Photo: AP Images
He uses a number of statistics to prove his point:
- E Ink Holdings, the sole supplier of e-ink screens for the Kindle, told reporters that their major customer (Amazon) ordered too many units in Q4 2011, which made them order “almost nothing from us” in Q1 2012. He also goes through E Ink’s financial reports for the last 12 months, which were shared by DigiTimes.
- iSuppli has estimated that the cost of each e-ink screen is $30.50.
- Amazon’s gross margins in Q1 were 23.95%, much better than a year ago, when they were 22.82%.
Putting all these stats together, he concludes that Kindle fires dropped off a cliff in Q1, and that’s largely responsible for Amazon’s gross margin improvement.
Specifically, he estimates that Amazon was selling around 7 million Kindles per quarter last year. In Q1, he thinks they sold only 1.75 million.
Amazon had no comment on the report, and has never disclosed Kindle sales.
But if true, it suggests that the Kindle Fire may have been a big mistake.
Instead of driving would-be Kindle buyers to spend a bit more on a full-colour tablet with apps from Amazon, it may have driven them to buy iPads — which are much more desirable in a lot of ways, including app selection and hardware.
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