What Amazon needs to make the Kindle Fire experiment a success
TweetFollow Us on Twitter

What Amazon needs to make the Kindle Fire experiment a success

The Kindle Fire, which Amazon is widely reported to be sold at cost or below the margin, has been one of the most intensely followed technology product stories over the past year.

A new study from ABI Research (www.abiresearch.com) concludes that the cross-subsidized device model that Amazon uses is a viable strategy. According to senior analyst Aapo Markkanen’s calculations, the firm would need, on average, an incremental profit of about $3 in each month of a tablet’s lifespan to achieve an overall profit margin of 20%.

"Considering the probable margins of app and content sales, our research shows that Kindle Fire is a credible proposition," Markkanen comments. "We expect that there will be a certain level of ‘innovation plateauing’ in mobile hardware taking place over the next five years, and that would certainly work in Amazon’s favor. Its future devices are likely to require less cross-subsidy than the ones we’ve seen so far."

Amazon’s mobile strategy is distinctly two-pronged, since besides its own devices the company also offers a popular portfolio of apps running on all major OSes. ABI Research estimates that altogether the Kindle, Amazon Mobile, Cloud Drive, and Price Check apps have seen over 180 million downloads. The already established presence on mobile devices begs the question whether such a platform-agnostic approach would actually serve Amazon’s interests better than investment in a competing ecosystem.
Markkanen doesn’t think so, saying, “Kindle Fire may look like an aggressive push into a whole new market, but it’s more of a defensive play, born out of necessity. If Amazon bet its post-PC future only on the web and apps, it would be dangerously exposed to the likes of Apple and Google. Whoever controls the platform has a more frictionless relationship with the user, and that relationship can become real poison for any third party that relies on the same platform for its own business.”

 
AAPL
$104.83
Apple Inc.
+1.84
GOOG
$543.98
Google Inc.
+11.27
MSFT
$45.02
Microsoft Corpora
+0.64
MacNews Search:
Community Search:

Latest Forum Discussions

See All
view counter

view counter
view counter
view counter
view counter
view counter
view counter

Toca Boo (Education)
Toca Boo 1.0.2 Device: iOS Universal Category: Education Price: $2.99, Version: 1.0.2 (iTunes) Description: BOO! Did I scare you!? My name is Bonnie and my family loves to spook! Do you want to scare them back? Follow me and I'll show you how!SCARE | Read more »
Intuon (Games)
Intuon 1.1 Device: iOS Universal Category: Games Price: $.99, Version: 1.1 (iTunes) Description: Join the battle with your intuition in a new hardcore game Intuon! How well do you trust your intuition? Can you find a needle in a haystack? Can you reveal the truth among the lies? Intuition is your weapon!* Challenge!* Guess!* Win... | Read more »
Ravenous Rampage (Games)
Ravenous Rampage 1.0 Device: iOS Universal Category: Games Price: $.99, Version: 1.0 (iTunes) Description: | Read more »
Partia 2 (Games)
Partia 2 1.0.1 Device: iOS Universal Category: Games Price: $5.99, Version: 1.0.1 (iTunes) Description: Partia 2 is a SRPG (Strategy Role-playing) video game inspired by Fire Emblem and Tear Ring Saga series. In a high fantasy setting, the game will take players through an adventure where magic and sword collide and friendship and... | Read more »
Puzzle to the Center of the Earth Review
Puzzle to the Center of the Earth Review By Campbell Bird on October 23rd, 2014 Our Rating: :: SPELUNKING PUZZLESUniversal App - Designed for iPhone and iPad Do some puzzles to make some platforms in this smart and fun free-to-play cave mining adventure.   | Read more »
Sleep Attack TD Review
Sleep Attack TD Review By Jennifer Allen on October 23rd, 2014 Our Rating: :: A TRUE TWISTUniversal App - Designed for iPhone and iPad Sleep Attack TD is a tower defense game with a difference – you can rotate the layout – and it’s pretty good.   | Read more »
Mecanic (Education)
Mecanic 1.0 Device: iOS Universal Category: Education Price: $1.99, Version: 1.0 (iTunes) Description: Plates, screws, wheels ... Everything you need to achieve whatever you want...MECHANICWith 'MECANIC' kids will have fun assembling several different pieces. Straight lines, elbows, rectangles, triangles ... All his pieces have... | Read more »
Earn Your Master Camper Badge in Camp Po...
Earn Your Master Camper Badge in Camp Pokemon Posted by Jessica Fisher on October 23rd, 2014 [ permalink ] Universal App - Designed for iPhone and iPad | Read more »
Garruk Gets His Revenge in a New Magic 2...
Garruk Gets His Revenge in a New Magic 2015 Expansion, Coming This November Posted by Jessica Fisher on October 23rd, 2014 [ permalink ] | Read more »
Sentinels of the Multiverse Review
Sentinels of the Multiverse Review By Rob Thomas on October 23rd, 2014 Our Rating: :: SENTINELS ASSEMBLEiPad Only App - Designed for the iPad Greater Than Games’ tabletop classic, Sentinels of the Multiverse swoops in to save the day on iPad. It’s super!   | Read more »
All contents are Copyright 1984-2010 by Xplain Corporation. All rights reserved. Theme designed by Icreon.