Amazon increases Kindle Fire production ahead of release

The Kindle Fire is clearly already a hot item—being the cheapest tablet from a major vendor by far at $199 probably has something to do with that. In any case, the device is proving so popular that Amazon has boosted production ahead of the November 15 release.

Jeff Bezos, Amazon’s CEO, stated the following in the company’s latest financial results announcement:

In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we’re seeing with Kindle Fire pre-orders, we’re increasing capacity and building millions more than we’d already planned.

"Millions more" isn’t exactly a hard number, but it puts things in perspective. Apple sold just over 11 million iPads last quarter. Amazon may not outship Apple’s star device, but the "millions more" figure suggests it’s already a sizable competitor even before any consumers have gotten the product in their hands.

For reference, a DigiTimes story posted in June said Asus’ Eee Pad Transformer was the second-most-popular tablet after the iPad with only 400,000 shipments in the first half of the year. Word was that Asus expected to ship two million Eee Pad tablets in 2011 overall.

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    • dashbarron
    • 8 years ago

    The Fire is going to rock. I really think we’re going to have a good line of competition between Amazon and Apple.

    • OneArmedScissor
    • 8 years ago

    Good gravy. If they stick to the $199 baseline, these things are going to be the iPod 2.0 once the inevitable update comes around with a 32 / 28nm HKMG CPU. I don’t know that I could stop myself from pulling the trigger. It’s already bordering on becoming everything netbooks were supposed to have been.

    Just give me HDMI out!

    • Thresher
    • 8 years ago

    I wonder if this will have any effect on iPad pricing. If it does nearly as much as the iPad for less than half the price, it will be hard to justify the more expensive iPad.

    I know games and that sort of thing get a lot of attention on the iPad, but I doubt very seriously if they actually account for most of the time people spend on their device. If the Fire can handle what people spend most of their time doing on a pad, like websurfing, reading, watching video, listening to music, and streaming content, then the iPad price gets very hard to justify.

      • ImSpartacus
      • 8 years ago

      Nope. Apple likes its profit margins.

      Amazon and Apple have different business models. Apple makes money off of hardware sales. Amazon makes money from its online store.

      Amazon is willing to sell its hardware at break-even prices just so it can get the hardware in people’s hands.

      So Apple needs to maintain those large profit margins to continue making money.

        • dashbarron
        • 8 years ago

        ^This.

        I always said if they could sell the hardware for nothing their sales of books and services will earn them cash plus a growing customer base. I think it’s a risky but good business strategy. It all pends on the Fire being a good product and it looks like it will be.

          • wierdo
          • 8 years ago

          I thought Apple’s profits from their App store are quite high, one would think that the longterm way for them to go would be to maintain their installed base as long as they can so they can keep making money off their app sales, which would mean lower prices now that they have real competition to deal with.

          For sake of example:

          Selling 100 units for 100 bucks profit with avg $10 profit per unit from apps = $10000 + $1000 = $11000
          vs
          Selling 1000 units for 10 bucks profit with avg $10 profit per unit from apps = $10000 + $10000 = $20000

          IMHO I think the longterm strategy should be keeping the hardware sales momentum for as long as possible.

        • HisDivineOrder
        • 8 years ago

        While it is true that Apple likes their high profit margins, I also expect Apple does not want to cede the tablet space to low-priced competitors over the long haul.

        I remember when Steve Jobs announced the $200 iPod Touch. He marketed that as the entry point into a gaming device for iOS users. I suspect you’ll see iPad marketed in much the same way in the near future with a lower than current price.

        That is, Apple wants large numbers of users locked into the iOS market and if large numbers of users start off in the Amazon App store instead, well that’ll put the kibosh on that, won’t it? Plus, $200 for an 8GB 3.5″ iPod Touch or $200 for an 8GB 7″ Amazon Kindle Fire is not much of a choice for the person who hasn’t already invested into the iOS ecosystem…

        Conveniently (for Amazon), Apple didn’t bother to update the iPod Touch line with the new A5 processor, so the match up is pretty uneven. Or are you betting that Amazon won’t have the money and clout to lure scores of developers of the best iOS games over to their marketplace?

        So yes, Apple loves its profit margins, but Apple ALSO loves its domination of tablets and should they ignore the low-priced threat like they did Android phones, they risk losing the marketshare advantage once again as they already did in Total Android Phones Activated vs iPhones activated.

        They already saw that play out twice before (Mac vs cheaper PC, iPhone vs cheaper Android phones) and they know some of the best customers for iPhones started out with iPod Touch’s. To lose the low end would be to risk considerably slowing the iOS carousel of progress. I think Tim Cook’s smart enough to know that won’t work.

        Kindle Fire will be faced with a cheaper iPad. I suspect it’ll be a replay of the iPhone 4S, iPhone 4, iPhone 3GS strategy where they keep the current iPad 2 on the market and release a newer iPad 3 for the current price points. Kindle Fire’s success will determine how low the price will go, but based on teardowns, the current iPad 2 could go quite low and still be a tidy profit for Apple.

        Apple’s never been solely about the money to be made today as they’re smart enough to see the money they’ll make tomorrow if they gateway drug users from low end to high end products over time.

    • esc_in_ks
    • 8 years ago

    Amazon should knock it out of the park with the Kindle Fire. They have the capability of making an ecosystem (books, music, video, apps) that the other non-Apple tablet vendors haven’t been able to do. The price is where it needs to be to get non-tablet owners to make the plunge. Amazon has a great brand, people trust them. Plenty of buzz, product visibility right on the front page of amazon.com.

    If it fails, it will come down to poor execution (shoddy hardware, poorly vetted applications, a rift of major security problems).

    • dpaus
    • 8 years ago

    I’m planning to pick up a few as Christmas gifts

    • Farting Bob
    • 8 years ago

    You cant beat Apple by pricing your very similar product $50 less. The ecosystem and hipster credit you get from owning an Apple product is worth the difference for many. You can beat Apple (in sales volume at least) by selling a similar (and not “chinese knockoff” level) product at half the price. Cut down the internal storage, make the screen a bit smaller and take out things like multiple HD cameras. Use more generic options (USB etc) and dont worry too much about making your own software if one can use a free or cheaply licensed established one that only needs minimal tweaking and support.

    Amazon probably lose a bit of money on the Fire, but will make that up through digital sales and price drops over time from the componants will help. Amazon know how to distribute and advertise their stuff, i wouldnt be surprised if in a year or 2 it sells similar numbers to the ipad.

    • Omniman
    • 8 years ago

    I for one pre-ordered the Kindle Fire as my first tablet. I don’t need a camera or microphone so I think it will suite me well!

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