Amazon CFO Tom Szkutak is predicting record sales of the Kindle and Kindle Fire. However, the company also anticipates a lag in revenue after initial sales of the devices, as consumers get acquainted with their machines before purchasing content for them.
“Much of the profit from these products would come from digital purchases by consumers post-sale,” reports The Next Web.
“Once a customer has purchased a device, what else do they buy? We certainly have some data now that we didn’t have prior to the launch [of the ad-based Kindles]. Once the customer purchases the Kindle and are carrying around this massive selection at their fingertips, they buy more content,” said Szkutak.
In a related Geek.com post, it was noted that the Kindle Fire may become the best-selling Android tablet ever, as pre-orders continue to flood in.
Amazon is producing “millions more” tablets to match the demand that has overwhelmed the company since announcing the slate a month ago.
The Fire will sell for $199, possibly making it an attractive alternative to Apple’s iPad, which starts at $499.
Amazon announced it has expanded its trade-in program to include the Kindle and other e-readers.
A used Kindle is reportedly worth $25 to $135, and the customer will receive an Amazon gift card in exchange.
To help encourage trade-ins, the company is also offering free shipping.
“With the Kindle Touch and Kindle Fire on the horizon, I wouldn’t be surprised to see many e-reader owners take advantage of this program,” suggests TechCrunch. “Simply visit Amazon’s Trade-In page and enter in the name of your model.”
Recent speculation has suggested that Apple will produce an “iPad mini” to compete with the $199 price tag of the Amazon Kindle Fire, but many analysts doubt the possibility.
For one, if Apple is looking to compete with the Kindle Fire — which it has already denounced as a threat — it would have to compete in price, not size. A recent study showed that two-thirds of consumers want 10-inch devices while only 9 percent want a 7-inch tablet.
“We expect Apple to maintain its premium price point on tablets,” wrote Forrester analyst Sarah Rotman Epps. “Apple will not allow Amazon to dictate the terms of competition — Apple makes its own rules.”
Additionally, the new size would complicate the development of apps, which have been specifically designed for the 3.5-inch and 9.7-inch displays of current Apple devices.
And the final reason: “Steve Jobs emphatically stated that 7-inch tablets are too small for a pleasant touchscreen experience,” writes Wired.
With its Kindle Fire, Amazon hopes to distinguish its Appstore from Google’s Android, even though the tablet’s OS is based on the 2.x version of Android.
“It seems that Amazon really wants to make sure that the Fire is a more curated and cohesive experience than most Android tablets,” suggests The Next Web, as is evident in the guidelines for submitting Kindle Fire applications. However, the post points out: “They’re not locking everything down though, as installation of ‘non-Appstore’ apps will be permitted without rooting.”
Interestingly, Amazon’s Appstore doesn’t support in-app purchasing. “Because Google’s in-app purchasing technology requires access to Google Mobile Services,” says Amazon, “it will not work on Kindle Fire. We are working on a solution that will let you sell digital content in your apps using Amazon’s merchandising and payments technology. Our solution is currently in Beta and available by invitation only.”
Amazon’s launch of the Kindle Fire tablet may have an impact on Netflix, since the new tablet will make it easier for users to watch streaming video content via Amazon.
“With its $199 price point the tablet could sell like crazy this Christmas,” reports Forbes. “Users will be encouraged to buy Amazon Prime in order to speed their Amazon purchases and Prime just happens to come complete with Amazon’s streaming video service.”
The decision for consumers between Amazon Prime and Netflix will likely be based on pricing and variety of content offerings.
Amazon Prime beats Netflix on price, set at $80 a year ($6.67 per month), while Netflix streaming costs $8 a month.
Netflix, however, has more variety of content with 51,000 titles currently available for streaming, compared to Amazon’s 11,000.
Amazon may soon be able to compete in this regard with added content from Fox and CBS deals. Netflix has similar deals with Fox and CBS and a new DreamWorks Animation deal, but it will lose movies from Sony and Disney with the loss of Starz.
Both companies may press Hollywood to license more content for streaming, but continuing to pay more for films could potentially break Netflix, while Amazon has other sources of revenue to cover costs.
Chris Espinosa, a longtime Apple employee, gives his impression of Amazon’s Silk and Kindle Fire announcements.
