Kindle Fire Burns Amazons Profits
Amazon have seen their profits hit by their recent efforts to launch a tablet computer, with a reported 73% drop in their profits for Q3 2011 following a huge investment process into the Amazon Kindle Fire.
The Seattle (USA) based company, who are best-known for their highly successful multinational online retailing service, reported that their third quarter net income was $63m (£40m), compared to the $231m (£144m) recorded in Q3 2010.
While shares for Amazon had dropped 12% shortly after the announcement, the company are said to not be worried by current events, as their year-on-year sales increase levels hit 44%, also claiming that their Amazon Kindle e-book device took in a ’biggest order day ever’ when the Kindle Fire tablet was revealed on 28 September.
The Kindle Fire, which will be released in America on 15 November at a price of $199 ($300 less than Apple’s iPad), features a seven-inch screen and a customised edition of the Google Android operating system, linking to key Amazon websites for quick and easy access to the online store along with the chance to purchase tablet ‘apps’.
Jeff Bezos, founder and CEO of Amazon, reported his company’s current situation, stating: “September 28th was the biggest order day ever for Kindle, even bigger than previous holiday peak days - we introduced Kindle Fire for $199, Kindle Touch 3G for $149, Kindle Touch for $99, and our all-new Kindle for only $79. In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we’re seeing with Kindle Fire pre-orders, we’re increasing capacity and building millions more than we’d already planned.”
While researchers at the company predict an even higher net sales figure for Q4, they have added that operational income in the next three months will be down by as much as 142% while it prepares the Kindle Fire for its launch date. Will the planned success of the much-anticipated product be able to justify their investment?
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