Amazon prepared to ship 5 million Kindle Fires

Amazon has increased production of its flagship Kindle Fire tablet, reportedly so much so that the company is ready to ship more than 5 million units before the end of the year. cites sources close to Amazon’s production channels as predicting an initial shipment total of around 3.5 million.

The Kindle Fire could very well become the de facto Android tablet, largely because of its consumer-friendly price tag of just $199, highly undercutting the price competition in a world of $500+ iPads, Galaxy Tabs, and Xooms.

It’s assumed that it actually costs Amazon more to make a Kindle Fire than the $199 it will charge to consumers, but the plan is to highly promote digital goods and services that will, over time, account for that loss in hardware sales.

Things like Amazon pay-per-view instant videos, Amazon MP3, and Amazon Cloud Drive are all potential moneymakers for the online company. In addition, the Kindle Fire encourages users to sign up for Amazon’s $79/year Prime membership, allowing users to get extra digital access. Of course, signing up for Prime offers advantages on as well, so it could ultimately lead to more sales of physical merchandise too.

For Amazon, it’s about getting as many Kindle Fires into the hands of consumers as possible. Once it holds a dominating position in the Android tablet market, the number of possibilities is endless.