“Amazon will capture and control every Web transaction performed by Fire users. Every page they see, every link they follow, every click they make, every ad they see is going to be intermediated by one of the largest server farms on the planet,” Espinosa writes in his blog. “People who cringe at the data-mining implications of the Facebook Timeline ought to be just floored by the magnitude of Amazon’s opportunity here.”
“Amazon now has what every storefront lusts for: the knowledge of what other stores your customers are shopping in and what prices they’re being offered there. What’s more, Amazon is getting this not by expensive, proactive scraping the Web, like Google has to do; they’re getting it passively by offering a simple caching service, and letting Fire users do the hard work of crawling the Web,” he adds. “In essence the Fire user base is Amazon’s Mechanical Turk, scraping the Web for free and providing Amazon with the most valuable cache of user behavior in existence.”
“They use a back-revved version of Android, not Honeycomb; they don’t use Google’s Web browser; they can intermediate user click-through on Google search results so Google doesn’t see the actual user behavior. Google’s whole play of promoting Android in order to aggregate user behavior patterns to sell to advertisers is completely subverted by Amazon’s intermediation. Fire isn’t a noun, it’s a verb, and it’s what Amazon has done in the targeted direction of Google. This is the first shot in the new war for replacing the Internet with a privatized merchant data-aggregation network.”
As part of its New York press event yesterday that unveiled the Kindle Fire tablet and three new Kindle e-readers, Amazon announced Silk, a new Web browser powered by Amazon Web Services (AWS) and available exclusively on its new tablet.
Amazon Silk is an important part of the Kindle Fire pitch, and as a “split browser” exclusive to the tablet it “gets the heavy lifting done on its EC2 cloud servers and promises faster access as a result,” reports Engadget. “Dubbed Silk to represent an ‘invisible, yet incredibly strong connection,’ it takes advantage of Amazon’s existing speedy connections, and that so many sites are already hosted on its servers to speed up Web access.”
Amazon’s cloud-accelerated browser may have some technical implications. First, Amazon may release a Silk desktop browser. It’s reliance on Amazon’s EC2 infrastructure may cut off access to the Web for customers during outages. That said, if Amazon succeeds, it may push other browser developer such as Google, Apple and Microsoft to follow. Mozilla may have a difficult time doing the same.
From a privacy perspective, Amazon talks about learning from “aggregate traffic patterns,” but in reality each Kindle has its own Amazon ID. Thus, Amazon will be able to track your personal Web habits, buying patterns and media preferences in detail.
“Until the Kindle Fire ships, there are more questions than answers,” suggests ReadWriteWeb. “I’m eager to get hands on a Fire so I can test out Silk and see for myself how it works. I’m not yet concerned about the privacy issues, but I do think they bear watching. What do you think? Is the Silk model something you’re excited about, or is Amazon a middle-man you’d rather do without when browsing the Web?”
Amazon has unveiled the Kindle Fire — a 7-inch touch-screen, color, and Wi-Fi tablet with dual-core processor that will sell for $199. The new tablet was announced by chief exec Jeff Bezos at a press event yesterday in New York City.
The Android-based device will offer access to Amazon’s app store, books, streaming movies and TV shows. Moreover, the expectation is that it will increase sales for Amazon’s other merchandise. Fire is available for pre-ordering and will be available November 15.
“The online retailer is gambling it can succeed with its tablet where several other giants, including Hewlett-Packard Co. and BlackBerry maker Research In Motion Ltd., have so far failed,” reports The Wall Street Journal. “Unlike those companies, Amazon already has a vast library of digital content to sell and tens of millions of credit-card numbers.”
The article suggests that the Kindle Fire may have an advantage over other tablets that have attempted to take on the iPad: “Amazon’s library of digital content, which its tablet users can access. Customers can pay $79 a year for a service known as Amazon Prime, which gives them access to 11,000 movies and TV shows, as well as unlimited two-day shipping for physical goods purchased on Amazon.com. Amazon also sells single movies, TV shows and music songs, with a catalog that competes with that of Apple’s iTunes store.”
Amazon also introduced three new Kindle e-readers — a touch-screen 3G version for $149, a touch-screen Wi-Fi version for $99, and a non-touch-screen model for $79.