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Amazon Plans to Expand Further

Read MoreHide Full Article Inc. (AMZN - Free Report) has recently come up with a plan to expand its children’s publishing division. The company has already introduced two imprints “Two Lions” and “Skyscape” for kids between 8 and 12 years.

In 2011, Amazon acquired the U.S. division of Marshall Cavendish publishing house, and got access to 450 children’s books published by them. The primary reason behind this acquisition was to gain access to Marshall’s clientele, who mostly are children, for its eBook reader- Kindle Fire.

The new prints may bolster its FreeTime Unlimited, which is particularly aimed at kids aged 3 to 8 years. This ‘easy-to-use’ feature offers kids a broad range of content such as movies, books, apps and games. They can also view shows from Walt Disney Co. (DIS - Free Report) , Sesame Street, Nickelodeon and DC Comics.

Another publisher, Barnes & Noble , as a part of its marketing strategy, is trying to attract children toward its eBook reader Nook. Barnes & Noble is offering 1,042 titles, including 36 “Read and Play” interactive titles and 404 “Read to Me” titles.

The tablet market is very competitive and Amazon cannot afford to miss out on any opportunity to grow its still-small customer base. Amazon’s prime competitor, Apple Inc. (AAPL - Free Report) , is already strengthening its position by launching 20,000 educational apps in the App Store with 1.5 million iPads being used in schools.

According to IDC, 27.8 million tablets were shipped worldwide in the third quarter of fiscal 2012. Apple shipped 14.0 million iPads and led the market with 50.4% share.  Samsung was next in line with 18.4% market share.  Amazon ranked third as it shipped 2.5 million units and held 9.0% market share.

Thus, Amazon’s Kindle Fire has a long way to go. It is yet to be seen if Amazon’s strategy to target this segment of the market yields improved results. Further, strategic measures, including the addition and upgrade of features and the targeting of key markets can generate higher revenues for Amazon.

Amazon’s third-quarter revenue was $13.81 billion, up 7.6% sequentially and 26.9% from the year-ago quarter. This was better than management’s expectations and more or less in line with the Zacks Consensus Estimate. Excluding the unfavorable currency impact, revenues increased 30.0% year over year.

Amazon has a Zacks Rank #3 (Hold).

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