Amazon Kindle Fire Slumping, Company Preparing Refresh

Amazon's first-quarter Kindle Fire sales tanked, but the bookseller is reportedly planning a larger version of the Fire and a midyear 7-inch refresh. However, the iPad remains the top-selling tablet.

Amazon wasn't able to sustain its tablet sales momentum during the first quarter, after bursting onto the scene during the fourth quarter with the introduction of the Kindle Fire. This helped secure the online bookseller the No. 2 spot behind Apple.

Holiday sales present a unique opportunity for most companies, and no manufacturer was immune from a dip in shipments during the first quarter, according to a May 3 report from IDC. However, Amazon's shipments notably fell from nearly 17 percent during the fourth quarter to just above 4 percent during the first.

Samsung, consequently, grabbed the No. 2 spot, pushing Amazon to third place.

Apple, meanwhile, shipped 11.8 million iPads during the recent quarter, down from 15.4 million during the fourth quarter. However, the company still managed, with help from others' losses, to boost its market share from 55 percent to 68 percent.

Although shipments of Android-running tablets were down "sharply" during the quarter, IDC found companies such as Samsung and Lenovo just beginning to gain traction in a packed market.

Lenovo during the quarter grabbed the No. 4 spot behind Amazon, while Barnes & Noble, with its Nook, came in fifth. In total, the industry shipped 17.4 million tablets during the quarter, representing a 120 percent year-over-year growth rate.

"It seems some of the mainstream Android vendors are finally beginning to grasp a fact that Amazon, B&N and Pandigital figured out early on: Namely, to compete in the media tablet market with Apple, they must offer their products at notably lower price points," said IDC Research Director Tom Mainelli, in a statement.

"We expect a new, larger-screened device from Amazon at a typically aggressive price point, and Google will enter the market with an inexpensive, co-branded ASUS tablet designed to compete directly on price with Amazon's Kindle Fire," Mainelli continued.

While Amazon's Fire runs a version of Android that manages to cut out Google, the Asus tablet, added Mainelli, will run a "pure version" of Android.

Amazon, however, appears to have plans to get sales figures back on track.

In a May 2 research note to investors, Canaccord Genuity analyst Bobby Burleson rated stock for Atmel, a company that makes parts related to touch displays, a "buy," explaining that a midyear refresh of the Kindle Fire 7-inch was coming. Additionally, he noted the "likely introduction" of a larger version of the Kindle Fire, as well as the coming ramp-up of tablets running Microsoft Windows 8, paired with a "huge marketing push."

IDC analysts say the impact that Windows 8 tablets€”widely expected to arrive during the fourth quarter€”will have on the market is for now unknown. A critical aspect of their ability to get in the way of Android-running tablets will be pricing, which no one is sharing yet.

What is clear, IDC Program Vice President Bob O'Donnell said in a statement, is that things are at least going to get a lot more exciting.

"The worldwide tablet market is entering a new phase in the second half of 2012 that will undoubtedly reshape the competitive landscape," said O'Donnell. "While Apple will continue to sit comfortably on the top for now, the battle for the next several positions is going to be fierce. Throw in Ultrabooks, the launch of Windows 8, and a few surprise product launches, and you have all the makings of an incredible 2012 holiday shopping season."

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