There’s no way Amazon is going to sell 5 million tablets in Q4
Even though Amazon taking on Apple is a bit like David taking on Goliath (compare the market cap, profits, and cash position of the two companies), Amazon’s willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market. If Amazon launches a tablet at a sub-$300 price point — assuming it has enough supply to meet demand — we see Amazon selling 3-5 million tablets in Q4 alone.
This just sounds way high. (Unless it counts some sort of $99-or-cheaper Kindle, too?) I’ve long been a believer in Amazon’s ability to potentially compete here, but that’s just too many tablets, too quickly.
Consider that Apple would be very lucky to sell 15 million iPads during the December quarter — with worldwide retail distribution and the huge benefit of its own stores. Amazon is going to show up and immediately sell 20% to 40% of what Apple does, primarily through its website? It just seems very unlikely.
And even if Amazon has a killer reason for that many people to buy its tablets instead of iPads, can it even get 5 million of them made?
A better estimate seems like 1-2 million tablets for Q4 — if that — which Amazon should be very happy with.