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Amazon (NASDAQ:AMZN) isn’t a company prone to revealing unit sales for its Kindle line of e-readers and tablets, providing a constant source of consternation for analysts trying to model the e-commerce giant’s financial results.
That hasn’t stopped the analysts from prognosticating based on word of mouth, and the guessing game is reaching a crescendo as the company prepares to unveil its fourth-quarter results Jan. 31 after the bell.
Stifel Nicolaus analyst Jordan Rohan said he was increasing Amazon’s Kindle Fire sales estimates from 5 million to 6 million, leading him to raise Amazon’s Q4 net revenue estimate to $286 million.
“Amazon’s device proliferation strategy has broader implications than most appreciate,” Rohan wrote in a research note Jan. 29. “Tablets, including iPad and Kindle Fire, are rapidly taking share from PCs and notebooks.
“Kindle Fire has staked out an important market position due to its loyal Amazon customer base and attractive (low) device pricing. We believe the lower hardware price will correlate with high e-book and video content attach rates.”
Forget the fact that Amazon is selling tablets that cost $201.70 to build for $199. Rohan said the shift to digital delivery of content could help Amazon avoid free shipping subsidies.
That logic about digital media delivery being a long-term winner jibes with what RBC Capital analyst Ross Sandler claimed last week. Sandler said the Fire could earn the e-commerce giant $136 per device in content sales over its lifetime.
Sandler surveyed 216 Kindle Fire owners and found roughly 80 percent of Fire owners have purchased e-books, with 58 percent of respondents owning up to buying more than three e-books within the first two months of owning the tablet.
Even so, Sandler is only modeling Amazon to sell 3 million to 4 million Fires for Q4. To prop up his 6 million unit sales estimate, Rohan observed is that the Kindle Fire has been a bestseller on Amazon in each week since its introduction Nov. 15. Moreover, Amazon itself said it was building millions of units of Kindles and Kindle Fires.
He also said checks with mobile advertising companies suggest the Kindle Fire is ramping the way that iPad ramped upon its introduction. That jibes with Flurry’s finding; the mobile analytics firm said application usage sessions on the Fire have rivaled that on the Samsung Galaxy Tab.
Amazon’s march on content and services figures to continue in 2012, which is when the company is expected to expand its streaming video service, which is currently pay-per-view, to a subscription service in which it will compete with Netflix.