Despite Amazon’s (AMZN) repeated earnings misses, investors have remained bullish, holding out for sunnier days as the company continues to invest heavily in infrastructure and product development. The theory is that painful expenditures and thin margins today will pay off in the long run by growing locked-in customers who will eventually drive revenue and profit.
Well, Amazon shows no sign of slowing up on the spending side: The new Kindle Fire HDX, two rumored smartphones and a set-top streaming box show a continued focus on capturing customers with proprietary hardware.
Here’s a look at what Amazon has planned for the future, and what these devices could mean for the stock.
Amazon released a trio of new tablets a few weeks ago. The Kindle Fire HDX series boasts high-density displays and beefy quad-core Qualcomm (QCOM) Snapdragon 800 processors. They’re significantly lighter than the previous generation and offer all-day battery life. The 7-inch Kindle Fire HDX starts at $229 — $100 less than Apple’s (AAPL) cheapest iPad Mini. While last year’s Kindle Fire lineup was competing largely on price, this year’s version isn’t just cheap — it’s at or near the top of the heap in terms of specs, too.
Apple’s iPad has taken a beating at the hand of tablets running Android OS, which now leads the pack in terms of market share, but Amazon’s Kindle tablets have also lost market share. According to IDC, in Q3 2012 Amazon was the world’s third-largest tablet vendor with a 9% share, but by August 2013 it had disappeared off the charts, slipping below fifth-place Acer.
Amazon smartphone rumors have been running rampant for the past year and are now focused on two phones under development at Amazon’s Lab 126. The device, code-named “Smith,” is reportedly equipped with four cameras that add 3D capability as well as the ability to grab an image of any product (no bar code required), send it to Amazon for identification and a quick link to buy it — on Amazon.com, of course. The second is a cheaper device that might be an ad-supported phone running the FireOS that powers Amazon’s Kindle Fire tablets.
Can those devices take off? It’s hard to say. Competition is tough in the tablet market, where the Kindle has to fight against Apple’s iPads as well as offerings from Google (GOOG), Samsung (SSNLF), Microsoft (MSFT) and a collection of discount players. And the smartphone market is even more brutal, which could make it difficult for Amazon to break in.