Kindle Fire Sales Estimates, Kindle Fire HD Sales Estimates

Estimating Kindle Fire and Kindle Fire HD sales is an interesting challenge.

Amazon likes to put out constant press releases full of meaningless nonsense – Amazon sold more Kindle Fire HDs than it sold ice cream cones and bubble wrap combined.

These are mostly misdirection. Not to mention a sort of calculated vagueness. To take advantage of the human need to avoid uncertainty and fill it in with guesses and estimates – something which is probably amplified in journalists and stock analysts to the point of borderline madness.

Let’s look at ways to estimate Kindle Fire and Kindle Fire HD sales – both qualitatively and quantitatively.

Kindle Fire Sales Estimates & Kindle Fire HD Sales Estimates based on Reviews

This is actually a very good way to guess. The only missing thing is what ratio we assume exists between Kindle Fires bought and reviews left.

We currently have:

  1. 4,438 reviews left for the Kindle Fire 2. If we assume the usual 1,000: 1 ratio between Sales and Reviews we are talking about 4.4 million Kindle Fire 2s sold. However, the ratio is different for higher priced devices and even higher for devices that create strong likes and dislikes. So a ratio of 500: 1 is more appropriate. That would give us 2.2 million Kindle Fire 2s sold. This seems more like the top end. The Kindle Fire 2 probably sold 1.75 million to 2.2 million units.
  2.  5,537 Kindle Fire HD reviews. Again, let’s go with the 500:1 ratio and that gives us 2.75 million Kindle Fire HDs sold. If we assume that a $199 device would get reviews slightly more often, we end up with a range of 2 million to 2.75 million Kindle Fire HDs sold.
  3. 1,609 Kindle Fire HD 8.9″ reviews suggest that between 500,000 and 800,000 of these were sold. Again, we are assuming that the higher up the price the more likely the purchaser is to leave a review.

This gives us the following estimates – 1.75 million to 2.2 million Kindle Fire 2s were sold; 2 million to 2.75 million Kindle Fire HDs were sold; Half a million to 800,000 Kindle Fire HD 8.9″s were sold.

Total Kindle Fire Sales: Between 4.25 million and 5.75 million.

Reliability of this Method: Close to Zero.

While this method seems absolutely crazy, it’s a really good one in the absence of any hard figures. Anyone who sells books or products through Amazon can confirm it for you. Depending on your price and quality you will see 1 review per 250 sales to 1 review per 1,000 sales.

Kindle Fire Sales Estimates & Kindle Fire HD Sales Estimates based on Browsing Share Among Tablets

This is actually the absolute worst method. Why?

  1. Different Tablets are used in different ways and bought for different reasons.
  2. Different Tablets vary wildly in how good they are for browsing.
  3. Measuring Browser Share among Tablets based on one company’s figures (even if it is an advertising company) is very vulnerable to pre-selection bias. The networks usually pre-select users in ways that tilt it towards different devices.

That being said, a recent survey by Chitika showed that for every 100 iPad impressions there were 4.88 Kindle Fire impressions.

If we assume this study is right, and if we assume that iPad users are twice as likely to use the iPad for browsing, then we get that for every 100 iPads sold there have been 9.76 Kindle Fires sold.

Total iPad Sales to Date – Perhaps around 112 million iPads sold.

Total Kindle Fire Sales to Date – Perhaps around 10.9 million.

Since we know neither Kindle Fire sales figures, nor Kindle Fire 2 sales figures, it becomes an exercise in futility. So, let’s just assume that the sales are split as either 5.9 million and 5 million OR as 6.9 million and 4 million.

Which gives us: Kindle Fire 2 and Kindle Fire HD have sold between 4 million and 5 million units to date.

Reliability of this Method: Zero.

Kindle Fire Sales Estimates based on Various Data Points

Let’s assume (you’ll see a lot of that – baseless assumptions) that Amazon sold 3 million Kindle Fires during last year’s holiday season. That it sold a further 2 million Kindle Fires until the launch of the Kindle Fire 2 and Kindle Fire HD.

Let’s assume that Amazon was ambitious and assumed that it would sell 10 million to 15 million of the new Kindle Fires (as opposed to 5 million of the first Kindle Fire 1 in its first year of existence).

That would give us stock of 5 to 7.5 million for this holiday season. We saw a few things that I personally haven’t seen Amazon do -

  1. A massive $50 off sale on Kindle Fire 2.
  2. A massive $50 off sale on Kindle Fire HD 8.9″.

Amazon has not, to the best of my knowledge, done a big sale on new models. Please keep in mind that these new models are ALREADY at a huge price discount compared to iPads.

