The Kindle Fire has been getting most of the attention, but it won’t make up the bulk of Amazon’s device sales in 2012, Barclays says in a new research note. The bank estimates that Amazon (NSDQ: AMZN) will sell 15.3 million Kindle Fire tablets (that number includes the rumored 10-inch Kindle tablet to be released next year) and 23.5 million Kindle e-readers next year. Device and resulting content sales, Barclays projects, will hit $9.4 billion for the year.
The bank doesn’t say why it thinks Amazon will sell more e-readers than tablets, but one logical reason is that the e-readers are still cheaper. At $199, the Kindle Fire is a lot cheaper than the iPad, but the $79 Kindle 4 with Special Offers is almost a bargain buy.
Barclays revised its projections upward after seeing the low price points on the Fire and the new e-readers, and joins others who believe Amazon is subsidizing the cost of the Fire. Barclays also believes Amazon will release a 10-inch tablet for $299 in the first quarter of 2012, and will subsidize that one as well. (Sales for that tablet are included in Barclay’s estimates of total tablet sales for 2012.) Due to those subsidies, Barclays says it’s “cautious on Amazon’s margin profile-which is also being pressured by continued geographic expansion, fulfilment center build-outs, and content acquisition related to Prime Instant video-and we believe significant margin expansion is likely pushed even further out.”
Some other projections from the report:
–Amazon will sell 4.5 million tablets in Q42011. (Before the Fire was released, Forrester predicted Amazon would sell three to five million tablets in Q42011 if their price was below $300.)
–Kindle tablet and e-reader devices and media will make up about 14 percent of Amazon’s estimated 2012 revenue, or $9.4 billion (out of an estimated $67 billion).
–Amazon digital media content revenue (e-books, video on demand, apps and MP3s) on mobile devices will eclipse Kindle hardware revenue by the end of 2013.
–Media consumed on the tablet and e-readers will make up about 45 percent of Amazon’s total media revenue (physical and digital) by the end of 2014. Media revenue as a percentage of total Amazon revenue has been declining, Barclays says, but the company believes the tablets and e-readers will “help stabilize–and potentially reaccelerate–growth within Media and could improve overall margins over time.”