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Author: stevenjklein Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 203077  
Subject: Some random thoughts on the Kindle Fire Date: 11/8/2011 11:29 PM
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I hope you'll find these comments insightful; forgive the haphazard presentation.

I think Amazon has a great shot at success, if for no other reason than price. They'll sell a ton of Fire tablets, and then (they hope) sell lots of content locked to their platform.

Note that lots of reporters have written that the Fire is an Android tablet, but Amazon never describes it that way. Yes, their OS started with the Android source code, but Amazon hasn't licensed the Android name, meaning they aren't beholden to Google in any way. (Official Android licensees are required to install certain Google apps and services if they want to use the Android name.)

We all know the razors and blades analogy. Consider:
Razors = Tablets
Blades = Content (books, music, video, and apps)

Amazon is selling razors near (or below?) cost, in hopes of eventually making up the difference by selling lots of blades.

Apple sells blades near cost to make their highly profitable razors all the more attractive.

The big difference is that Apple gets profits now, and more profits later. Meanwhile, Amazon is taking a huge hit right now, in the hope of more profits later.

I don't think Amazon is wrong; I think they have no choice. If your business is selling blades, you'd better also be making razors! In a marketplace where products are delivered electronically, Amazon must provide consumers a reason to buy from Amazon, and Kindle Fire provides that reason. (What else could they do? Hope to compete against Apple on Apple's own platform?)

I will be very surprised if, two years from now, anybody besides Apple or Amazon has 20% of the tablet market.

Also, don't expect Amazon to win any corporate converts. Sure, corporations might love to get their hands on a $200 tablet, but since businesses are unlikely to buy lots of music, movies, and books, Amazon wouldn't likely benefit from such sales. I expect they'll do whatever they can to actually thwart corporate sales. They could simply limit sales to 1 or 2 per customer. (Though they aren't doing that right now; I just added 999 Kindle Fires to my cart, and I didn't get an error message. Since I don't have $198,801.00, and don't actually want even 1 Kindle, I removed them from my cart!)
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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 177984 of 203077
Subject: Re: Some random thoughts on the Kindle Fire Date: 11/9/2011 12:06 AM
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(Though they aren't doing that right now; I just added 999 Kindle Fires to my cart, and I didn't get an error message. Since I don't have $198,801.00, and don't actually want even 1 Kindle, I removed them from my cart!)

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Author: Philipo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 177985 of 203077
Subject: Re: Some random thoughts on the Kindle Fire Date: 11/9/2011 12:48 AM
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FWIW I ordered one (not 999) and will share my impressions when I get it. It won't be a comparison to iPad since I've had too little time hands on with iPads (and unfortunately haven't won one yet at techie eng seminars ;-)

For me, as an Amazon prime member, Fire should be fun - and perhaps slightly useful (all my tech docs are pdfs these days) yes price and free content made it an easier jump in even knowing an iPad would be more functional and Fire2 (when/if ever) I suppose the same - and both likely 2x+ the Fire's price. Will have to see....
B

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Author: 0gre Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 177988 of 203077
Subject: Re: Some random thoughts on the Kindle Fire Date: 11/9/2011 1:53 AM
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I think at the moment < $300 is a safe place because Apple doesn't have anything near that market. The closer you get to $500 the closer you are to the dangerous "Why not just buy an iPad?" zone where no-one buys your stuff. Two hundred is a casual purchase for people with a fair amount of disposable income, and makes an affordable alternative for those who don't have the disposable income.

We were Amazon Prime members fairly recently and I was encouraging my wife to try it out because I was thinking of ditching netflix. As an alternate to netflix it was a letdown, the selection of current shows was less than Netflix by a fair margin. I have been using them for music purchases because I don't care for the iTunes store (Maybe now that I'm using a newer Mac full time I'll give it another spin). Amazon also owns Audible now, I'm not sure how Apple's audio book library compares.

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Author: platykurtic Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 177991 of 203077
Subject: Re: Some random thoughts on the Kindle Fire Date: 11/9/2011 6:16 AM
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The big difference is that Apple gets profits now, and more profits later. Meanwhile, Amazon is taking a huge hit right now, in the hope of more profits later.
This seems a stretch to me. The better reasoned analyses - those with numbers and stuff based off actually comparable BOMs for similar tablets like the BB - I've seen on Amazon's pricing seems to suggest Amazon is selling at cost or making a slight profit, so I think that a 'huge hit' is unlikely. There was that vague comment in Amazon's earnings release about possible profitability for the coming quarters due to investments but it could have referred to anything and may be setting up AMZN's earnings for a positive surprise if sales are good. More likely is Amazon - like yourself - expect to sell a tonnes of these and have warned in case they get it wrong (in the wrong way) as a prudent manager should.

And B&N Nook tablet - that's on sale very soon for $249 - shows that the price point is very doable. (The B&N Nook tablet has better specs around memory, screen coatings to reduce glare etc.) Heck even Apple's margins suggest Amazon's price point is very doable given the screen size and memory difference.

So in short I'd be surprised if Amazon are taking a 'huge hit' via the pricing assuming they sell moderate or more numbers of these.

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Author: Philipo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 177994 of 203077
Subject: Re: Some random thoughts on the Kindle Fire Date: 11/9/2011 8:40 AM
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"This seems a stretch to me. The better reasoned analyses - those with numbers and stuff based off actually comparable BOMs for similar tablets like the BB - I've seen on Amazon's pricing seems to suggest Amazon is selling at cost or making a slight profit, so I think that a 'huge hit' is unlikely."

I agree....and given the cost of the licensed or sold as their own, sold direct via Amazon, folio type protectors & other accessories that seem like no brainers...well those margins are probably in the 50% range which puts a ~10% profit immediately on unit sales not counting long term attachment sales or strengthening a dependence on their content.
B

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