So, Amazon must not be meeting its sales projections, for it to take such drastic measures.

Finally, let’s add-on the fact that WalMart and Target stopped stocking Kindle Fires this year – right before Holiday Season.

All of this suggests that Amazon probably was not meeting its sales goals of 5 million to 7.5 million Kindle Fires this holiday season and had to do special promotions to get closer.

Which gives us: 3 million to 4 million Kindle Fire 2s and Kindle Fire HDs sold.

Reliability: Close to Zero. However, a $50 off sale on a device that already undercuts the competition by around $200 is very, very telling.

B&N did lots of $20 off sales on its $269 Nook HD+ and also did a $70 off sale at Staples for one day. Combine this with the rumors that iPad Mini cut into iPad sales. We add these data-points to the Kindle Fire fire sales and we get a picture of a Tablet world dominated by iPad Minis. A scenario that hurts everyone (including Apple, since iPad Minis perhaps make 1/4th the per-unit profit of the iPhone and 1/2 the per-unit profit of the iPad (estimates)).

Kindle Fire Sales Estimates, Kindle Fire HD Sales Estimates based on Google Traffic Trends

Right off the bat let’s point out that interest doesn’t indicate intent, and intent doesn’t indicate a sale. Additionally, users would also have been searching for other gifts (instead of Tablets) and for Tablet comparisons.

So, even if Tablet 1 sees as many searches as Tablet 2, it might sell far less if Tablet 2 comes across as a much better choice.

Here are data points from a few searches:

  1. If we compare ‘kindle’ with ‘kindle fire’ with ‘ipad’ with ‘ipad mini’, we get that iPad Mini interest was around three times that of Kindle Fire interest for most of November 2012. Then it was around 40% more in December (except for 3 or so days when interest was equal). iPad interest was a steady 4 to 5 times that of Kindle interest. Nook interest was 40% to 60% that of Kindle Fire (which makes sense given that B&N said sales will miss projections). Note: Comparing 2 letter keywords with 1 letter keywords is VERY inefficient. So anyone who compares ‘kindle’ searches with ‘ipad mini’ searches, their analysis should be taken with a pinch of salt (as should this post).
  2. The Chart comparing ‘Kindle Fire’ and ‘iPad Mini’ searches is very telling. Apart from Christmas Day, and one or two days in early December (perhaps during the $50 off sale), the interest in iPad Mini is 2 to 3 times the interest in Kindle Fire in November and 1.75 to 2 times in December. Combine this with iPad having 4 to 5 times the amount of interest Kindle has, and we can derive some interesting conclusions.

If we assume iPad Mini sold 2 times Kindle Fire we’d get figures like 15 million iPad Mini sales and 7.5 million Kindle Fire sales. However, we also have to factor in 4 times more interest in iPad than in Kindle.

That suggests we might have a 3:1 ratio between iPad Mini sales and Kindle Fire sales.

Which gives us: 5 million Kindle Fire sales (assuming 15 million iPad Mini sales).

Reliability: Close to Zero.

Why is it that all methods give us a range of 4 million to 5 million Kindle Fires sold?

Here are our estimates -

  1. Reviews – 4.25 million to 5.75 million Kindle Fires and Kindle Fire HDs sold.
  2. Tablet Browser Share – 4 million to 5 million Kindle Fires and Kindle Fire HDs sold.
  3. Various Data Points like Firesales – 3 million to 4 million Kindle Fires and Kindle Fire HDs sold.
  4. Google Traffic Trends: 5 million Kindle Fires sold.

If we throw out (or average out) the two outlier ranges (5 million to 5.75 million; 3 million to 4 million) we get an extremely tight range – 4 million to 5 million Kindle Fires and Kindle Fire HDs sold so far. With the highest likelihood being a figure of around 4.7 million.

Kindle Fire and Kindle Fire HD Sales Estimates: 4 million to 5 million devices.

Most Probable Figure for Kindle Fire and Kindle Fire HD Sales: 4.7 million.

Reliability: Close to Zero. However, all these methods giving us such a tight range (3 million to 5.75 million) increases our chances of being right from 5% to 20%. They suggest that Amazon did indeed sell around 4.7 million Kindle Fires and Kindle Fire HDs.

What does 1 million Kindles a week really mean?

