Late last month, Amazon said it had sold more than 4 million Kindle devices over the holiday season. The Fire tablet was its most-popular Kindle device, but the retailer did not provide exact sales figures.
Now, one financial analyst believes Amazon shipped approximately 6 million Fire tablets during the fourth quarter, up from earlier estimates of 5 million.
"Our checks with mobile advertising companies (search and display) suggest the Kindle Fire is ramping the way that iPad ramped upon its introduction," Stifel Nicolaus analyst Jordan Rohan wrote in a Monday note to investors.
Amazon is not quite selling the 13 million iPads that Apple sold in the fourth quarter, Rohan said, but it's shipping "millions of devices nonetheless."
"Even if Amazon makes no incremental contribution on the sale of the hardware, the fact that the company has used its distribution prowess to define and dominate the low end of the device ecosystem is quite impressive," Rohan continued. "And there is significant strategic value in becoming the third major device ecosystem after iOS and Android. We believe that shows up in both revenues and margins, longer term."
Some investors have been skeptical about Amazon's potential success rate given the hardware costs and the Fire's relatively low $199 price tag. "However, we believe most investors have overlooked the potential upside of the sales of media (books and video) to be played on the new Kindle devices," Rohan wrote. "We believe that software attach rates correlate inversely with the hardware price."
Earlier this month, analyst from RBC Capital Markets reached the same conclusion. Though Amazon actually eats a loss of an estimated $18 for every Kindle sold due to manufacturing costs and other factors, the company makes up for it through sales of ebooks and apps, RBC said. Based on survey of 216 Kindle Fire Owners, RBC analysts estimated that over the course of three years, each Kindle Fire sold could earn Amazon $136.
Amazon will hold its fourth-quarter earnings call tomorrow afternoon.
For more, see PCMag's review of the Kindle Fire and the slideshow below.