Amazon Kindle Fire: More Profitable Than Expected?

Findings from the survey:

• The two most frequent users for the Fire were e-book reading, at 71%, and browsing the Web, at 39%. Playing game was cited by 29%, and using apps, 20%. Only 13% named streaming video as a most frequent activity.
• The most important reason given for buying a Fire? 47% said it was a gift. 27% cited features. 20% cited the price. “We were somewhat surprised that features outweighed price, which contrasts some of the early reviews by the Technorati,” he writes.
• Over 80% of Fire owners have purchased an e-book, and 58% had purchased more than three e-books within 15-60 days of buying the Fire. He estimates that customers will by 5 e-books per quarter. At a $10 ASP for the books, he says, that would mean $15 in e-book revenue per quarter.
• 66% of the survey group had purchased at least one app; 41% have purchased three or more. He assumes 3 apps per purchase per quarter, suggesting $9 in paid app revenue per Kindle Fire unit per quarter at above-company average operating margin.
• 72% of the sample had not used the Fire to buy physical goods on Amazon.com. Of the 26% who had, a third said the purchases were incremental to what they would have purchased on the site otherwise. 51% increased their physical purchases on Amazon “slightly to significantly” because of owning the Kindle Fire.