Just to follow up, Amazon has released their numbers. As expected, net income doesn’t look great — $177 million, down 58 percent year over year. But at least it’s not a loss (which Amazon had warned it might be).

That $177 million is on sales of $17.4 billion. Crazy. That’s what low margins — and selling hardware at a loss — will do to you.

Speaking of 177, that’s also the percentage that Amazon says Kindle sales increased during the holiday period when compared to the previous year — which means basically nothing since Amazon refused to release actual numbers last year. And they still refuse to this year.

Looking forward, Amazon expects profit to be anywhere from $100 million — to a $200 million loss next quarter. Ouch.

To be fair, unlike my earlier statement, Amazon did make more money in the entire quarter than Apple did in one day last quarter, but just barely: $177 million versus around $145 million.

But that’s an average. I’m sure during some of the busy shopping days, Apple actually did make more money in one day than Amazon did for the entire quarter.

Amazon’s profit for all of 2011 was $631 million. As a reminder, Apple made $13.06 billion in profit last quarter. Perhaps not a fair apples-to-apples comparison, but not exactly apples-to-oranges either.

Amazon will announce their earnings later today. As I outlined in October, the results this past quarter will highlight the difference between Apple and Amazon.

Writes Tricia Duryee:

Here’s one data point: For the holiday period, Apple’s gross margin was an impressive 44.7 percent, up from 38.5 percent a year earlier. Meanwhile, analysts are estimating that Amazon’s operating margin will fall to 1.3 percent from 3.6 percent last year.

44.7 percent versus 1.3 percent. 

What does that mean? It means that even though Amazon should report record revenues, their profit will likely be depressed — probably badly depressed. Why? Well, first and foremost, most of the goods they sell have low margins. But even the goods that should have high margins — hardware — have low margins. 

Or worse. Take the Kindle Fire — Amazon’s most popular product (though don’t bother asking how many they actually sold) — it’s sold at a loss. 

Like Apple, Amazon has built an amazing business that has revolutionized more than one industry. But context is important. Right now, Apple probably makes more profit in a day than Amazon does in a quarter. 

Update: The numbers are out.

This has the potential to be massive. And make no mistake, it’s a shot right at Google, just from the other direction. What if the future of search isn’t web search, but data search (which includes web and native apps). 

The Amazon/Google rivalry is quickly shaping up to be more intense than the Apple/Google rivalry.

Good scoop by Sarah Lacy. Undoubtedly the first of many.

For once, a bit of upbeat news for UltraViolet, the awful idea that Hollywood seems dead set on implementing: Amazon and Samsung are now on board.

That’s good news for the don’t-call-it-DRM newfangled DRM, which has been swimming in a sea of shit since it launched last year. 

Of course, the one name still not on board remains the most important: Apple. Wake me up when that happens — which given the customer response to UltraViolet seems unlikely anytime soon. 

I have no doubt that Google is working on some kind of “Nexus” tablet — they have to be. To say Android’s entrance into the tablet space has been a flop is a vast understatement. Google needs to get on top of this situation. And fast — Amazon, not Google, is leading now leading the “Android” tablet race.

With that in mind, it shouldn’t be too surprising to hear that Google may be targeting the Kindle Fire (and not the iPad) with any flagship tablet they make. While the source of this news is DigiTimes, which has a pretty awful track record when it comes to reporting this kind of stuff, on the surface this makes some sense:

The sources believe that Google will launch the own-brand tablet PC in March-April, featuring a 7-inch panel and Android 4.0 with a price less than US$199 to compete against Amazon.

The problem here is that Amazon is selling the Kindle Fire at or near break-even (they may even be losing money on each unit sold when you consider marketing, etc). And customers are getting what they pay for — a tablet of significantly less quality than the iPad. 

If Google is going to undercut the $199 price, the hardware is either going to be shit — or Google is going to have to take a significant loss on each one sold. Maybe they do that and say they’ll make it back in search advertising. But there is real money they’re going to have to pay to an OEM to get them to agree to that.

If you consider Eric Schmidt’s quote from last month: ”In the next six months we plan to market a tablet of the highest quality.” — only the latter option makes sense here. There is no way Google releases a tablet of the “highest quality” and sells it for under $199 without taking a loss.

Or maybe Schmidt is just being overly generous in his definition of “highest quality”. Or maybe the DigiTimes story is total bullshit. Impossible to know right now.

What I do know: if Apple aggressively drops the price of the iPad 2 with the launch of the iPad 3, this is going to be fun to watch. 

It took Amazon two weeks to do what none of the other tablet players could do for months: create a hit Android tablet. 

This, along with the fact that Barnes & Noble will probably soon move into the number two spot in terms of Android tablet shipments suggests something. And it’s not good for Google. 

Amazon issued a press release this morning to say that Black Friday was their best ever in terms of Kindle sales. In fact, they were up 4x over last year. Wow, right? But there’s still that one pesky little problem. 

Amazon’s VP of Kindle, Dave Limp:

Even before the busy holiday shopping weekend, we’d already sold millions of the new Kindle family and Kindle Fire was the bestselling product across all of Amazon.com. Black Friday was the best ever for the Kindle family - customers purchased 4X as many Kindle devices as they did last Black Friday - and last year was a great year.

Okay, so Amazon’s stated sales are 4X of “great”. But hey, at least we did get them to say “millions” — that’s progress.

I do not understand why Amazon refuses to release actual numbers when it comes to the Kindle. Actually, I would be fine with it, except for the fact that they issue press releases touting sales numbers… without giving actual sales numbers!

By most estimates, sales of the Kindle — including the new Kindle Fire — are indeed great. I bought a new Kindle Touch, I love it. So why the charade?

Marco Arment:

One of the biggest draws to the Android platform, the “open” Android Market, has just been sidestepped and made largely irrelevant for tablets. If the Fire sells anywhere near its target volumes, Amazon has hijacked the Android app retail channel for the long term: most sales of Android tablet software will be through the Amazon Appstore, and if your app isn’t there, it’s effectively invisible to the Android tablet userbase.

How long will it be before this effect spreads to the much larger Android-phone market? All it would take is a deal between Amazon and one of the big handset manufacturers to preload the Amazon Appstore, placed more prominently than Google’s Android Market, on all of their phones for a little while. Amazon knows how to play the retail game — it’s their business, and they’re incredibly good at it.

Yup. Yup. Yup.