From Seeking Alpha:
Amazon had an amazing run of success with the fifth generation of its Fire tablets, released in fall 2015. Over the next twelve months, it regularly reported doubling sales despite the declines in the overall tablet market. Customers responded extremely well to Amazon’s renewed focus on price and value over top-end specs.
The sixth generation of Fire tablets was expected to be released in Fall 2016. But only one of the three Fire models received a refresh at that time. Despite that, sales appeared at first to be continuing upward. Amazon, as usual, did not disclose actual sales figures for Black Friday Weekend, but it did say that Fire tablet sales were double what they were last year. Fire tablets sales were also helped by the fact that they were marked down for the holidays.
. . . .
Discounts and the Black Friday report left many, including me, optimistic that Amazon would report more growth in its tablet sales for the holiday 2016 period. When it failed to do so, I flagged it as a potential setback for Amazon.
. . . .
And now IDC’s 1Q2017 report is out. And the trend has been confirmed. While Amazon remains one of the better performers in the tablet market, its growth has come to a screeching halt. Amazon sales held steady for the second straight quarter.
That beat Apple’s and Samsung’s performances – beat everyone except Huawei in fact – but marked a substantial shortfall from its prior performance, and also from what its own prior comments had indicated. And with Amazon still commanding less than 10% of the tablet market, it was not really a reflection of hitting any industry ceiling. It simply failed to continue growth.
. . . .
Fire tablet sales are very important to Amazon, but not because of the revenue they generate. They are important because selling a Fire tablet is one of the best ways for Amazon to enmesh a customer firmly in the Amazon Prime ecosystem, either selling or retaining a subscription.
With evidence suggesting that Amazon Prime subscribers buy at least twice what non-Prime subscribers do, and maybe more, off the website, this makes Fire tablets one of Amazon’s most important product categories despite the relatively low sales revenues. More Fire tablets equal more Prime subscribers.
Link to the rest at Seeking Alpha
My guess is people bought big and then didn’t need to buy again a year or two later. All my Kindles work–2010 and on through the 2016 model I got early this year. Once you have one that works fine and is a recent-ish model, for most folks, that’s enough. I haven’t had any of my Kindles malfunction yet, so if something’s working, why do you need more unless you’re a junkie like me. 😀
I didn’t NEED the HD 8in I got this year. My 6 and 7 inchers work fine. But the price made me hit the buy as a birthday present to myself. 😀
But really, it was a luxury/indulgence. I didn’t need it. And anyone with a previous model Kindle/Kindle Fire (bought in the last 3 or so years) likely doesn’t need another.
I hear the Echo is doing REAL well.
The Echo line is doing very well indeed.
So is the streamer line of FireTV and FireTV sticks, soon to be joined by FireTV-based TVs.
Given that pure tablet sales are declining across the board, Apple included, singling out Amazon is a pretty big reach.
Kindle readers are a strategic product for Amazon–the flagship/entry point into the ebook world–but the tablets are more of a tactical product, a target of opportunity, since everything the can be used to buy can be bought and consumed with the other Amazon toys, which are actually optimized for their product lines: audio (Echo), Video & Games (FireTV), ebooks (Kindle).
There is nothing make-or-break about the tablets. And at current price points they probably add very little to the bottom line. They’re mostly about keeping customers safely in the Amazon eco-system. Account control.
If that’s the worst they can dig up Amazon must be in pretty good shape.
Agree with commenter above – seems that Seeking Alpha has some anti-Amazon bias. (Didn’t realize, based on second commenter, that it has 14,000 contributors which can certainly explain it!)
Having said that – I totally disagree with this assumptions of the article. And they ARE assumptions. I don’t know that I’ve ever purchased a SINGLE thing off of Amazon from my (or any other of the 10 or so Fire tablets my family of six has) through the tablet. I’ve been a Prime member since before it was cool (pretty much since the inception when it only amounted to discounted shipping). Owning the Fire or the Kindle has not equated to Prime membership.
I daresay, most of the entire Apple ecosystem members use Amazon and/or are Prime Members – it completely fits their stereotype – yet, they likely do not even own Fire tablets.
The Fire tablet has always been popular because it delivers VALUE – it is as good as an iPad at half the price. Period.
Why else did the Amazon Phone die? THIS VERY SAME ASSUMPTION. That for some reason, we, the consumer, would somehow be driven to buy from Amazon because we use one of their products. We buy from them because they are cheapest, they deliver in two days, and I’m all but guaranteed a return. I can watch Amazon Prime video, on darn nearly literally anything. I don’t need a Fire for that.
Does the gadgets help their sales? No doubt. Why else the Echo, those stupid button pushing things, et al. But does Amazon remotely depend on those gadgets for their sales?
Not at all.
Frankly, the reason the sales of Fires stagnated are, in my opinion, because ALL tablet sales are stagnating – and to top it off, their most recent implementation was relatively lackluster. I bought one – I’ve not been impressed, despite typically finding the Fire to be fantastic.
If they continue to deliver VALUE and performance to their customers, they’ll continue to sell.
Is ‘Seeking Alpha’ trying to outdo the NYTs in their ADS? Crows might become an endangered species for all that Seeking Alpha is going to have to consume.
Amazon Prime members are not like Apple fan boys and girls, they don’t need to run out and buy the latest shiny if their old shiny is still working just fine for them. So unless sales drop to near zero (just for replacement) then Amazon is still ‘growing’.
(I’m really starting to think Seeking Alpha is more fore the ‘day trader’ crowd that need to focus of companies that are a bit more volatile and unstable than Amazon.)
Seeking Alpha is a platform for people to post their opinions positive or negative, rather than an editorially directed publication. There is supposed to be some type of editorial screen, but they advertise having over 14,000 contributors, so the quality of editorial attention is likely limited.
With a p/e ratio of something like 181, anything less than breathtaking revenue growth, margins skyrocketing at some point, and flawless execution raises questions of Amazon’s value as an investment regardless of how fantastic they are at the brand, the business and delivering relevant offers to customers. I’m not finding it surprising that some of these opinion writers are looking around for reasons to be nervous about the assumptions that are implicitly baked into the current price (and additionally some of these writers might be shorting it and pushing negative lines in the hope of benefiting from an attitude shift).
I value Amazon’s brand each year. It’s one of the best executed and most valuable in the world. The business is one of the best that has ever been. That stock price though seems to be imagining utter perfection and runs counter to one of my pet Amazon theories. My theory is that what Jeff Bezos will likely always do with profits is reinvest anything more than a tiny 1-3% margin to grow the business and stay so competitive that no one else can expand into anywhere Amazon has already won.
So on par with any HuffPo piece? That makes more sense. 😉
Funny, I’m writing a little piece of someone that was also turning any profit back into their business or using it to start new businesses here and there. For ‘now’ they aren’t the biggest or most noticed, but there would be notice if they suddenly were no longer there. (Think Amazon and the qig5 (and other booksellers) if Amazon decided to stop selling physical books altogether. 😉 )
Bezos interest is clearly in playing the game, not cashing in tbe chips.
Ah, that explains something there. PG had a piece the other day that quite seriously explained that every Prime member Amazon signs up has to be losing them value. This one says that not seeing growth in Prime subscribers is heading them for disaster.
Seems that Jeff just cannot win, no matter what he does. Oh, that I should encounter such “bad luck!”