- Amazon’s Kindle Fire will never account for more than a slice of the tablet market since it's competing against a rising tide of very inexpensive Android tablets. We estimate that in the third quarter of 2013, shipments of the Kindle line, including e-readers, accounted for only 2% of worldwide tablet shipments.
- Amazon's tablet shipments have always been strongly seasonal. We expect that Kindles will take a significantly larger share in the holiday quarter, but likely not reach the 11.5% share of tablet shipments that IDC said it achieved in the fourth quarter of last year.
- But selling more tablets isn't Amazon's only goal, and Kindle Fire should not be overlooked. Amazon is generating revenue as Kindle Fire users engage with content on the devices, download from Amazon's vast digital library, receive ads, and use other Amazon services like e-commerce.
- Morgan Stanley expects the Kindle ecosystem to account for 11% of Amazon's total revenues this year.
- Additionally, Morningstar estimates that there will be more than 10 million total Amazon Prime subscribers this year, another key source of Amazon revenue. Kindle Fires encourage Amazon Prime subscriptions because subscribers receive free unlimited video streaming and e-book borrowing.
- The Amazon Appstore is also generating strong developer revenues. Popular Kindle Fire apps are generating 59 cents of revenue for every dollar earned by top apps in the Google Play store, according to a Distimo study.
- Amazon's platform is in a major global expansion phase: Earlier this year, Amazon began selling high-end Kindle Fire models in 170 countries and brought the Amazon Appstore online in 200 countries. Previously these had only been available in a handful of the largest European and Asian markets. Meanwhile, Amazon's advertising programs on the Kindle Fire also generate nearly $200 million in ad revenue for the company.
Amazon is vying to be the "everything store," and that goes for digital products as well as online retail purchases of electronics, household items, or books. The Kindle Fire plays into this strategy by giving the company a device line in the tablet market and a means of capturing even more sales for its enormous digital media library.
The Kindle Fire ecosystem is often overlooked, but it has steadily gained traction among consumers and developers, and is [...]