Amazon's Kindle Fire tablet is reportedly taking a hit over the Christmas period, because of increased competition from the iPad mini.
Pacific Crest analyst Chad Bartley told investors that "Kindle Fire sales this holiday season are shaping up to come in lighter than expected". The analyst cut predicted fourth-quarter Kindle Fire and Kindle Fire HD sales by 25 per cent, down to 6 million units.
And for next year the projection is just 10.5 million units, down from a previous estimate of 12.5 million.
While that's seemingly still a large number of devices sold, it falls far short of Apple's iPad projections. To put it in context, Citi is calling for 23 million iPads sold this quarter, and a whopping 83 million iPads due to be sold in 2013. Apple has sold over 100 million iPads to date.
Given that the Kindle Fire and Kindle Fire HD both attempt to undercut Apple on price, with the expectation that Amazon can forgo profit in the short term, and get a healthy return on selling content on the Kindle ecosystem. The fewer Kindle Fire and Kindle Fire HD devices that Amazon sells, the less likely it is to get a foothold in the tablet space and make a return on its devices.
“This is negative for Amazon’s digital ecosystem,” Bartley wrote in a note to clients on Tuesday evening. “Although weak Kindle Fire demand is potentially positive for profitability, it does imply that Amazon is still struggling to compete against Apple, and may even be seeing competition from Google. This could make it more difficult for Amazon to drive incremental purchases of digital media and physical products over the longer term.”