This is shaping up to be an interesting shopping season for Amazon.com (AMZN). Analysts are holding out for another quarter of resilient growth. Wall Street pros see the leading online retailer’s sales topping $29.8 billion, clocking in 17 percent ahead of last year’s holiday quarter.
However, they also see profitability going the other way. Amazon’s investing in growth initiatives, and these are moves that won’t pay off right away. In short, it’s going to cost the dot-com darling on the bottom line.
A big part of Amazon’s strategy heading into this seasonally potent shopping period is the introduction of new gadgetry. The push into proprietary consumer electronics began in 2007 with the Kindle. The original e-reader hit the market at the steep price point of $399, and Amazon has had seven years to learn that it needs to price its hardware aggressively.
It’s hoping to make a splash this season with a few gadgets that are priced for success. Let’s check out three products.
Fire TV Stick
Amazon entered into the TV set-top market in April with Fire TV, a $99 box that turns a television into a smart television with access to leading streaming services and apps. It was priced high relative to Chromecast and Roku boxes, but it also came with some nifty features — including a remote with voice recognition and the ability to play games.
Now Amazon is ready to address the low end of the market. It rolled out Fire TV Stick on Wednesday. It’s similar to the pricier Fire TV but without the voice search and with scaled-back specs. It’s a dongle that plugs directly into a television’s HDMI port. At $39 it’s priced right to take on Roku and Google’s (GOOG) (GOOGL) Chromecast. Amazon claims that the Fire TV Stick is the company’s fastest-selling device, but it also helped make its own luck by offering its Amazon Prime members the ability to order one for half that price when it was introduced last month.
Demand is certainly outstripping supply right now. Customers placing new orders now are being told that they won’t ship out until mid-January.
Another new toy unveiled by Amazon earlier this month is Echo. It’s a cylindrical device that can be planted around the house, responding to voice commands to do everything from providing weather updates to announcing sports scores. It can scour the Internet for research. It also plays tunes.
It’s been described as Amazon’s response to Apple’s (AAPL) Siri, and that’s fair. However, this is a stand-alone consumer electronics device that’s also more intuitive. It awakens with a predetermined voice prompt, and its ability to do everything from setting alarms to compiling shopping lists could make it a game changer since it doesn’t require fidgeting with a smartphone.
Echo’s $199 price point isn’t cheap, but Amazon Prime members were able to preorder it for half the price. Earlier this month the device was supposed to begin shipping in a few weeks, so that should be sooner rather than later.
The Kindle e-reader and tablet lines have gotten better and cheaper. The most popular e-reader now sells for just $79. and the Kindle Fire tablet starts at just $99. However, late last month Amazon took an upmarket turn, introducing the $219 Kindle Voyage.
The high-end e-reader features an improved high-res display, adaptive front lighting and a new way to turn pages without having to lift a finger. Most readers will be fine with the entry-level $79 model, but Amazon now has a high-end option that’s winning critical raves.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com, Apple, and Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. Want to make 2015 your best investing year ever? Check out The Motley Fool’s one great stock to buy for 2015 and beyond.