Amazon Shares Climb Higher While Apple Struggles

Amazon (NASDAQ:AMZN) continues to provide shareholders with steady returns.  Shares are up more than 22% year-to-date.  Despite a 75 point sell off in the Dow (NYSEARCA:DIA), shares of Amazon bucked the trend once again on Monday with a near 1% gain.

On Monday, the Wal-Mart (NYSE:WMT) of the internet announced it is shipping its Kindle Fire tablets a day ahead of schedule.  The company said the tablet is the best-selling item on its website, but did not release how many units were sold.  Some eager customers were actually upset that the tablet will be available at Best Buy (NYSE:BBY) stores on Tuesday, but those who pre-ordered through will have to wait till later this month to receive units.  Amazon also announced that it will ship the Kindle Touch and Touch 3G about six days early.  The Kindle will compete with Barnes & Noble’s (NYSE:BKS) new Nook Tablet and Apple’s (NASDAQ:AAPL) popular iPad 2 this holiday season. In an attempt to stand out from competition, Amazon is taking a loss on its $79 Kindle e-reader.  The Puget Sound Business Journal reported that Amazon’s materials cost is $78.59, and manufacturing costs are about $5.66 per device.

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While Amazon’s Kindle Fire is the cheapest tablet option at $199, the reviews have been luke warm.  “The Fire does not have anything like the polish or speed of an iPad,” explains the NYT’s David Pogue.  Engadget calls the device a great value and loves its content integration, but also says, “When stacked up against other popular tablets, the Fire can’t compete.  Amazon also does not allow Kindle Fire users to buy copy-protected books from anyone but Amazon.  Amazon achieves this by operating its own app store, separate from the Android Market run by Google (NASDAQ:GOOG).  On the positive though, Amazon is allowing Netflix (NASDAQ:NFLX) and Hulu (NYSE:GE) apps to complete with its own streaming service.

Although Kindle Fire is not seen as an iPad killer, shares of Apple continue to struggle.  Shares are down 10% in the past month.  Shares hit a 5-week low on Monday after Goldman’s (NYSE:GS) Bill Shope noted that he was worried about a weak forecast from contract manufacturer Hon Hai precision, and thinks it could be due to soft iPad demand.  He adds that the release of a cheaper iPad could be needed to boost demand, given the price-sensitivity of tablet buyers.

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