Kindle Shipments to Plummet After Reports of Amazon's $99 Tablet

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Amazon's (NASDAQ: AMZN ) Kindle brand is getting a lot of attention this week, first because of a rumor claiming that the company will follow in the footsteps of its Chinese competitors and release a $99 tablet. The rumor originated at TechCrunch , whose sources say that Amazon hoped to produce a low-cost tablet that is very similar to the current Kindle Fire HD.

"…The $99 Kindle Fire HD will also still sport a TI processor like the rest of the lineup, and will have a 1280×800 resolution, like today's Kindle Fire HD 7" does," TechCrunch's Sarah Perez wrote in her report.

To illustrate the feasibility of a $99 tablet, Perez pointed to Amazon's recent price cuts for the 8.9-inch Kindle Fire, which received discounts of $30 (for the standard Wi-Fi model) and $100 (for the 4G/Wi-Fi iteration).

Perez also interviewed IDC Research Director Tom Mainelli, who said that the infrastructure is "definitely in place for Amazon to go even lower" than its current prices.

"If they can sell the product at roughly what it costs to build, that fits their long-term vision to make money selling you content on that device," he said. "It's entirely possible - physically possible - to create a device that costs $99, particularly at the scale that Amazon would do it."

TheWeek's Keith Wagstaff concurred, adding that the $99 price point "makes sense."

"If Amazon were to sell its tablet for less than $100, it would put Apple (NASDAQ: AAPL ) and others on notice," he wrote.

ZDNet's Adrian Kingsley-Hughes believes that a $99 Kindle Fire would "annihilate the Android tablet competition."

After the rumor had just enough time to excite the masses, Amazon responded by issuing a formal denial to Business Insider and everyone else on the Web .

According to those reports, an unnamed spokesperson said that the $99 tablet is "not happening -- we are already at the lowest price points possible for that hardware."

Of course, Amazon would have likely issued a similar statement about the prospect of a $159 Kindle Fire in 2011. Back then, the idea seemed crazy. In September 2012, it finally happened . Thus, it is not out of the question to think that an older/slightly modified Kindle Fire may one day sell for $99.

While that development is apparently on hold, there is another that's about to go into effect.

According to DigiTimes , Kindle e-reader shipments could drop by several hundred thousand units in March and April.

In January, Amazon reportedly shipped 750,000 Kindles worldwide. That number dropped to 420,000 in February, which proved to be a slow sales month for many corporations .

March isn't over yet, but the month is expected to be very hard on Amazon's Kindle division. The firm is expected to ship as few as 20,000 units this month. Shipments may be the same in April.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis@benzingapro.com. Follow him @LouisBedigianBZ

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: AAPL , AMZN

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