Amazon's advantage, he said, is it is able to subsidize the Fire through its other ecommerce products, as more people shop online. "It's really a consumer play," he said. "People want a tablet, but they want it below $300."
Mahaney has no such reservations about the newest nontouch version of the Kindle, priced at $79. Amazon has 65 percent of the e-reader market, he said, and the company has made the model less clunky and cheaper every six months.
"This will be a major gift item in this fourth quarter," Mahaney said. Amazon is expected to sell 20 million e-readers and "I bet that number’s gonna be 25 million to 30 million units next year," he said.
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Mark Mahaney does not own Amazon shares but Citi has received compensation for noninvestment banking services within the past year.