Amazon will rake in $136 additional revenue from each Kindle Fire sold, claims study
Given that Amazon sells its Kindle Fire tablet for $199, one could easily presume that the company is not making much money out of its otherwise well-selling device. After all, once the guys at iSuppli gave it the teardown treatment, it became evident that the actual cost of its components exceeds its retail price by a few bucks. However, you might be surprised by the amount of revenue the Kindle Fire is likely to bring straight into Amazon's pockets.
Here is what Ross Sandler, analyst for RBC Capital, said in a research note to clients:
“Kindle Fire unit economics are likely to be more favorable than consensus expectations, based primarily on frequency of digital goods purchases,... Our assumption is that Amazon could sell 3-4 million Kindle Fire units in Q4, and that those units are accretive to company-average operating margin within the first six months of ownership. Our analysis assigns a cumulative lifetime operating income per unit of $136, with a cumulative operating margin of over 20 percent.”
And an additional revenue of $136 per each Amazon Kindle Fire sold is not a bad figure. Most of that money is expected to come from e-books as that is what 80% of Kindle Fire owners are interested in purchasing. According to the analysis, the average Kindle Fire user will purchase five of them each quarter, thus generating revenue of $50 for that period, assuming that each e-book is priced at $10. The rest of the income will come mostly from apps. Out of all the people who participated in the survey, two thirds had purchased at least one of them, and 41 percent said they had purchased three or more. Additional revenue is expected to be collected from video-on-demand services and purchases of physical goods.
source: RBC Capital via AllThingsD
Popular stories
Latest News
Things that are NOT allowed:
To help keep our community safe and free from spam, we apply temporary limits to newly created accounts: