Amazon Heads to $230: Kindle Fire Rapidly Takes #2 Position in Tablet Market

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AMZN: Amazon logo
AMZN
Amazon

According to a recent report from iSuppli, Amazon’s (NASDAQ:AMZN) Kindle Fire tablet could surpass all other Apple (NASDAQ:AAPL) iPad rivals in Q4 2011 to take the second position in the tablet market. The report suggests that iPad will continue to dominate the tablet market with a market share of 66% while Kindle’s market share will increase to around 14%. [1] The biggest loser will be Samsung for which the market share will decline to around 5%, down from 8% in Q3 2011. Motorola Mobility (NYSE:MMI) Xoom and Research in Motion’s (NASDAQ:RIMM) PlayBook will continue to be laggards in the tablet market and doesn’t even feature in the top 5 brands.

Our $233 price estimate for Amazon stock is about 20% above market price.

See our complete analysis for Amazon stock here

Amazon Kindle Fire becoming a major force

The recent finding from iSuppli was not a surprise, although it does reinforce our prior beliefs that Kindle Fire is more of a threat to Google’s (NADAQ:GOOG) Android based tablets rather than Apple’s (see Amazon’s Kindle Fire Threatens Google More than Apple). We believe that iPad sales will remain strong, and Apple should be able to take advantage of the holiday season when the consumer spending is at its peak (see Apple Should Toast Tablets This Holiday Season). We expect Apple to sell in excess of 39 million iPads this year.

Amazon’s non-iPad rivals struggling

Non-iPad rivals other than Amazon continue to struggle in the tablet market. Last Friday, RIM announced that it will miss its revenue guidance for the third fiscal quarter, mainly due to lower than expected sales of its PlayBook tablet. [2] The company said that it will book a one-time pre-tax charge of $485 million in order to write off the hugely unsold PlayBook inventory. The position of other tablet players such as Samsung and HTC could continue to decline as Amazon make rapid strides.

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Notes:
  1. Red-Hot Kindle Fire Blazes its Way to Second Place in Media Tablet Market, iSuppli, December 2nd, 2011 []
  2. Research In Motion Announces Third Quarter Provision Related To PlayBook Inventory, Press Release, December 2nd, 2011 []