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Analyst Foresees the Obvious: Nexus 7 to Cut into Kindle Fire Sales

The Nexus 7 has been shipping for just over a week now, and early user reports are positive (aside from trying to open the frickin' box). So it should come as no surprise that the Nexus 7 is going to see great sales and that it will likely cut into the sales of the less capable but similarly priced Kindle Fire.

According to one analyst it is a surprise, and it took him a few weeks to quantify it into a report. Cowen analyst Kevin Kopelman, who issued a new forecast today on sales of the Kindle Fire and the Kindle ereader:

Cowen’s Kopelman believes the Kindle Fire could be hurt by the Nexus 7. He lowered his full-year estimate on Kindle Fire sales to 12 million units from a prior forecast of 14 million. He had Amazon selling 4 million Kindle Fire units in 2011, when it launched late in the year.

Kopelman also cut his growth forecast for the Kindle reader to 3 percent from a prior estimate of 30 percent, now calling the estimate "unrealistic." …

He expects Amazon to sell 16.3 million units for the year, up slightly from the 15.9 million it sold in 2011.

What, like this should come as a surprise? Sorry for the tone, folks, but I’m irked by people stating the obvious (while getting paid for it). A superior device will displace an inferior one, causing sales of one to increase while the other dips.  This simple relationship is obvious and well-known.

But in this case it is also wrong.  As I see it, the analyst hasn’t taken into account the more complex situation involving hardware that doesn’t exist yet. I would bet money that this analyst’s prediction will not come true for a simple reason: it doesn’t appear to take into account the fact that Amazon is almost certainly planning a new Kindle Fire as well as 1 or more new Kindles.

Yes, the current Kindle Fire comes up short against the Nexus 7, but the next one won’t. Or the next two; for all we know Amazon might have a couple tablets to show off this fall (perhaps even this summer).

And heck, we don’t even know how the iPad Mini might affect the tablet market. If Apple actually does release a smaller iPad this year all projections go out the window. In fact, I’d say that the tablet market is in such a constant state of flux that any prediction is worth about as much as the paper it’s printed on.


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Syn July 19, 2012 um 10:29 pm

I agree with everything you said. As nice as the Nexus 7 looks. I’m waiting on KF2 myself. I just like Amazon. I like I can borrow books from them once a month.. (useful when your public library is still in the stone ages.) and I like I have Amazon Prime.

Not a big fan actually of the 7" form factor. I have small hands and I’m always hitting the wrong keys. I’m hoping Kf2 will come out with an 8 incher.

Time will tell.

fjtorres July 20, 2012 um 6:29 am

The Nexus is attractive simply because it is a 2012 design competing against 2011 designs. So what happens when Amazon, B&N, Kobo, et al, bring *their* 2012 designss to market?
As for the eink Kindles, they seem to be doing fine if they’re doing 16 milion units for the year. On top of almost the same last year and 8-10 million in 2010. That puts the install base of eink Kindles at well north of 40 million and total Kindle sales over 50 million.
That…is substantial.
A self-sustaining market unto itself.
(And that is without factoring-in the app-based Kindle buyers.)

fjtorres July 20, 2012 um 6:32 am

And of course, from the point of view of Amazon’s Kindle operation, a good portion of those Nexus sales will end up as retro-fitted Kindles anyway so they get the recurring ebook business even if not the hardware sale.
More webpads, mediapads, and tablets out in the wild is hardly a bad thing for Amazon.

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