Investment analyst thinks Kindle Fire cost Apple 1 million iPad sales | Appolicious iPhone and iPad apps

Investment analyst thinks Kindle Fire cost Apple 1 million iPad sales

Jan 4, 2012

The Kindle Fire was a hot item this holiday season. It might have cost Apple quite a few sales that normally would have gone to its iPad tablet.

Amazon’s new kid on the tablet block, which runs Google’s Android operating system, was its top-selling electronic item during the 2011 holiday. We don’t know just how many Kindle Fires Amazon actually sold, because the huge online retailer hasn’t said specifically. We do know that Amazon sold some 4 million Kindle devices (which includes the other versions of its popular e-reader) during the month ahead of Christmas.

According to a new report from Mashable, some of those Kindle Fire sales might have cut into sales that would normally have gone to Apple during this time of year. The 7-inch Kindle Fire is priced pretty competitively, undercutting the cost of Apple’s iPad by $300 ($199 compared to $499 for the cheapest iPad 2), and it’s possible that buyers who normally would have gone for Apple’s premium tablet instead opted for the cheaper, less powerful Fire.

That’s the speculation of investment analyst Tavis McCourt at Morgan Keenan, who put out a note to investors adjusting his predictions for Apple’s first fiscal quarter of 2012 (which is actually October through December 2011). McCourt thinks Apple’s iPad sales will come in below earlier expectations, although he still believes they beat out the quarter ending in September.

McCourt estimates that Apple sold 13 million iPads in the quarter ending in December, which he scaled down from his original estimate of 16 million. He also estimates that 1 million to 2 million of those lost sales went instead to the Kindle Fire. The Fire likely grabbed the market of people who would normally not otherwise buy a tablet because they’re too costly, but also may have cut into Apple’s share of people looking to give tablets as a gift. Given the choice of giving an iPad at $499 or a Kindle Fire at $199, McCourt thinks upwards of a million customers went the cheaper route.

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There’s also the fact that the iPad 2 is nearly at the end of its hardware cycle, with a new iPad announcement expected in the spring (last year, the iPad 2 announcement came in March). With just a few months off before the hardware is refreshed, tech-savvier customers might have sat out the holiday season (or even opted for a cheaper Kindle Fire) while they await the latest and greatest from Apple.

When the Kindle Fire was first announced back in September, it seemed like it and the iPad were in two different classes of the market: the low end and the high end. The Fire is definitely not built to stand against the iPad one-on-one, but it seems Amazon’s gamble on price (and ability to take a slight loss on every Kindle Fire sold) might be paying off if it really is dipping into Apple’s share of the market.

On the other hand, the iPad’s numbers are currently so high, there’s really nowhere for them to go but down as other competitors, like Amazon, find smart ways of fighting back.

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Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

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