Analysts were not so happy with Amazon’s fourth quarter 2011 financial results, in particular the lower profit margins due in large part to spending to support the Kindle Fire effort. But Amazon has been pricing the Kindle Fire at a slight loss in hopes of spurring more shopping on Amazon.com (News - Alert), including content products.

According to a new survey by Changewave, Amazon might have bet right. When Changewave recently asked tablet owners whether they planned to increase their spending on particular sites within the next 90 days, Amazon.com was the retailer that saw the biggest change in intentions.

About 20 percent of respondents suggested they might spend more money at Amazon.com, an order of magnitude more than at other major online retailers.

More to the point, 29 percent of Kindle Fire owners indicated they'll spend more money at Amazon over the next 90 days, compared to 19 percent of non-owners. Spending intent seems to be higher for Amazon.com, across the board, but is significantly higher among Kindle Fire owners. 

The considerable difference in planned spending between Kindle Fire owners and non-owners highlights the tremendous potential for additional realized revenue that the new tablet brings to Amazon, above and beyond initial sales of the device, one might argue.

We’ll have to wait and see whether that higher spending works out the way Amazon.com hopes. But the analyst and investor reaction points out how hard it is for a company to make strategic investments that lower return in the near term, for greater returns later. 

RBC Capital analyst Ross Sandler polled 216 Kindle Fire owners and concluded that Kindle Fire tablets are making Amazon more money than was originally expected. Sandler originally had estimated that each Kindle Fire unit would generate about $136 in content purchases over the useful life of the device. Content purchases on Kindle Fire

But Sandler’s most-recent survey of 216 Kindle Fire owners suggests content revenue might be higher than that.

The survey found that roughly 80 percent of users already have purchased e-books, with 58 percent of respondents buying more than three e-books within the first two months of owning the tablet.

Averaged out, that’s five e-books per quarter, which nets Amazon $15 per Fire owner per quarter, assuming an average selling price of $10 for e-books. That further implies revenue from e-books of about $60 a year.

About 41 percent of Fire owners also say they have bought at least three apps. This will put another nine dollars per Fire owner per quarter into Amazon’s coffers, or $36 a year of net revenue (after splitting gross revenue with content owners).

That implies possible gross sales of about $30 a quarter worth of apps, assuming Amazon’s share of revenue is 30 percent.

Those figures suggest annual Kindle Fire revenue of about $96 a year. Over three years, that suggests $288 of revenue for Amazon, even if users do not buy any video or audio products, which seems unlikely.

In terms of near term hits to margins, it could be much worse. Amazon could be a major telco, looking at huge fiber to home investments with a payback horizon of 30 years to 40 years. The declining margins have been a "problem" for Amazon for at least a year.

Amazon’s third quarter 2011 profits were down 73 percent and on Oct. 25, 2011, for example, even though revenues were up 44 percent to $10.9 billion.

Amazon also is ramping up investments in the backend infrastructure to support all the digital media it expects people will want to consume on their Kindles, especially their Kindle Fires. Amazon spent $769 million on “technology and content” in the quarter, up 74 percent from a year ago.

Sometimes companies have to take risks. Sometimes they have to invest. Investors don't like the quarterly fluctuations. Why Did Amazon Profits Take A Hit?

Despite investor disappointment at a surprising fourth quarter sales miss, a January consumer survey shows Amazon.com riding a wave of momentum in the New Year, according to ChangeWave Research, a service of 451 Research.

The survey of 2,607 North American consumers shows Amazon continuing to grab share in the Home Entertainment market and in overall online sales.

Moreover, the new Kindle Fire tablet – which was on-sale for just six weeks during the 4th Quarter – shows tremendous potential to bring in additional revenue for Amazon, based on the survey results.

Amazon has increased its share of the home entertainment and computer networking market by 14-pts over the past six months, and is now just one point below its December all-time high in a ChangeWave survey.

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