Kindle Fire Shipments Fizzle
Amazon likes to tout the Kindle Fire as “the #1 bestselling, most gifted, and most wished for product” it peddles (without ever disclosing actual sales numbers). But evidently that doesn't mean quite as much as you'd think.
Context & Ripple Effects
The Kindle Fire arrived with momentum that was hard to dispute: pre-orders kept climbing through early October 2011, and by December iSuppli had it blazing to second place in the media tablet market. AllThingsD reported in late December that Amazon was moving more than one million Kindles a week heading into the holidays — even while flagging that Amazon might still miss its Q4 estimates.
The story has always been what the numbers don't say: Amazon touts the Fire as its '#1 bestselling, most gifted, and most wished for' product without ever disclosing actual unit sales. The new NPD shipment data punctures that framing — and lands two weeks after Amazon reported Q1 2012 net sales up 34% to $13.18 billion alongside a 35% drop in net income, with comScore having just put the Fire at 54.4% of US Android tablets. The pickup across ZDNet, Fortune, Computerworld, IDC, The Verge and others shows how much weight the market places on any independent read of Amazon's tablet volumes.
First-order effects
- Amazon's preferred proof point — top-of-the-retail-charts status — is now visibly decoupled from actual shipment volume, weakening the marketing line it has used since launch.
- Investors already digesting a quarter where revenue grew 34% but net income fell 35% get another reason to question whether the Fire is paying back its hardware investment.
Second-order effects
- With comScore crediting the Fire with a majority (54.4%) of US Android tablets, a shipment slowdown drags the whole non-Apple tablet ecosystem's trajectory down with it — even as NPD's own syndicated forecast still projects Apple ceding a quarter of the tablet market by 2017.
- Rivals reading the same data face a fork: match Amazon's aggressive content-subsidized hardware economics or concede the low-end media-tablet segment entirely.
Third-order effects
- Amazon's refusal to disclose unit sales forces the entire market to run on third-party trackers — NPD, iSuppli, comScore — whose divergent methods (shipments vs. installed base vs. web usage) can tell opposite stories about the same product in the same month.
- If the pattern holds, the durable lesson is that 'bestselling on our own store' is a marketing metric, not a demand metric — pushing analysts toward revenue-per-device and content-attach measures rather than unit ranks when judging Amazon hardware.
The trend: The tablet market is splitting into an Apple premium tier and a low-margin, content-driven Android tier, with Amazon's opaque reporting leaving third-party trackers to arbitrate whether the latter is working.