Amazon’s latest Press Release about Kindle Fire and other Kindle sales includes:

  1. This Headline: Customers purchasing Kindles at rate of more than 1 million per week for 3rd straight week.
  2. This line: … for the third week in a row, customers are purchasing well over 1 million Kindle devices per week, …
  3. This: … we’ve already sold millions of units (of Kindle Fire), and we’re building millions more to meet the high demand …

This ‘1 million Kindles sold per week’ data-point is the most revealing information Amazon has ever shared about Kindle sales. Let’s parse it:

  1. It suggests that Amazon never had a ‘1 million Kindles sold in a week’ week before. Perhaps it did and just didn’t want to talk about it (we’ll see below why that’s unlikely).
  2. It suggests Kindle Fire sales are not eating into eInk Kindle sales much. Amazon even alludes to this by saying that many people are buying both a Kindle Fire and a Kindle Touch.
  3. When Amazon says ‘millions of units’ it usually means 1 or 2 million. This suggests over 2 million Kindle Fires have already been sold and another few million are being made.
  4. One million Kindles a week is most interesting. If we assume sales are split as: 50% for Kindle Fire, 15% for Kindle Touch, 15% for Kindle 3, and 20% for Kindle 4. Then we get: 500K Kindle Fires sold per week, 150K Kindle Touches sold per week, 150K Kindle 3s sold per week, 200K Kindle 4s sold per week.
  5. Most importantly, it suggests that perhaps Amazon has seen the recent attacks on the Kindle Fire affect sales. Perhaps it is trying to create social proof to ensure that Kindle Fire sales in the two most critical weeks of the year are good. Buy the Kindle Fire – Millions of people a week can’t be wrong.

That last item is the one that’s most interesting. The Creation and Preservation of Social Proof.

Social Proof vs Revealing Too Much

Amazon’s defence for not revealing actual Kindle sales has been that ‘it would reveal too much to the competition’. That’s amusing coming from a publicly traded company that reveals literally everything about its finances every 3 months.

  • The real reason is probably that it knew it needed Social Proof. You need to be able to tell people that other people are buying something – so people feel secure in the knowledge that they won’t make a mistake and be left all on their own. You don’t want to be one of the 237 people who bought a $399 eReader and then found it was terrible.
  • This ‘human need for Social Proof’ presents a huge problem to Amazon. It can’t exactly get ‘millions of Kindle 1 sales’ when the Kindle is a new experiment. Hence the culture of secrecy and the focus on ‘stock being sold out’ and other such things. No real numbers because telling people they can join the 127,000 people who bought Kindle 1 or the 22,000 people who bought Kindle DX would be the kiss of death. Especially when other devices have tens of millions of users. There is security in numbers – not to mention economies of scale.
  • When Kindle sales finally did hit the million mark, Amazon milked it well. Using phrases like ‘millions of Kindles’ Amazon made the most of what it had to work with. Contrast the difference: 1.04 million Kindles sold Vs ‘millions of Kindles sold’. It also ignites another powerful effect – curiosity. Lots of journalists wrote articles estimating Kindle sales. In conclusion – there were very good reasons for Amazon to not reveal that it was selling a moderately impressive number of Kindles.
  • Suddenly, Amazon has jumped to ‘1 million Kindles being sold a week’. Surely, this is the most revealing figure of all. First, Amazon claimed that revealing sales figures is a danger – Now, it’s telling us exactly how many Kindles have been sold every week for the last three weeks. How does that make any sense?
  • The real reason Amazon is shouting out Kindle sales figures from the rooftops is that people will be making their Christmas gift decisions this week and next. Being reminded that they join the ranks of ‘1 million Kindle buyers a week’ is very reassuring.

Kindle Fire is not affecting iPad sales at all

This is what I think of the assertion that Kindle Fire is not affecting iPad sales at all:

  1. If there are people who buy the iPad primarily for reading, and we know there are (anecdotally), then it’s a reasonable assumption that there are people who consider an iPad and choose Kindle Fire instead. Perhaps it’s not a huge number – however, it’s larger than zero.
  2. If there are people who buy the iPad primarily as a toy, and have no idea what actual value it’ll provide, then it’s a reasonable assumption that some of those people will also consider a Kindle Fire. You could argue about the size of the intersection between ‘Interested in iPad’ and ‘Interested in Kindle’ – However, you cannot deny the intersection exists. Nor can you claim that all decisions made in the intersection will result in an iPad sale.
  3. We can extend this to numerous dimensions – a device to entertain kids, a device for watching movies, a device to use as a glorified coffee table book, a couch partner, etc. For most of those uses, the Kindle Fire worms its way into the equation. Annoying, far too cheap, not sophisticated enough – but very much present. 

