Fire TV: Is Amazon's Box Going Down in Flames?

Fire TV may not be the solution Amazon investors have been waiting for.

Apr 7, 2014 at 2:00PM

 Image by Flickr user Claudio Toledo

Fire TV is here, and has placed a bet on the living room. The $99 set-top box offers streaming services, wireless access to Amazon video and music, voice-recognition features, and -- if consumers buy a controller -- video games as well. Fire TV has so many features packed inside, some consumers may be confused about what, exactly, to use it for. Therein lies Amazon's dilemma.

Shares traded slightly lower after the release in early April, dipping to $315. But it certainly was not as bad as the early February drop, when Amazon's share price lost more than $50. In March, the stock fell by another 6%. For the first quarter of 2014, the Amazon consensus earnings estimates have fallen by 57%, to $0.23 per share, and the EPS estimate fell by 28% to $1.91.

While a new product is a potential solution to these losses, Amazon's market positioning for the Fire still seems puzzling. The set-top box is on a collision course with other big brands, from Microsoft(NASDAQ:MSFT)'s voice-controlled Xbox One to Apple's iTunes-connected Apple TV. The comparisons do not favor the Fire, which does a little of everything but may have trouble finding a niche.

Box vs. box
Can Fire TV, with its voice commands and entertainment features, function as a lightweight Xbox One? In Amazon's favor, the box comes with a $40 controller and a promise that the company is working with recognizable publishers like Ubisoft and 2K. Minecraft and ports of some popular mobile games are already available, but major league console games are out of the question. The box has only has 2GB of storage with hardware equivalent to a tablet computer, limiting it to smaller, low-res, and streaming games. Amazon has acquired the game studio Double Helix, but the only exclusive game released so far is Sev Zero, a $7 third-person shooter. The other games in the Amazon catalog are primarily classic ports and mobile games.

Microsoft, meanwhile, has been making a string of smart decisions in 2014. Office for iPad has been confirmed, CEO Satya Nadella has cut Windows OS prices by 70% while making the software free for mobile devices, and the company's cloud-based services continue to grow. Xbox One sales, at 258,000 units in February, continue to break records for Microsoft console sales. In response, Microsoft's share price has shot up from $26 to around $41, the highest since the early 2000s, when the stock was at $60, a figure Nadella and team may meet once again. Well-received Xbox One games like Titanfall haven't hurt, either.

Despite the superficial similarities, Fire really can't compete with Microsoft's Xbox One -- with 500 GB, a Blu-ray drive, and 8GB DDR3 RAM -- or consoles like the PS4, except in price. If consumers were losing interest in paying $500 for an entertainment machine, Fire TV's gaming focus would make more sense. But with Xbox One sales at 4 million units and PS4 sales at 6.5 million, there is no lack of demand for heavier consoles. By taking the "mobile" out of "mobile games," its mobile ports also struggle to find a place. Where is Fire's demographic?

Amazon, say hello to Apple ... and Roku ... and Google
The other part of Fire TV's puzzling placement is its role as a set-top box. Here, Amazon runs into another barrier. While the voice controls and gaming is reminiscent of the Xbox One, the media streaming recalls the other set-top boxes on the market. The Apple TV has a similar set of services and a $99 price tag, making it a direct competitor, especially if Apple releases a new generation of its own box in 2014. The Fire TV is also similar to the Roku set-top box, and even competes against Google's more affordable $35 Chromecast widget.

These products have been on the shelves for at least nine months, a window long enough to meet plenty of demand. Current-generation consoles have also been on the market for several months, giving serious gamers enough time to make up their minds. The e-tailer is left with a slim slice of the market that is invested enough in Amazon services to make the switch to a new set-top box. Will that be enough to push Amazon into a profitable 2014? Right now, Fire TV looks too unfocused to do the job.

The biggest thing to come out of Silicon Valley in years
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Tyler Lacoma has no position in any stocks mentioned. The Motley Fool recommends The Motley Fool owns shares of and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers