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Report: Amazon Plans Three New Kindle Fire Tablets

March 27, 2012

Amazon plans three new models of the Kindle Fire, according to a report from the China Economic News Service.

The service, citing reports from suppliers, claims that Amazon plans three new models of its popular tablet: three new models, a low-end 7-inch, 1,024-by-600 model; a midrange, 7-inch model with a higher 1,280-by-800 resolution; and a high-end, 8.9 inch tablet with a 1,920-by-1,200 display.

Hon Hai will join the ranks of ODMs, assembling the 7-inch, 1,024-by-600 low-end model. Qunata will manufacture the others, the report said. Chimei Innolux will supply the 7-inch flat-panel displays, while Prime View will source the 8.9-inch display.

CENS claims that Amazon expanded its partnership with the Tainwan ODM industry, a traditional route to lower costs. The tightly-knit network of suppliers also leaks many tidbits of information, as supplier talks to supplier. In other words, there's reason to believe that the report may be true, although the ODMs may also be disclosing preliminary talks that may not be completely fulfilled via contract.

Amazon sells the Kindle Fire at a loss of between $3 to $18, depending on whether you believe RBC Capital Markets or an In-Stat teardown report. Lowering the costs further could mean that Amazon would recognize some profit on sales of the device, rather than making it up through sales of apps and media.

The reports, if true, would contradict other reports of a ten-inch Kindle Fire that made the rounds earlier this year. But Pacific Crest analyst Chad Bartley also predicted new 7-inch and 9-inch Kindle Fire models in a February report.

Amazon hasn't disclosed how many Kindle Fire tablets the company has sold, but Stifel Nicolaus analyst Jordan Rohan estimated that Amazon sold 4 million during the holiday season.

"Even if Amazon makes no incremental contribution on the sale of the hardware, the fact that the company has used its distribution prowess to define and dominate the low end of the device ecosystem is quite impressive," Rohan continued. "And there is significant strategic value in becoming the third major device ecosystem after iOS and Android. We believe that shows up in both revenues and margins, longer term."

Some investors have been skeptical about Amazon's potential success rate given the hardware costs and the Fire's relatively low $199 price tag. "However, we believe most investors have overlooked the potential upside of the sales of media (books and video) to be played on the new Kindle devices," Rohan wrote. "We believe that software attach rates correlate inversely with the hardware price."



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