Dissecting Amazon's Kindle Fire Sales and 22 Percent Market Share Claim

Paul Lilly

Amazon yesterday announced that it had sold out of its Kindle Fire tablet, ending a nine-month run for the popular 7-inch slate. There were two things of note in the press release. First, company founder and CEO, Jeff Bezos, added fuel to speculation that an upgraded second generation Kindle Fire tablet is en route when he said Amazon has "an amazing roadmap ahead." Second, Amazon made the claim that Kindle Fire had captured 22 percent of tablet sales in the U.S. Exactly how many tablets is that, anyway?

Horace Dediu at Asymco crunched the numbers and estimates Amazon must have sold 5 million Kindle Fire tablets in the U.S. He arrived at that number by taking tablet sales claims that Apple and Samsung revealed in recent court filings.

"The iPad added up to 16.14 million units (Q4 2011 through Q2 2012) and the Tab was 540,00 units. That makes the iPad and the Tab add up to about 16.7 million units," Dediu explains. "Assuming an additional 1 million units for the other (non-Kindle) total yields an estimate of 22.7 million tablet devices sold in the nine months ending June. Applying the 22 percent claim to that total gives a Kindle sales total of 4.987 million. That’s awfully close to a round number of 5 million."

It's the best estimate that's out there to date, and if its accurate, Dediu says it's "not an auspicious start for a disruptive product." Due to the device's low price tag, Dediu estimates Amazon lost $40 on each Kindle Fire device it sold (which is probably a high estimation), and with five million units sold, that translates into a $200 million charge.

"Did Amazon earn a profit on content sales of $40 on each of those five million units?," Dediu ponders? "The margins on content sold through Amazon are so low that I have a hard time imagining that Fire users are that ravenous in their consumption."

It's expected Amazon will launch a second generation Kindle Fire at its press event on September 6, 2012.

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