Amazon Reduces Kindle Fire HD Price After Losing Market Share (AMZN)
During the second quarter of 2012, Amazon (NASDAQ: AMZN) celebrated an important win against its competitors.
The online retail giant overtook Acer, Asus and many others to become the third most successful tablet manufacturer. According to IDC, Amazon gained five percent of the market after selling 1.2 million units that quarter.
Sales of the Kindle Fire were only exceeded by Apple's (NASDAQ: AAPL) iPad and Samsung's (OTC: SSNLF) collection of Galaxy tablets. While five percent may not sound like much, it was an enormous step forward for Amazon, who was new to the tablet market at the time.
This year, IDC's numbers painted a different picture for Amazon. When the market intelligence firm published its Q2 2013 report on tablet sales, Amazon was mysteriously absent. IDC told AllThingsD that Amazon was not mentioned in the report because it fell to sixth place.
While its Q2 2013 sales figures were not provided, it is possible that collective Kindle Fire sales (for the standard, HD and 8.9-inch models) remained constant at 1.2 million units.
Other manufacturers simply sold more:
Image Source: IDC Worldwide Tablet Tracker, August 5, 2013
Without any concrete numbers regarding the Kindle Fire's performance this week, investors may wonder why Amazon decided to lower the price of the seven-inch HD model to $159 -- the same price as the standard-def edition.
Amazon may have lowered the price to increase sales and regain market share. Remember that if competing tablets sell faster than the Kindle Fire, its market share will be diminished even if Amazon's devices continue to perform well at retail. It is also possible that Amazon has implemented this price cut to make way for the next Kindle Fire, which should arrive sometime next month.
This is far from the first Kindle Fire sale, however. The seven-inch tablet and its 8.9-inch big brother have been discounted several times since they were released. Amazon often requires its customers to pay back the discounted amount if they return a Kindle Fire after purchasing it on sale. This return fee only applies to those who purchase the device directly from the company.
Best Buy (NYSE: BBY) and other retailers require no such fee.
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ
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