Why Amazon’s Discontinued the Kindle Fire – Three Great Theories

Kindle Fire 1

Amazon’s made two big announcements in the last week – both about their Kindle Fire tablets. And now technology watchers are trying to put the pieces together, offering up their best guess about what Amazon is really up to!

Earlier this month, Amazon was temporarily sold out of their Kindle Touch – and bloggers took it as a sign that Amazon was about to release a new model within a week. Instead, Amazon announced a big press event for September 6th — exactly one week from today. And this morning, the anticipation continued to build as Amazon offered another tantalizing piece of information: that they’d sold every last one of their current Kindle Fire tablets, and they apparently weren’t going to make any more of this model.

“We’re grateful to the millions of customers who have made Kindle Fire the most successful product launch in the history of Amazon…” Amazon’s CEO Jeff Bezos said in a statement, confirming Amazon was “sold out” of their current Kindle Fire, but adding that “we have an exciting roadmap ahead…” If you visit the current Kindle Fire’s page on Amazon, you’re now told that they’re available from “these sellers”. Amazon’s basically pointing to people who are selling used Kindle Fire tablets.

But why did Amazon discontinue sales of their original Kindle Fire tablets? Here’s some of the best theories.

Amazon Misjudged Their Own Launch Date
You can’t just stop the production of a technology product with one phone call. Amazon has to scheduled the delivery of all the necessary electronic components well in advance, and the Associated Press seems to think that today’s just the day that the parts ran out. (“Thursday’s announcement that the first model is ‘sold out’ suggests that Amazon halted production a while ago to retool for a new model.”) Unfortunately, this leaves Amazon with no tablets to sell for the next seven days. But maybe Amazon actually has something to gain by halting production…

Amazon’s Deliberately Raising Expectations
Amazon’s comment about an exciting upcoming “road map” seems like a not-so-coy hint that next week’s press conference will be about the next generation of Kindle Fire tablets. And at the technology site Slashdot, at least one poster thinks this is all part of a very deliberate campaign by Amazon. “This development strikes me as a classic ‘Build anticipation for KF2’ thing, not a ‘Phew, we got rid of the things. They were taking up space’ type complaint. ” Next week, when Amazon announces a new tablet, there’ll now be a full week of pent-up demand for a color Kindle tablets.

Amazon’s saving money
I stumbled across an interesting statistic this week. In November, Time magazine’s “Moneyland” site calculated that Amazon was actually losing money with its Amazon Prime shipping service — and that on average, Amazon was losing $11 for each Prime customer. “They must have been subsidizing the Kindle Fire,” argues another commenter at Slashdot. “That’s the only reason I can think of that they would stop making money [by ending Kindle Fire sales early]. It’s like how Microsoft used to lose money on every Xbox sold, or Sony and the PS3. They wanted a foot in the door of the market, and their next offering will be something that makes them money for each unit sold, rather than losing them money.”

What’s the real story? Who knows. But Amazon is obviously planning something big, . And if their plan was to increase the curiousity among Kindle owner — it’s working!

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