Kindle Fire HD Tablet Scores Record Sales Cyber Monday, Says Amazon, But is It Making a Profit?

As consumers rushed to the Internet to take advantage of Cyber Monday deals, Amazon's new Kindle Fire HD tablet was one of the must-have items of the shopping holiday, hitting record sales figures, according to Amazon.

Amazon did not mention a precise figure of how many of the devices it sold.

The shopping event was also a record day for Cyber Monday. Internet sales in general jumped 30.3 percent, making it the biggest online shopping day ever, according to IBM.

Besides the 30.3 percent increase from Cyber Monday of 2011, total online sales were up more than 36 percent from this year's Black Friday, according to International Business Machines Corp, which analyzes transactions from 500 U.S. retailers.

On Cyber Monday, when retailers offered deals online for electronics products and more, online shopping peaked at 11:25 a.m. EST, IBM said. "That timing suggests that shoppers still check out online offers while they are at work, even though more people have high-speed Internet access at home than in prior years," reported Reuters.

Amazon offered the most competitive deal on its Kindle Fire tablet on its own website for Cyber Monday, discounting the device by $30, down to $129 for the shopping holiday; it was the company's most successful Cyber Monday deal ever, the retailer said.

According to Amazon, nine of the top 10 bestselling products on Amazon.com have been Kindles, Kindle accessories, and digital content since the company unveiled the new devices on Sept. 6.

Kindle sales internationally more than doubled during the Thanksgiving shopping weekend compared to the same period in 2011, said Amazon.

Not all of the statistics from Cyber Monday sales are encouraging for Amazon, though. According to IBM's Benchmark survey of Thanksgiving and Black Friday sales, Kindles accounted for only 2.4 percent of purchases made via tablet, fewer than those made by Barnes and Noble's Nook (3.1 percent) and way fewer than the iPad (88.3 percent).

That doesn't bode well for Amazon collecting a profit on the Kindle Fire.

"The value proposition for a retailer is to drive additional sales of their physical goods or to build brand recognition," said Rhoda Alexander, a tech analyst at IHS iSuppli. Amazon sells its entry-level Kindle Fire for $199 and bets users are likely to turn back to Amazon.com when they want to get their hands on the next hot novel.

That strategy, employed by the likes of Barnes & Noble and Amazon to keep prices down, usually includes making little or no profit on the tablets upfront. Companies can always make money later, said Alexander, by introducing tablets with new features in the second generation. The most important part of the puzzle is getting in the ring with the rest of the big boys.

However, no other company has managed to profit from that business model, but Apple, according to Alexander.

Only Apple has shown it can make a profit in this increasingly competitive market. It prices its tablets at a premium and cashes in on the thousands of apps developed for them.

"We want to make money when people use our devices," CEO Jeff Bezos often says, in a remark widely seen as directed at Apple (AAPL), "not when they buy our devices."

Analysts expect tablets to be a top gift this year. Fifteen percent of tablet buyers told the Maritz Research firm that, if given the chance, they would purchase a tablet before buying a computer, smartphone or even a television, making it a potential all-in-one replacement device.

"People coming in at this point are a wide cross section of society. They held back initially to see if it was a fad but are now seeing these devices everywhere they go," said Rhoda Alexander, a tech analyst at IHS iSuppli.

"The rising interest means there are tablets aimed at all segments of the market - from the business-like Microsoft Surface with a full keyboard on its cover to the Toys R Us Tabeo, meant for children as young as 5," says the Washington Post.

This holiday season could establish the tablet narrative for years to come and even provide insight into what consumers value most in making a tablet purchase: price, functionality, top-of-the-line specs, or app and entertainment options.

Amazon Kindle Fire HD

"The Kindle Fire 8.9 is very inexpensive given its specs, and the question here isn't really if this is the best large tablet. The question is if the Kindle Fire 8.9 is worth the price. And there, the answer is absolutely yes. Ultimately that's where the Kindle Fire HD 8.9 triumphs. If you're counting your dollars, the Kindle Fire offers the most bang per buck so far," said PC Mag in its review.

Amazon's Kindle Fire HD looks like one of the few devices to successfully blend tablets and e-readers.

The Kindle Fire HD's Whispersync feature automatically syncs not only your content, but also where you were in a particular book or movie, across devices. If you've downloaded a book that has an Audible audiobook, you can switch between reading and listening seamlessly. While reading a book, you can tap on a name, place or passage to get more detailed information about that item from Wikipedia and Shelfari, Amazon's own user-supported encyclopedia. "It's like having Cliffs Notes built into everything you read," said CNET.

When you're watching a movie that has X-Ray content, a little window appears at the upper left corner that shows the names of the actors currently on screen. Click on a name, and that person's IMDB profile fills the whole of the display.

Amazon says "thousands" of books and movies are X-Ray-enabled; though it couldn't give us a more accurate number, the company says it started with the most popular titles, and is working its way down.

Another cool reading feature, Immersion Reading, uses the audio and Kindle versions of a single book and combines them to create an experience currently not reproducible on any other tablet. "As the text is read by the original audiobook reader, each word is highlighted on the Kindle book version, allowing you to follow along bouncing-ball-style with the story," said CNET.

The "Time to Read" feature uses your reading speed to tell you when you will finish a chapter in a book on the Paperwhite.

"Kindle FreeTime" lets parents create profiles for their children and choose what books, games, apps or videos they can access.

The new Kindle Fire HD 8.9-inch models start at $299, with the most expensive models selling for $500 or more.

Specs

The Kindle Fire HD 8.9-inch tablet comes in Wi-Fi and 4G LTE wireless versions. The Wi-Fi only model comes with 16GB or 32GB. The 4G LTE Wireless tablet comes with 32GB or 64GB. Both come with a 1920x1200 HD display with "polarizing filter and anti-glare technology for rich color and deep contrast from any viewing angle." It also comes with a 1.5Ghz dual-core processor with Imagination PowerVR 3D Graphics core and a dual-band, dual-antenna Wi-Fi for 40 percent fast downloads and streaming. The tablet offers up to 10 hours of reading, surfing the web, watching video, or listening to music. The 16GB model sells for $299, and the 16GB with 4G LTE sells for $499.

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