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Amazon Devices Available in China

Zacks Equity Research

The world’s largest online retailer, Amazon.com Inc. (AMZN) has recently announced the availability of its high-definition (HD) 7-inch Kindle Fire tablet and Kindle e-readers in China.

The 16 GB and 32 GB versions of the 7-inch Kindle Fire HD are going for ¥1,499 (USD $244) and ¥1799 (USD $293), respectively while the Paperwhite e-reader is priced at ¥849 (USD $138).

In recent months, Amazon has been aggressively pursuing opportunities in China. Last month, the company launched its Appstore in China, offering Chinese customers access to Amazon’s broad selection of Android mobile applications (apps). The company also offered cloud storage services and launched its Kindle e-book store in China last year.

The Kindle Store offered 25,000 e-books at the time of its launch last December, including new releases and bestsellers from a number of Chinese authors. Now it offers 47,000 e-book titles in local languages. Though the e-reader will be available online, the company has inked distribution deals with Suning and Tesco Shi to increase the physical availability of the device.

We believe that despite the strong competition and various regulatory hurdles in China, the availability of Kindle devices in the country will provide customers a wide selection of Kindle tablets and books and help Amazon tap a promising market.

There is a possibility that Amazon might capture a significant share of the Chinese market within the next five years; following which should help it generate an additional several billion dollars a year in revenues. China’s huge market size and Amazon’s reputation and credibility present a strong opportunity. This will likely boost Amazon’s e-books, tablets and other content sales.

However, heavy investments in its Kindle tablet computers, new warehouses and data centers may weigh on its near-term results.

Amazon shares currently retain a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth a look include IAC/InterActive (IACI), Overstock.com (OSTK) and PetMed Express (PETS), all carrying a Zacks Rank #1 (Strong Buy).

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