Amazon’s Successor Tablet Needs To Light A Fire As Shipments Slide

by Trefis Team
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Amazon (NASDAQ:AMZN) launched the Kindle Fire, its own tablet in late 2011. Though it wasn’t as popular as the Apple (NASDAQ:AAPL) iPad, it came a close second, and ended up as the most popular Android tablet in Q4 2011, speeding past competitors Samsung, HTC and Motorola (NYSE:MMI).

Check out our complete analysis of Amazon

The Kindle Fire’s success can be attributed to the holiday shopping season as well as the extremely aggressive pricing, which boosted Amazon’s hardware revenue but weighed heavily on its profit margins.

However, it seems that the party is over for Amazon. While it had a 17% tablet market share in Q4 2011, the share dipped to around 4% in Q1 2012, while Samsung gained market share with its new Android tablets. [1]

Apple continued to dominate the market and even managed to increase its market share from 54% to 68% despite lower sales. Amazon is reportedly working on an newer version of the Kindle Fire and may launch it in Q4 2012 to cash in on the holiday shopping season again.

Going forward, we expect Apple will continue to rake in a majority of the total profits in the tablet market, while Google (NASDAQ:GOOG) and its partners may gain more market share by flooding the market with cheap Android tablets. Microsoft (NASDAQ:MSFT) will enter the tablet space later this year with Windows 8, further intensifying the competition in the space.

The Kindle hardware accounts for only 3.3% of Amazon’s total value because of razor thin margins. However, Amazon expects to generate increasing amounts of revenue by selling digital content to the Kindle users.

We currently have a $222 Trefis price estimate for Amazon, which stands close to its market price.

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  1. Apple Shines, But Slumping Android Shipments Lead to Disappointing First Quarter for Media Tablets, IDC []
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