It seems as if the Fire that Amazon.com
An important factor to consider while launching a new product is whether it has the ability to recover costs. Currently, Amazon is almost breaking even by producing the tablet at $201.7 and selling it at a cheap $199. As the company pumps up production, the cost should come down further and generate profits.
And remember, this doesn't take into account the revenue each tablet will generate once it reaches the hands of customers through online sales, which are supposed to drive the success of the Fire. So all in all, the future looks quite rosy for the Fire as Amazon gears up to cash in on the holiday season.
The Fire may be lacking in versatility compared to Apple's
However, considering the wide array of content available on the Fire compared to the Nook, Amazon could well see out the challenge posed by Barnes & Noble. And if you were concerned about the memory and processor speeds, then you'd likely opt for a Samsung tablet or an iPad instead of a low-budget gadget.
The macro factors
Economic uncertainty could well turn out to be a blessing in disguise for Amazon. Considering how tablets and mobile computing are fast becoming a part of our daily lives, the Fire, with its attractive price tag, is easy on the pocket. Amazon's expectation of selling 5 million units of the tablet in the ongoing quarter bears testimony to the fact that it has been a hit among customers.
The Foolish bottom line
Maybe I was a little too apprehensive in my earlier dissection of the tablet, but the package the Fire brings along could take it a long way. Amazon's margins may suffer a bit in the short run as it looks to turn the tablet completely profitable, but its prospects are certainly looking bright going ahead. Once the Fire starts making money, it will hopefully bring the oomph factor into the company's margins as well.
Add Amazon to your Watchlist, and keep track of how it builds on the strength of its Fire.
Fool contributor Harsh Chauhan owns none of the stocks mentioned in the article. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Amazon.com, Google, and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. 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.