Demand For Kindle Fire Cooling As Orders Cut In Half

After a red-hot introduction and a hectic holiday period that left Apple looking over its shoulder, orders for Amazon’s $199 Kindle Fire tablet are slowing, cut in half to 3 million units for the first quarter of 2012, Friday reports claim. During the last three months of 2011, around 6 million of the devices flew off the shelves, making it Amazon’s best-selling product.

“Orders for Kindle Fire or Nook Tablet PCs are likely to drop to 800,000-1,000,000 a month in the first quarter of 2012 after the year-end holiday season,” reports the Taiwan-based industry publication DigiTimes. Citing “sources in the supply chain,” the site said the decline is not unexpected during the slower period at the start of a new year.

Earlier this month, one Wall Street analyst forecasted Apple lost “at most” 1 million to 2 million iPad holiday sales because of the Kindle Fire. Morgan Keenan analyst Travis McCourt also told investors Amazon sold 4 million to 5 million Kindle Fire devices during the period, slightly higher than the estimated 4.2 million iOS devices Apple sold on Christmas Day alone.

In late 2011, a JP Morgan analyst estimated the $199 tablet along with e-book sales could 14 percent of Amazon’s overall profit in 2013, the tablet bringing in $1 billion in 2012 and double that by 2013. That profit comes at a price, however. As we reported, Amazon is seen losing $10 on every Kindle Fire sold. However, that loss could be balanced by higher e-book and other services sold as a result.

So far, the Kindle Fire is the first Android-based tablet to come close to the iPad’s popularity. RBC analyst Mike Abramsky believes a large portion of consumers purchasing the Amazon device either put off or totally avoid buying an iPad.

These latest numbers should not worry Kindle Fire owners or hearten iPad lovers. As was seen with the slowdown of iPhone sales just prior to the iPhone 4S, Amazon is also developing another version of its tablet, perhaps with screen larger than the current 7-inches.