Amazon Under Pressure To Relight The Fire

| About:, Inc. (AMZN)

According to the technology press, Amazon (NASDAQ:AMZN) is under enormous and increasing pressure to relight its Kindle and Kindle Fire.

After a big Christmas, the Fire is slowing down. IDC says Fire sales tanked in the last quarter. The idea that regular Kindle sales are also declining gets evidence from a CNET story that the device (with ads) is now available for just $49.

Maybe, then, it's no coincidence that Amazon is firing up the Kindle rumor mill:

  • Amazon will soon have an ad-supported version of the Fire. Ads are supposedly being hawked for $600,000, which could provide a big subsidy.

  • The new Fire will sport a 10-inch screen, making video much more attractive.

  • A front-lit version of the monochrome Kindle will also be released in July, probably at prices similar to those announced last year.

Meanwhile, Amazon is busy loading existing owners with bargains, like the "Harry Potter" books, coming soon to the Kindle's own lending library.

While some analysts say all this means is that the company is shifting gears, it sounds to me more like doubling-down.

A twice-yearly upgrade cycle is becoming standard in the mobile space in order to take advantage of the latest advances from suppliers. Adding free content adds value to the device. Users seem not to have objected to ads on the $79 device, so bringing that strategy to the $199 device (perhaps making it a $159 device) makes sense.

It seems unlikely that Waterstones would make a deal to offer a device that is about to be discontinued, just nine months after its CEO hit out at Amazon as being "utterly ruthless."

One more point. By all accounts, Amazon had a very good quarter ending in March. This happened just as Kindle and Fire sales were said to be tanking.

This company is not in trouble.

Disclosure: I am long AMZN.