Kindle Fire Reviews Not Good - Sell Amazon

Nov.15.11 | About: Amazon.com, Inc. (AMZN)

Several of the hands-on reviews of the much-expected Kindle Fire are turning out poorly. These are just a few of the things being said:

Wired, “Is This Really the Tablet That Everyone’s Talking About?

But everything I describe above accounts for just the first five minutes of Kindle Fire use. The Fire isn’t a dud, but its real-world performance and utility match neither the benchmarks of public expectation, nor the standards set by the world’s best tablets.

Unfortunately, though, the screen isn’t adequately proportioned for magazine content.

Sounds great in theory, but throughout my five days of testing, I found that total web page load times took anywhere from 100 to 300 percent longer on the Fire relative to an iPad 2.

Besides poor load times, the Fire’s browser lurches in fits and starts when swiping through already loaded web pages. And sometimes the browser doesn’t react to touch gestures at all, requiring that oh-so-annoying second tap or swipe instead. Pinching in and out of magnified views is also a test of one’s loyalty — this action looks like choppy stop-motion video on the Fire, whereas on the iPad 2, it’s fluid and seamless.

New York Times, “Fire Aside, Other Kindles Also Shine

Most problematic, though, the Fire does not have anything like the polish or speed of an iPad. You feel that $200 price tag with every swipe of your finger. Animations are sluggish and jerky — even the page turns that you’d think would be the pride of the Kindle team. Taps sometimes don’t register. There are no progress or “wait” indicators, so you frequently don’t know if the machine has even registered your touch commands. The momentum of the animations hasn’t been calculated right, so the whole thing feels ornery.

Magazines are supposed to be among the best new features. Most offer two views. There is Page View, which shows the original magazine layout — but shrunken down too small to read, and zooming is limited. Then there is Text View: simple text on a white background. It’s great for reading, but of course now you’re missing the design and layout, which is half the joy of reading a magazine. And Text View sometimes loses words, cartoon captions and so on.

In practice, it’s not clear what all of that gains you: nytimes.com takes 10 seconds to load, eBay.com takes 17 seconds, Amazon.com takes 8 seconds. The iPad took about half as long each time. On the other hand, the Fire can play Flash videos (if a little jerkily), which the iPad can’t.

The Fire deserves to be a disruptive, gigantic force — it’s a cross between a Kindle and an iPad, a more compact Internet and video viewer at a great price. But at the moment, it needs a lot more polish; if you’re used to an iPad or “real” Android tablet, its software gremlins will drive you nuts.

AP, “Review: Kindle Fire sacrifices to get under $200

Here, the small size of the screen gets in the way. It's just too far from standard page sizes to do them justice. Magazine pages look tiny. Amazon has to jump through some hoops to make them readable, like including a mode that shows just the text. But flicking through a magazine is still a lot of work — and that's one thing that should not be like work.

While we're on the subject of "too small," let's talk about the Fire's memory. It has 8 gigabytes of storage. That's enough for more books than you'll ever read, but ten movies will eat up the whole thing.

The main problems seem to be the smallish screen for magazines, some lack of features, lack of storage, and perhaps the biggest surprise, the web browsing being both bad (due to screen size) and slow. I’ll point out that Amazon (NASDAQ:AMZN) Silk was supposed to provide a much speedier experience in that regard, so that seems to have failed completely. On the positive side, good mention is made of the Kindle’s video-playing abilities.

I had already provided one blog post that compared the Kindle fire to the Nook tablet that BKS is launching almost simultaneously, where, from comparing specs, the conclusion was already in Nook’s favor. These hands-on reviews just seem to expand this conclusion further to the user experience.

This turn of events is very important for Amazon.com’s stock, because the latest hype on this deeply overvalued equity (2011 P/E estimated at 183, using $220 for the share price and the present consensus EPS of $1.20) is based precisely on the Kindle Fire's success, and more than that, on the huge amounts of media that Amazon.com is expected to sell for it, since the device is being sold at breakeven at best.

However, even if the Kindle Fire does sell tens of millions of units during 2012, which is now in question given the poor review, I might also add that such does not guarantee any kind of huge margin expansion, as shown in my article on the supposed razor and blades strategy by Amazon.

So, with the main catalyst Amazon.com had, with earnings and estimates plunging deeply, and with the likely “buy the rumor, sell the news” reaction to today’s Kindle Fire arrival at the market, it seems like it would be advisable to sell Amazon.com here. Especially if one takes into account that JP Morgan just upgraded its price target from $230 to $250 Monday, a seemingly strategic upgrade, and if we remember that they had just revised it lower 2 weeks ago on the apocalyptic earnings release, and nothing new happened since then that could be construed as positive.

Disclosure: I am short AMZN.