Kindle Fire Churns Out Profits

Forbes, Thursday, January 19, 2012 11:42 AM
  • Comment
  • Recommend
Subscribe to Around the Net In Online Marketing

Is Amazon’s Kindle Fire a cash cow? Based a proprietary survey of over 200 Kindle Fire owners, RBC Capital analyst Ross Sandler is suggesting as much. “One high level conclusion is that Kindle Fire unit economics are likely to be more favorable than consensus expectations, based primarily on frequency of digital goods purchases,” he writes in a research note out this week.

“Our assumption is that AMZN could sell 3 to 4 million Kindle Fire units in Q4, and that those units are accretive to company-average operating margin within the first six months of ownership.” As Forbes points out, the study also found that the two most frequent users for the Fire were e-book reading, at 71%, and browsing the Web, at 39%. “Playing game was cited by 29%, and using apps, 20%. Only 13% named streaming video as a most frequent activity,” it notes.

Over 80% of Fire owners have purchased an e-book, according to the research, while 58% had purchased more than three e-books within 15-60 days of buying the Fire. Sandler estimates that customers will by 5 e-books per quarter. As such, Forbes calculates: “At a $10 ASP for the books, he says, that would mean $15 in e-book revenue per quarter.”

 

 

Read the whole story at Forbes »

Be the first to comment on "Kindle Fire Churns Out Profits"

Leave a Comment

Sign in to leave a comment. Don't have an account? Join Now

Recent Around the Net In Online Marketing Articles

>> Around the Net In Online Marketing Archives