If there are 1 million things you can use the iPad for, 900,000 of those the Kindle Fire can be used for. This is the key thing that iPad apologists don’t understand. It’s impossible for Kindle Fire to not affect iPad sales in some way.

Would those 500,000 people a week have bought no Tablet

Let’s assume that 50% of the ‘1 million Kindle sales a week’ are Kindle Fires. What would those people have done if Kindle Fire didn’t exist?

  1. Perhaps 50,000 would have bought an eInk Kindle instead.
  2. Perhaps 100,000 would have bought a Nook Color or Nook Tablet instead.
  3. Perhaps 100,000 would have bought a different Android Tablet.
  4. That still leaves 250,000 people a week. That’s over 1 million people a month.
  5. We can’t guarantee that those 1 million+ people would have bought an iPad. However, neither can we guarantee that those 1 million+ people would have not bought an iPad.

There’s something fundamentally wrong with the assertion that ‘Kindle Fire will not affect iPad sales at all’. By the very virtue of its existence, the Kindle Fire changes things. It’s one more option. Because it’s just at $199 it might even affect people who would never consider a $199 Tablet – They start wondering whether paying 2.5 times is worth it. It definitely affects people for whom $499 is a stretch. It definitely affects people who can’t afford $199 – which means they are not left coveting a $499 Tablet and that in itself reduces the value of the iPad as a status symbol. Now the 99% have Tablets and the 1% must go back to buying ponies and Chanel.

It’s the War of Perceptions

Different companies fight the War of Perceptions in different ways:

  1. Apple is strong in iPads so it reveals real sales figures. It is weak in the worldwide PC market so, instead of talking about less than 10% marketshare, it talks about ‘fastest market share growth’ or about iPad+PC combined sales.
  2. Amazon used to be weak (relatively) in Kindle sales, so it was vague and talked about ‘millions of Kindles sold in 3 blue moons’ and ‘the importance of keeping sales figures private’. Do keep in mind that the smartest people are the best at fooling themselves into believing ridiculous things. Now Kindle sales are strong so Amazon talks about 1 million Kindle sales a week.

The 3 big things ‘1 million Kindles sold a week’ really signifies are:

  • Kindle Fire is gathering up customers that would have gone to the iPad and Nook Color.
  • Kindles are now selling well enough that Amazon is on the verge of revealing real numbers. Perhaps by end 2012 we will get precise sales figures.
  • The Kindle Fire experiment is a success so far. The low-price Tablet market now has multiple successes (Nook Color, Kindle Fire, perhaps Nook Tablet) and will grow and might even become 80% of the Tablet Market. This third item is the most significant – The $499 Tablet is going to be outsold by $200 and $250 Tablets (sooner or later, perhaps sooner than the experts think).

Amazon has conclusively shown that both its argument that ‘Sales Figures have to be hidden’ and Apple’s claim that ‘iPad sales will not be affected by Kindle Fire’ are utter nonsense. It’s all spin and influence and it works very well until your position changes and then its more beneficial for you to spin the story differently.

Kindle Fire Cost vs Price, 6 million Kindle Fires might sell in 2011

The Kindle Fire has taken people by storm -

  1. Journalists are stunned that it isn’t identical to the $500 iPad 2. Oh Lords, why is this $199 Tablet not identical to our beloved $499 God of All Devices?
  2. Kindle Fire owners have decided to drive normal Kindle owners crazy by taking over the Kindle forums and asking all sorts of wondrous questions – Why does my Kindle Fire not transform into an eInk Reader in sunshine? Is it because I was a bad girl and Santa has no presents for me this Christmas?
  3. Apple people are quaking in their boots AKA pretending aesthetic superiority. Yes Dorian, I do realize it is incredibly cheap but it’s not really the sort of device I would carry with me to the Society Ball.

Perhaps the worst affected are analysts of all stripes and colors. Let’s consider two examples.

Apparently, now there might be 6 million Kindle Fires sold in 2011

Here’s how analysts’ opinions have varied over the last 3 to 4 weeks -

  1. 4 weeks ago: Might I add, there is absolutely no market for a non-iPad Tablet. Amazon will just be the latest tragic debutante.
  2. 3 weeks ago: $199? It is appalling how shamelessly Amazon competes on price. It doesn’t realize the importance of being earnest and overpriced? Let’s project 3 millions Kindle Fire sales – just to be on the safe side.
  3. 2 weeks ago: By Jove, it’s selling like those scandalous gossip rags. We will have to raise our estimates to 4 million. Of course, thy iPad shall not be affected for it is more than just a Tablet, it is a delight and a true gentleman would never stoop to a $199 Tablet.
  4. 1 week ago: Lord Ashby, this is rather discomfiting. This Fire thingie keeps on selling. Let me call for my carriage and go check the neighbourhood GoodPurchase to see what it looks like. Also, increase my estimates to 5 million. I would not wish to look like a fool if this sells well.
  5. Today: This thing keeps selling and selling. Tell the Evening Rags that my estimates are now 6 million Kindle Fires. And bring me some tea and strumpets … I mean tea and crumpets.

