Courtesy of Benzinga.
As many investors are aware, Amazon (NASDAQ: AMZN) has remained tight-lipped about the true success of its tablets.
The company has issued numerous press releases touting how well the Kindle Fire is performing at retail, particularly on Amazon.com. In November the company proudly announced that worldwide Kindle device sales had more than doubled over the year-ago period. Amazon provided a number of sales highlights, including:
- Cyber Monday 2012 was the biggest day ever for Kindle sales worldwide.
- The top 4 spots on the worldwide Amazon best sellers list since launch nearly three months ago are Kindle e-readers and Kindle Fires.
- Kindle Fire HD is the most gifted and most wished for product on Amazon worldwide since launch.
- 9 out of the top 10 best-selling products on Amazon worldwide since 9/6 are Kindles, Kindle accessories and digital content.
Those numbers seemed to confirm Amazon’s claim that the Kindle Fire, Kindle Fire HD and 8.9-inch models were selling very well. However, not once did Amazon state exactly how many units had been sold.
In fact, the company has gone out of its way to promote how well the Kindle Fire is performing without actually stating any official numbers to back up these claims.
Some investors might think that it is because Amazon has a different strategy from Apple (NASDAQ: AAPL), which likes to remind everyone that its products sell large quantities on a quarterly basis. Others might assume that Amazon does not want its competitors to know exactly how fast it is catching up, which could slow their defenses or delay a response.
Even if that is true, that does not change the fact that Amazon made a very curious announcement today: it decided to reduce the price of the 8.9-inch model to $269.99. The $30 price cut might not sound like a huge adjustment, but the company has also reduced the 4G model from $499 to $399.
This could have a couple of positive explanations. First, Amazon may be planning to pull-an-Apple and release the next Kindle Fire sooner rather than later. That being the case, Amazon would have every reason to reduce the price of the existing model to deplete its inventory.
Second, Amazon might have found a way to reduce the cost of the item and decided to pass the savings on to the consumer. In fact, that is exactly what Dave Limp, Vice President of Amazon’s Kindle division, said today.
“As we expand Kindle Fire HD 8.9″ to Europe and Japan, we’ve been able to increase our production volumes and decrease our costs,” Limp said in a company release. “Across our business at Amazon, whenever we are able to create cost efficiencies like this, we want to pass the savings along to our customers.”
Still, it is hard not to wonder if this is really just a way to increase sales for a product that did not live up to expectations.
Apple received a similar degree of skepticism when it reduced the price of the 13-inch MacBook Pro with Retina Display. While Apple publishes the number of Macs that are sold each quarter, the company does not specifically state how many individual units are sold. Thus, investors are repeatedly forced to speculate about the source of Apple’s price cut — just as they are forced to speculate about Amazon.
This is not the first time that the Kindle Fire has experienced a questionable price reduction. The company knocked $50 off the 8.9-inch model not once but twice in the same week last December. The discount came with a catch, however. Amazon said that it would subtract the discount from the refund of those who decided to return the item.
Follow me @LouisBedigianBZ
