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Amazon, B & N Slates Have Big Christmas; iPad Slips

Thu, 01/05/2012 - 7:17am
Andrew Berg

Results trickling in from this year's holiday tablet faceoff reveal Apple's iPad might have slipped a bit, while Amazon's Kindle Fire burned bright and Barnes & Noble's Nook did so well the company is thinking of spinning that segment off into its own business. 

Mobile ad firm Jumptap just released its November MobileStat report, which saw network traffic to Amazon's new tablet jump 270 percent in the last week of November. The report also showed that Amazon's home town of Seattle was especially fond of the Kindle Fire. Jumptap found that 20 percent of Fire traffic came from within one mile of its headquarters. Other cities with a high penetration of Kindle Fires included San Francisco, Denver, Atlanta and Phoenix.

Paran Johar, chief marketing officer for Jumptap, said the Kindle Fire's popularity speaks to consumer desire for mobile content consumption at lower price points, as well as a move away from desktops and laptops.

"In 2012, tablets will lengthen the shadow they have begun to cast over the PC/laptop, as they already perform many of the same tasks, and consumers won't want to purchase both," Johar said in a statement, adding that the Fire's success will ensure other players will enter the market.  

Barnes & Noble's Nook Tablet also did well; however, the rest of the bookseller's business is in question. The company reported today that during the nine-week holiday period ending Dec. 31, 2011, Nook unit sales, including Nook Simple Touch, Nook Color and the new Nook Tablet, increased 70 percent over the same period last year. 

The company didn't get into specifics about the Nook Tablet but did say that the sales of the device "exceeded expectations," while sales of the Nook Simple Touch, the company's touch-based eReader, lagged expectations, indicating a stronger customer preference for color devices.

Due to the increased significance of the company's Nook platform, and evidently the lagging performance of its retail segment, Barnes & Noble revealed that it is looking at strategic options going forward, including a possible spin-off of its Nook segment.

"We see substantial value in what we've built with our Nook business in only two years, and we believe it's the right time to investigate our options to unlock that value," said William Lynch, CEO of Barnes & Noble, in a statement, adding that the Nook business is growing rapidly year-over-year and should be approximately $1.5 billion in comparable sales this fiscal year.

Barnes & Noble also said that it is in discussions with strategic partners including publishers, retailers and technology companies in international markets that may lead to expansion of the Nook business abroad.

Meanwhile, Apple felt at least a small pinch as a result of competition from the Kindle Fire and Nook Tablet. However, analysts continue to bicker about whether these new lower-cost tablets are actually in direct competition with Apple's higher-priced iPad, which starts at $499.

In research notes today, Morgan Keegan analyst Tavis McCourt trimmed his estimates for Apple's fiscal first quarter that ended last month after concluding that the iPhone probably sold better than he thought, but that the Kindle Fire probably stole a couple of million units worth of sales from Apple's iPad. 

McCourt said he expects iPad revenues to generate 21.3 percent of revenues in the December quarter for Apple, up from 17.2 percent in the year-ago period, although down from 24.3 percent in the previous quarter.

"We are lowering our unit shipment estimates for iPad in the Dec. quarter from 16 million to 13 million. Based on data from Amazon, we believe the Amazon Fire likely sold 4-5 million units this holiday season, which probably means maybe 1-2 million cannibalized iPad sales at most," McCourt wrote.

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