Analysts Consider Impact of Fire, New Kindle Pricing on Tablet, eReader Markets

With shares of Amazon.com (Nasdaq: AMZN) up 3.3 percent and Barnes & Noble (NYSE: BKS) shares down 5 percent Wednesday, investors seem to be excited about the unveiling of the Kindle Fire and a new pricing format for past models of the Kindle.

While the consumer will undoubtedly be the final judge of the new tablet, Wall Street analysts are offering a wide range of opinions about the device and what it will mean for competitors and peers.

• Piper Jaffray - Notable tech analyst Gene Munster argues Amazon will lose about $50 per Fire it sells, suggesting potential downside of about 10-20 percent on quarterly earnings. Based on the cost of manufacturing an iPad 2, Munster believes the Fire costs about $250 to produce. Munster is currently expecting Amazon to sell about 2.5 million Fires during December, the first full month in which the tablet will be available.
  
  
• Nomura - Believes the Fire will be a negative for NVIDIA (Nasdaq: NVDA) given a possibility the device could squeeze other Android tablets such as the Galaxy, Xoom and PlayBook. Sees an estimated $100 million opportunity for Texas Instruments (NYSE: TXN) based on 5-10 million unit volume and an average selling price of $10-$15 for TI's dual-core OMAP processor. The firm notes this equates to less than 1 percent of Texas Instrument's total sales.
  
  
• Jefferies - Considering what the analyst believes is a "nearly identical" looking device amid a lower price point, the Fire may pose a challenge for RIM's (Nasdaq: RIMM) PlayBook. The firm notes HP's (NYSE: HPQ) recent fire sale of its webOS proves Android tablets can sell in large amounts if the price is low enough. Says the Fire will mostly expand the tablet market, however could steal share from other Android devices. The low price point may push the device to hold the number two spot in front of Samsung.
  
  
• Collins Stewart - Called the launch of fire and a sub-$100 Kindle "highly positive for Amazon." The firm believes the new Kindle pricing could "further accelerate ebook adoption, crossing 35% penetration in 2012 (vs. our prior 28% estimate)..." Notes the Fire offers Amazon.com "an incremental revenue stream." Although Collins Stewart doesn't believe the Fire will be an iPad killer, the firm sees a chance the device could take market share "from competitors with similar, higher priced offerings such as Dell (Nasdaq: DELL) and Samsung.

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