Kindle Fire Will Play Larger Role in Amazon Revenue [Analyst]

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The Kindle Fire tablet and e-books will play a larger role in Amazon’s overall revenue, reaching 14 percent of the Internet retail giant’s 2013 income, an analyst said Monday. But Apple still doesn’t have much to worry about.

As a result, J.P. Morgan upped its target price for Amazon shares 13 percent to $250 per share from $221. Amazon could reap $5 billion in 2012 and $8 billion in 2013, largely driven by Kindle devices, digital book sales and increased membership in the company’s Amazon Prime program.

“Our analysis suggests revenue from the family of Kindle devices and ebooks will increase from 9.4 percent of Amazon’s revenue in 2011 to 13 percent in 2012 and 14 percent in 2013,” write analysts Doug Anmuth, Kaizad Gotla and Shelby Taffer.

Kindle devices could bring in $1 billion in 2012 and more than double to $2.6 billion in 2013, the analysts add. The Kindle Fire could add 2.6 million subscribers to Prime by 2013, a figure the three believe could be conservative.

The increased confidence in the Kindle Fire comes after last week’s report “strong demand” caused Amazon to boost orders for its tablet to 5 million units, from 4 million previously. The company originally requested 3 million Kindle Fire units, but found demand higher than expected.

The larger production figures could come at a price, however. According to one estimate, the Seattle-based company could lose $10 on each Kindle Fire sold. The Fire is seen by some to be the first real competition for Apple, whose iPad has captured the majority of tablet sales. That vision was rejected somewhat by Apple, which said the Amazon device could fracture demand for Android-based iPad rivals. However, that positive spin was then countered by an RBC Capital reading of a survey of potential tablet buyers. According to RBC’s Mike Abramsky, of those consumers saying they were “very likely” to buy a Kindle Fire, 26 percent reported they plan to delay or shelve buying an iPad.