Coming on the heels of Friday's story on how Kindle Fire sales could have fallen dramatically during Q1 2012, based on IDC's shipment data, NPD Group tries to right the ship by writing a piece titled "Shipments Are Not Sales".
The basic theory NPD advances is, predictably enough, that shipments are not sales. And that thus IDC is referring to shipments, and we cannot from there conclude that Kindle Fire sales have plunged as much as was being bandied about on Friday.
NPD is right. Shipments really are not sales. The Kindle Fire can really have sold more than it shipped on Q1 2012. So we can't linearly say that Kindle Fire sold around 0.7 million units during Q1 2012 (I myself did not estimate this, because the number really seemed too low). And indeed, NPD puts its estimate for sales at 1.8 million Kindle Fire units.
However, bear with me for a minute:
- First, sales cannot exceed shipments in aggregate, so if we're saying sales were better than what was being said about Q1 2012, then we're also saying that they were worse than what was being said about Q4 2011;
- Second, 1.8 million in Kindle Fire sales is also a plunge from the sales the quarter before. Even using NPD's lower Q4 2011 estimates, that's a 52.5% plunge. So we can still talk about a plunge in sales. Not a 75%-80% plunge, but a 52.5% plunge nonetheless. That compares to a -22% seasonal variation for an iPad that was about to see the New iPad coming out.
- Third, the iPad shipments are counted at 11.8 million on the quarter, the same as sales. So at the very least the plunge in sales surprised Amazon.com during Q4 2011 and Q1 2012;
- And finally, NPD somehow twists a smaller plunge in sales - a plunge still well beyond the expectations of the market, or of Amazon.com (AMZN) - into "a pretty good second quarter of sales results". That about sums it up. NPD wanted to conclude this, even if the numbers didn't bear it out - which they didn't, as selling 1.8 million Kindle fires or a 52.5% drop in sales was not what the market expected.
NPD does its best to re-interpret history and paint as good a picture of Kindle sales as it can. In the process, it downgrades sales in the past to be able to conclude that sales during Q1 2012 were higher than what was being bandied about in the press on Friday.
With this, NPD wants to conclude that there was no collapse in Kindle Fire sales. For all its efforts, even NPD estimates 1.8 million Kindle Fire sales and thus, a 52.5% drop from the quarter before. A 52.5% drop in sales, even for a seasonally unfavorable quarter, is still a collapse in sales.
Disclosure: I am short AMZN.