Amazon Increases Orders for Kindle Fire (NewsFactor)

Days before the release of its new Kindle Fire tablet next week, Amazon is reportedly upping its initial production run through the end of this year to 5 million units. This is at least the second time the company has increased its order volume, and there are indications that pre-orders for the giant retailer's new product are strong.

Amazon CEO Jeff Bezos mentioned in his last call with analysts that "millions more" of the Fire were being ordered than was originally planned. According to estimates by eDataSource, a digital marketing firm, Amazon took 95,000 orders for the device on the first day of pre-sales in September. While less than a third of the original iPad's first day of sales last year, that level of volume is considered impressive.

2,000 Units Per Hour

Some Web reports, citing internal Amazon inventory documents, have said that the Fire is selling 2,000 units per hour, about 50,000 a day. At that rate, it would outsell the first month of sales for either Apple's iPad or iPad 2.

The Fire, retailing for $199, is scheduled to ship on Tuesday.

Given these sales numbers and increases in volume orders, there is speculation about whether the Fire is a competitor to the continued success of the category-dominating iPad. When the Fire originally was announced, many observers pegged it as an evolutionary step in e-reader development and as focused on competing with Barnes & Noble's Nook, and less as a direct iPad competitor.

But a new survey by consumer shopping site Retrevo indicates that, whether Amazon has intended or not, the Fire may be competing with the iPad for consumer dollars. In October, the site conducted a survey of more than 1,000 people, which showed that 69 percent were interested in buying a tablet this holiday season. Of that 69 percent, 44 percent said they were thinking about buying the Fire instead of the iPad, which starts at $499. About 12 percent chose the iPad, and the other 44 percent said they didn't know enough about the Fire.

Razors, Razorblades

The more Fires that Amazon sells, interestingly enough, the more Amazon loses, at least in the short run. Research firm iSuppli has estimated that the company loses about $20 on every tablet sold. Given Amazon's huge inventory of content -- e-books, movies, music, apps, and more -- the company's strategy is to lose on the razor, make money on the razorblades.

Amazon's ability to make its money on content sales rather than hardware is what distinguishes it from tablet attempts by Research In Motion, Hewlett-Packard, Samsung and others.

This initial Fire model has Wi-Fi but not 3G, no camera or microphone, and only 8 GB of memory. It comes with a 30-day free trial of Amazon Prime, the membership service that includes streaming video, a lending library that includes bestsellers, and free two-day shipping. The company has developed a customized interface for Android, which some observers have described as relatively easy to use.

Source: http://us.rd.yahoo.com/dailynews/rss/personaltech/*http%3A//news.yahoo.com/s/nf/20111110/bs_nf/80949

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