Did Amazon fudge Kindle Fire numbers?

The current model of the e-reader just sold out, and a market share claim causes controversy.

By Minyanville.com Aug 30, 2012 2:04PM
Amazon.com logo copyright Spencer Platt, Getty ImagesAmazon.com (AMZN) just bid an official goodbye to the Kindle Fire, which made history as one of the first Google (GOOG) Android tablets to actually make a dent in the market.

According to Amazon, the Kindle Fire accounted for 22% of tablet sales in the U.S. during its time on the market. This number is causing some controversy in the financial Twitosphere as it seems awfully high, so I decided to investigate. 

I hit Amazon up with a phone call, email, and Tweet. They haven't gotten back to me, so I took a stab at figuring it out myself. 

One thing to remember is that while Apple (AAPL) faithfully reports iPad sales numbers each quarter, Amazon does not do the same for the Kindle Fire. That makes this exercise a little bit tough. 

I took a look at estimates from IDC, which help out quite a bit. During Q4 of 2011 (when the Kindle Fire debuted), Amazon sold 4.8 million units, enough to take 16.8% of the global tablet market. In Q1, IDC reported that Amazon's market share fell to just over 4%, which implies sales of about 700,000. For Q2, sales were 1.25 million, for about 5% of the global market.

Using my own brand of magic seventh-grade math, I figured out that during the three quarters for which we have Kindle Fire sales estimates, it had 9.6% of the global market. Note, however, that this number does not include July or August, for which there are no numbers.

Now remember this: The Kindle Fire was a U.S.-only product. Therefore, its global market share will be significantly lower than its U.S. market share. It is reasonable to assume that U.S. market share was significantly higher than 9.6%, putting that 22% number within reach.

Comscore (SCOR) said in April that the Kindle Fire had more than half the U.S. Android market, which is probably enough to get to a 22% total market share number, if we assume that Android market share was about 40% of the U.S. market during this time period.

So I'll have to put my pitchfork down -- for now it looks like Amazon is telling the truth. 

Enough about the past, let's look towards the future. Amazon is holding a press event on Sept. 6, and in all likelihood, it's going to introduce the next edition of the Kindle Fire. However, that model will likely face an uphill battle in the marketplace.

Google's Nexus 7, released in July, makes for an awfully tough competitor in the bargain-bin category in which the Kindle Fire competes. It is extremely well-outfitted for its $199 price and very well reviewed. Google even pushed the Nexus 7 on Google.com in recent days, the same way Amazon pushes the Kindle family on Amazon.com.

And of course, if the mythical iPad Mini ever comes out (I have my doubts), all bets are off for low-priced tablets like Google's and Amazon's.

As for the Microsoft (MSFT) Surface tablet, it likely won't impact the Kindle Fire 2 unless it hits the widely-rumored-but-unlikely $199 price point. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

More from Minyanville


5Comments
Aug 30, 2012 4:34PM
avatar
I have a Kindle Fire. I got it because it was affordable and did a lot of the basics online. An iPad was just out of my reach financially. I think a lot of people like the iPad, but feel that they are much too expensive.
Aug 30, 2012 5:08PM
avatar
I have a Kindle Fire , so now we are up to two!
Aug 31, 2012 9:07AM
avatar
Amazon is more secretive than Apple, So I would say they do have something to hide.
Aug 30, 2012 7:55PM
avatar
The Kindle Touch 3G also went "Unavailable with no restocking date" about 2 weeks ago.  My suspicion is that it is being replaced by a 4G version.  Maybe it is being announced next week too.
Aug 30, 2012 5:18PM
avatar
I think companies are fudging #'s on a lot of products.Can't see gigantic sales on anything right now with the economy in the tank. Unless the # 0f 1% has increased that much.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

113
113 rated 1
268
268 rated 2
422
422 rated 3
632
632 rated 4
512
512 rated 5
518
518 rated 6
682
682 rated 7
523
523 rated 8
343
343 rated 9
124
124 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
KOGKODIAK OIL & GAS Corp10
COPCONOCOPHILLIPS9
TAT&T Inc9
DVNDEVON ENERGY CORPORATION9
EOGEOG RESOURCES Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.