Bad News for Amazon Is Good News for Apple


There may be a reason for last week's fire sale on's Kindle Fire.

Maybe they're just not selling.

Pacific Crest analyst Chad Bartley lowered his unit sales target for Amazon's attractively priced tablet yesterday. His supply chain checks show that Amazon is likely to sell just 6 million Kindle Fire devices this holiday quarter, well off the 8 million that he was originally targeting.

Obviously, most companies outside of Apple would kill to move 6 million tablets.

Just last week, Barclays Capital analyst Raimo Lenschow slashed his target of Microsoft's Surface unit sales during the current quarter from 2 million to just 700,000.

Combine both calls -- as unfair an analysis as that may be -- and you're talking about 3.3 million fewer Kindle Fire and Surface tablets being sold this quarter.

Now, shoppers seem to be spending at least as much as they did last year this holiday season, and tablets seem to be high on wish lists.

However, no one really asks for a tablet for Christmas. It's an iPad that they want, and it's what they will probably get.

Don't read into analysts souring on the Kindle Fire and Surface as a global slam on tablets. It seems as if Apple's strategy -- quickly rolling out the fourth generation of its iPad alongside the $329 iPad mini and $399 iPad 2 -- has created enough price points and feature profiles to woo shoppers that could've been swayed by Kindle Fire's low prices.

The silver lining for Amazon is a cruel one. Bartley is lowering his revenue targets for 2012 and 2013 on the downward tablet revision, but he's also propping up next year's profit target from $2.60 a share to $2.70 a share. Since Amazon is widely reported to be selling its tablets at a loss, coming up short in the near-term is a plus for the bottom line.

We'll see how this all plays out. Microsoft and Amazon are unlikely to put out actual tablet unit sales numbers once the holiday quarter is in the rearview mirror, but Apple has no problem opening up every quarter. It's easy to do that when you're winning.

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