Amazon's recently released Kindle Fire is heading straight for the coveted No. 2 position in the tablet category, according to a new report. Industry researcher IHS iSuppli is projecting 3.9 million Fires shipped in the fourth quarter, capturing 13.8 percent of the global market for tablets.
For nearly two years since the iPad's launch, a series of tablet competitors have auditioned and tried to position themselves as the second-place competitor. Apple's iPad still dominates the category it created, with 65.6 percent market share, while iSuppli expects Samsung's Galaxy Tab tablets will take 4.8 percent, for third place.
An open question is how many tablets have been sold to date by Amazon. One research firm, eDataSource, is estimating about 2 million or so from all sales channels have been sold, including about 850,000 from Amazon's site. The Fire is also being sold at brick-and-mortar retailers such as Best Buy.
Two major factors appear to be driving the Fire's sales. One is the $199 price tag, while the iPad starts at $499. The other is Amazon's enormous store of content and goods, for which the Fire becomes a front end. The retailer has undertaken the razor-and-razorblade model, with the Fire being sold at a loss, estimated at anywhere from a few dollars to as much as $50 for each unit, which the company expects to make up in content sales.
Sarah Rotman Epps, an analyst at Forrester Research, said her firm's estimates were tracking well, with 3 million to 5 million Fires expected to be sold by the end of this quarter. Forrester projects Barnes & Noble's recently released Nook Tablet will sell 1.5 million to 2 million units in the same period, which would put it in third place. This compares with 40 million iPads sold worldwide to date.
Epps said that Forrester sees a "bifurcation" taking place in the tablet category, with a "high-feature, high price point" end dominated by the iPad, and a lower-priced, less-featured end represented by the Fire and Nook tablets. At the moment, she said, "there's nothing in between."
But, while the Fire is on fire in sales, it is also generating a bit of heat in Congress. Rep. Ed Markey, D-Mass, who co-chairs a congressional caucus on consumer privacy, has put Amazon on the hot seat about what kind of consumer information its Silk browser in the Kindle Fire collects, and what is done with that information.
A recent story in The New York Times reported that Amazon was gathering information about Web browsing and purchasing patterns of users, including what they buy and how much they pay for products at sites other than Amazon's. Markey said earlier this week that he wasn't happy with the responses he got back from Amazon, following a written request from him for information.
"Amazon's responses to my inquiries do not provide enough detail about how the company intends to use customer information, beyond acknowledging that the company uses this valuable information," Markey said in a statement. He said that the company "has a responsibility to be transparent with its customers," and that his office planned to follow up with Amazon for additional answers.