Business

After Explosive Debut, Amazon Will Have to Keep Stoking to Keep Fire Hot

Amazon’s Kindle Fire was second in tablet market share only to Apple’s iPad in the fourth quarter of 2011, according to a report from IHS iSuppli.

Amazon didn’t release official sales figures when it reported its quarterly earnings for the end of 2011 recently, but the iSuppli report states the company shipped 3.9 million Kindle Fires during the last three months of 2011. That gave the Android device a 14.3 percent market share of the worldwide tablet market.

The Kindle Fire came in ahead of devices from Samsung and Barnes & Noble, the third and fourth highest sellers in 2011, respectively. Samsung’s tablets took 8 percent of the market in the fourth quarter, a drop from the 11 percent it held during the third quarter, before Amazon launched the Kindle Fire. Samsung held a 9 percent market share on the year.

Apple’s iPad continued to reign as the leader in the space. The Cupertino company shipped 15.4 million iPads in the fourth quarter of 2011, or about quadruple the units Amazon shipped. Apple’s share in the market fell during the fourth quarter, however, holding 57 percent of the market compared to 64 percent in the third quarter.

Devices like the Motorola Xoom and products from Sony, Acer and Lenovo were part of the “other” category that collectively took 12 percent of the tablet market share.

Amazon didn’t return our requests for comment.

Keeping Momentum Going

Even though the iPad’s market share sank in the fourth quarter once the newer Kindle Fire was on shelves, Apple still saw an increase in unit sales between the third and the fourth quarters. The company shipped 15.4 million iPads in the last three months of 2011, compared to 11.1 million in the three months previous, indicating the market overall has room for plenty of competitors.

“The overall tablet market is growing, so even though market share for a leader in the field like Apple might go down, the number of units they’re selling continues to rise,” Gerry Purdy, principal analyst at MobileTrax, told the E-Commerce Times.

Amazon had the advantage of a holiday launch and already had a strong consumer base for its retail goods, but keeping that force alive going forward could be challenging.

“It’s going to be difficult to continue the momentum they saw with that product,” Tim Coulling, an analyst at Canalys, told the E-Commerce Times. “They had a clever launch and a great marketing campaign, but the actual product has let some people down. It’s a bit sluggish and the pace bothers some people, so I think think it’s going to be difficult for them to sustain that business.”

To keep up in the tablet market, Amazon might think about releasing additional products to appeal to a broader range of people, a more difficult proposition for a company that doesn’t have its roots in hardware.

“Releasing other products could be a worry to shareholders, because Amazon’s business model relies on people using Amazon to buy content and make Amazon retail purchases, so the next step for them is looking at the current users and determine whether or not they’re really spending money on Amazon products and seeing if revenue has gone up because of it,” said Coulling.

Market Is Open to All

The Kindle Fire’s arrival on the tablet scene is an indication the scene is still open to new players.

“The market is in its infancy, or maybe a toddler, and there’s still a lot of room for change, which is what this report Amazon’s entry into the market shows,” Rhoda Alexander, senior manager of tablet and monitor research at iSuppli, told the E-Commerce Times. “It had a big affect on the price point, and showed this is a dynamic market where there are options to move forward with Android or other platforms.”

Some platforms have the advantage of selling to customers that are already invested in a brand — Apple with its iTunes or iPhones, and Amazon with its digital and media content available on the Kindle Fire. For other companies to succeed in the growing space, integration with another market that other tablets can’t provide will be essential, according to Purdy.

“Two or three years ago even, you probably wouldn’t have guessed that Amazon was going to be a player in the market, so it shows that there are interesting things going on,” he said.

“Google acquired Motorola, and they’re extremely aggressive and could launch a tablet that makes it easy for people to search,” Purdy added. “RIM’s playbook could come back and appeal to enterprise customers, Sony could do a lot with digital content, and so on. It’s going to be an uphill battle for a lot of companies to get good consideration in the space, but we’re watching a fast-growing market that’s poised for tremendous growth, and that makes it fun.”

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