as for the third-generation model's arrival.
The claims cast doubt on how much Amazon is actually shipping but are consistent with Amazon's habit of refusing to provide numbers. In the past, it has argued that revealing shipments would give up a competitive advantage, though they're believed in the public at large to be attempts to avoid unfavorable comparisons.
Its fiscal results for the summer supported the shipment spike as well as theories that Amazon was selling the Kindle Fire at a loss to build share. It made $10.88 billion in revenue, just below the $10.9 billion the market had predicted. Profit was also much lower: it made $63 million in the summer where it had made $231 million a year ago.
Outlook for the fall was potentially disappointing. It gave a wide spread of between $16.45 billion and $18.65 billion in raw revenue. Most had expected it to lean towards the high end, at about $18.15 billion.
The Kindle Fire performance could lead to Amazon almost immediately making the most popular Android tablet in the world. Most of those clinging to the official Android experience usually only sell a few hundred thousand tablets a quarter, just a small fraction of the now double-digit millions of iPads sold each season. A low price and a deliberate attempt to get away from the stock Android experience may have worked in Amazon's favor by minimizing direct comparisons to the iPad and catering to those put off by the colder stock Android interface.