Amazon as Mobile App and Content Ecosystem

Application Analysis

Amazon’s entry into the tablet market in late 2011 is one of the most interesting and potentially disruptive initiatives recently seen in the mobile industry. What made the move so remarkable is the cross-subsidy concept on which it relies: Amazon treats the Kindle Fire as a loss leader, with an intention of making the actual profit from incremental sales of apps, content, and physical goods over the device's lifespan. 

In this study, ABI Research will assess the viability of this strategy, and what it means to the mobile industry as a whole. Included are the forecasts on Kindle Fire shipments and the corresponding evolution of the installed base, as well as the profit/loss Amazon will make from the devices. Based on the hardware profitability, ABI Research presents also three scenarios on the Kindle Fire's lifecycle profitability, which factor in the incremental transactions that will take place during each device's active usage. The study also covers a Competitive Assessment of Amazon Appstore as a mobile application storefront, including the forecasts on its downloads. Finally, included are ABI Research's estimates on the to-date cumulative downloads of Amazon's own third-party applications that the company offers to the users of other mobile OSes.

Table of Contents

  • 1. AMAZON AND KINDLE FIRE - WHERE IS THE BUSINESS CASE?
    • 1.1. Amazon's Cross-subsidized Device Model
    • 1.2. Kindle Fire Shipments and Installed Base: 2011 to 2018
    • 1.3. Amazon's Profit and Loss from Kindle Fire Sales
    • 1.4. Required Incremental Profit per Device - Three Scenarios
    • 1.5. Incremental Kindle Fire Profit - One Customer Spending Pattern
  • 2. AMAZON APPSTORE - WHAT IS IN IT FOR DEVELOPERS?
    • 2.1. App Development for Kindle Fire
    • 2.2. Competitive Assessment of Amazon Appstore
    • 2.3. Amazon Appstore Download Volume: 2011 to 2018
  • 3. AMAZON'S COMPETITIVE IMPACT ON THE MOBILE INDUSTRY
    • 3.1. Two-pronged Approach: Third-party Apps for Cross-platform Presence
    • 3.2. Amazon and Apple
    • 3.3. Amazon and Google
    • 3.4. Amazon and Microsoft
    • 3.5. Amazon's Smartphone Prospects

Tables

  1. Kindle Fire Shipments and Installed Base, World Market, Forecast: 2011 to 2018
  2. Profit or Loss from Kindle Fire Device Sales, World Market, Forecast: 2011 to 2018
  3. Incremental Profit Target for the Kindle Fire by Profit Scenario, World Market, Forecast: 2011 to 2018
  4. Mobile Application Downloads from the Amazon Appstore by Platform, World Market, Forecast: 2011 to 2018
  5. Cumulative Downloads of Amazon's Own Third-party Apps by Platform, World Market, Estimate: December 2012

Charts

  1. Kindle Fire Shipments and Installed Base, World Market, Forecast: 2011 to 2018
  2. Profit or Loss from Kindle Fire Device Sales, World Market, Forecast: 2011 to 2018
  3. Incremental Profit Target for the Kindle Fire by Profit Scenario, World Market, Forecast: 2011 to 2018
  4. Mobile Application Downloads from the Amazon Appstore by Platform, World Market, Forecast: 2011 to 2018
  5. Cumulative Downloads of Amazon's Own Third-party Apps by Platform, World Market, Estimate: December 2012

Figures

  1. Competitive Assessment of Amazon Appstore, World Market, Vendor Matrix: 4Q 2012