Amazon Says Kindle Sales Topping 1 Million Devices a Week

By Danielle Kucera - Dec 16, 2011 5:04 AM GMT+0700

Amazon.com Inc. (AMZN), the world’s largest online retailer, said customers have bought about 1 million of its Kindle e-book readers and tablets in each of the past three weeks, the most detailed sales numbers the company has released.

The Kindle Fire tablet, which sells for $199, has been the best-selling product on Amazon.com since its introduction 11 weeks ago, the Seattle-based company said in a statement today. Kindle Fire sales have risen week-over-week for the past three weeks, Amazon said.

The Kindle Fire, which has a 7-inch (18-centimeter) display and runs on Google Inc. (GOOG)’s Android operating system, costs less than half the price of Apple Inc. (AAPL)’s least-expensive iPad tablet. Amazon Chief Executive Officer Jeff Bezos said in October that the company may post a loss in the fourth quarter as it ramps up spending. Operating margin may narrow to 0.79 percent this quarter from 3.66 percent in the year-earlier period, according to the average analyst estimate compiled by Bloomberg.

“They have not talked about numbers at all, so it’s a big deal that they for some reason think they need to disclose metrics now,” said Brian Blair, an analyst at Wedge Partners Corp. in New York. “It’s a part of their strategy to show the strength of it against Apple -- a way to say, ‘we’re a player, and we’re going to start letting you know.’”

Amazon shares jumped 0.6 percent to $181.26 today at the close in New York. The stock is little changed this year.

Content Revenue

While IHS (IHS) Inc. says Amazon is losing money on every $199 tablet it sells, Susquehanna Financial Group LLLP said Nov. 15 that each machine may generate a total of $384 in revenue for the company, including money spent on books, videos and other content.

Estimates for sales have varied. Amazon has raised production of the tablet two or three times since its introduction and will probably sell 5 million to 6 million Kindle Fires by the end of the year, Blair said.

Anthony DiClemente, an analyst at Barclays Plc in New York, said the company may sell 4.5 million tablets in the fourth quarter, while Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco, estimates Amazon will sell 5 million to 6 million units of the device.

After hitting store shelves on Nov. 14, the Kindle Fire has surpassed more established tablets from Samsung Electronics Co. and Barnes & Noble Inc. (BKS) in challenging Apple, which will ship an estimated 18.6 million iPads in the fourth quarter, IHS said. That would give Apple a market share of 66 percent, compared with an estimated 14 percent for Amazon, IHS said. The researcher forecasts overall tablet sales of 28.3 million units this quarter.

“They’re getting traction by selling no-profit hardware,” said Colin Gillis, an analyst at BGC Partners LP in New York. “Bad for margins, but it is giving them some share.”

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net