RBC polled 216 Kindle Fire owners for the study and said that Amazon is exceeding expectations by making more money from content sales than predicted.
“Our assumption is that Amazon could sell 3 to 4 million Kindle Fire units in Q4, and that those units are accretive to company-average operating margin within the first six months of ownership," explained analyst Ross Sandler in a recent research note.
"Our analysis assigns a cumulative lifetime operating income per unit of $136, with a cumulative operating margin of over 20%."
Sandler’s note went onto explain that roughly 80% of Kindle Fire owners have spent money on eBooks, with 58% buying more than three eBooks within the first two months of ownership. The firm estimates that consumers will buy five eBooks per quarter, resulting in around $15 in eBook revenue per quarter.
Paid apps made up the rest of the revenue, with 41% of owners buying at least three apps, if not more, over the same two-month period.
RBC Capital found e-Book reading to be the most popular usage of the Kindle Fire (71%), followed by browsing (31%), playing games (29%), using apps (20%) and streaming video (13%).
The firm also found that 47% of Kindle Fire owners received their item as a gift, while 27% and 20% cited features and price, respectively, as the main reasons for buying the device.
This news on content sales is not overly surprising given analysts predicted that Amazon would not make money on the tablet itself, which is available for $199.99, but costs $201.70 to build, according to research firm IHS iSuppli. The assumption was that Amazon would be taking a hit on the hardware, but would drive revenue via apps, eBooks and movies.