Here we have (via CNET, via Teleread) analyst Shim’s shimmering estimate (shimmering as it rushes in to replace yesterday’s estimate and gets pushed out by tomorrow’s estimate) -

“Our supply chain numbers are up to 6 million now,” Richard Shim, an analyst at DisplaySearch, said in a phone interview Friday.

Shim said the timeline for manufacturer build plans was originally at 4 million units. “Shortly after preorders they upped it to 5 [million],” Shim said. “Then, about a week and a half ago as they were getting closer to the actual launch date, they upped it to 6 [million].”

6 million Kindle Fires. But, Lord Shim of Analystshire, there was no tablet market – only an iPad market. Where has this magical and contradictory Tablet market appeared from?

Meanwhile we have the Sir Complain-A-Lots droning on -

A $199 Tablet couldn’t possibly affect sales of a $499 tablet. It’s just money. Would you exchange $300 for the feeling of aesthetic superiority and the additional deep meaning it gives your life?

I don’t like the shape of the Enter button. Did you notice that the Enter button is almost perfectly square when it should have triangular-quadratic edges that fill eyes with happiness and the nectar of the gods?

Apparently, not even 1 out of the 6 million people buying a Kindle Fire considered an iPad. And there will be no effect whatsoever on iPad sales.

Amazon is losing $2.70 on Kindle Fire sales … if you assume Fire went straight from Mr. Bezos’ imagination to a factory in China and then was teleported to customers

The mainstream press seem intent to pretend that Kindle Fire isn’t a bargain.

The latest example is how pretend-analysts are estimating how much Amazon is losing on each Tablet sold.

iSuppli did a rather neat break-down of how much Kindle Fire components cost and what it would cost to put them together into a Kindle Fire. Their answers were -

  1. Cost of components: $185.60.
  2. Cost after adding in manufacturing costs: $201.70.

Naturally, pretend-analysts jumped at this figure and assumed this means Amazon loses $2.70 per Kindle Fire.

Not so fast, dear pretend-analysts. We forget a few small things -

  1. Design Costs. There was a design process involving people on salaries.
  2. Software Costs. The code didn’t exactly write itself. Someone probably spent a lot of time figuring out how to make the Carousel super-embarassing. Let’s not just limit it to showing the last inappropriate book they read, let’s throw in the last few sketchy websites they visited too.
  3. Marketing Costs. Amazon has been doing a lot of marketing. Even space on the website is space that could be used elsewhere (opportunity cost).
  4. Shipping Costs for getting Kindle Fire from the factory to Amazon warehouses. No, there weren’t a bunch of Shipping Companies offering Amazon free 2-day shipping on the Kindle Fire. No, the storks didn’t deliver Kindle Fires to Amazon warehouses either.
  5. Commissions. Lots of people, such as brick and mortar stores and websites (including this website), get a cut from Kindle Fire Sales.

My rough estimate would be (averaged over all Kindle Fires, assuming 15 million sold for the first generation Fire): $2 in Design costs, $4 in Software Costs, $3 in Marketing costs, $2 in Shipping Costs, and $3 in Commissions (probably more if you consider what brick and mortar stores get).

That’s $14. There are probably other items we missed so let’s make it $17.

Of course, now we get the interesting costs that no one ever considers -

  1. Customer Service.
  2. Returns.
  3. Faulty units.

Those probably add $5 per Kindle Fire sold (remember – customer service is over the lifetime of the device). It might go up if Amazon doesn’t fix the bugs quickly.

We get a total of $22. We probably missed a few things so let’s say the range is $22 to $28.30.

Kindle Fire Cost to Amazon is probably $223.70 to $230 per Kindle Fire. We’ve been pretty conservative and it might be more. Additionally, things like lots of returns would increase costs drastically.

Why is Amazon still selling them for $199?

Firstly, it doesn’t have a choice. It can’t let B&N tie up the low-price, high-quality Tablet Market.

Secondly, it thinks (quite rightly) that it can more than make up the loss over time.

So, we shouldn’t worry too much about the loss-leader $199 price of Kindle Fire. Amazon will make back the $23 to $31 it is losing – over time.

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