Speculations about Amazon’s inability to create an ecosystem that could rival Apple iTune’s solid grip on the digital market might be completely off. Creating and offering the new Kindle lineup – and especially Kindle Fire – may just be one of the smartest things Amazon has done lately, despite the fact that they are not making any profits on the devices themselves.

eDataSource’s ecommerce monitoring shows that while  millions of Kindle Fire tablets sat waiting under the Christmas tree for eager openers, downloads of digital content from Amazon.com trended pretty evenly. In fact the paid downloads actually declined for most of December. That is, until December 25th and the days following when the new users went right to Amazon.com and started loading up their devices with content, both free and paid.

Sales of Amazon digital items in January were up by 21% from December, according to an eDataSource analysis of nearly 50,000 Amazon Digital receipts received by email — a continuation of the spike of digital purchases in the days just following Christmas. But while demand for Android-based free items practically exploded overnight, Amazon’s digital average order value dropped from $2.22 in November down to $1.18 in January (with the split between paid and free items coming in at 63% free / 37% paid).

Nevertheless, if we look at the types of content that Kindle Fire purchasers downloaded both before and after the Kindle started shipping on November 14, we see that Android app consumption is declining while consumers’ appetite for books and videos is rising pretty significantly. Before the Kindles were first delivered, book sales were about $16/person and video-on-demand sales totaled about $11.50/person. After the initial delivery, books have gone up to about $18.28 and videos have risen to $19.70/person. On the other hand, Android App sales went from about $2.60 to $1.08/person. And with books and videos bringing in a higher average price per item across the board, we see yet another positive trend in the making.

It’s clear that Amazon is very focused on building out a new platform for the digital consumer. By providing a loss-leading device family (the Kindle family) and an assortment of items to consume, Amazon may one day compete in the tablet major leagues — particularly as it rolls out 9- and 10-inch Kindle devices. Who knows, if the trend continues, Amazon may even be changing digital consumer preferences and turning interest back to books and movies by increasing their accessibility.

Note: eDataSource is now offering a series of individualized reports and data feeds providing just this type of eCommerce data. Call now for pricing and availability.


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