Kindle sales cooling down, Fire heating up?

June 26, 2012: 3:16 PM ET

The e-reader may be getting ready to take a permanent backseat to the sexier tablet.

FORTUNE -- Are people tiring of black-and-white e-readers? It seems that way.

According to a recent report from Pacific Crest Securities, a Portland, Oregon-based investment bank, orders for components used in Amazon's standard e-readers have fallen 75% from the bank's previous expectations.

We still expect new multi-touch, black-and-white devices to launch in Q3, but we are cutting our Q2 and 2012 unit sales forecasts to 1.2 million and 9.7 million, respectively, from 1.5 million and 12.3 million. 

But while Kindle sales may be falling, demand for the Kindle Fire is climbing, with requests for components up nearly 60%. Things are looking so good for Amazon's (AMZN) color tablet that analyst Chad Bartley says sales could reach 1.8 million units for the second quarter and 14.7 million units for the year, which would be at the higher end of his previous estimates.

MORE: Amazon's Prime and punishment

And while we can expect a new 7-inch Kindle Fire in the third quarter, we'll have to wait longer (think "infinite delay") for that long-rumored larger tablet.

If demand for the Kindle Fire is really heating up, that's good news for Amazon, which reportedly lost money on each tablet sold during its first few months available. More tablets in more people's hands means increased sales of its various media, from books to video. Which the company's philosophy until now of sacrificing upfront profits for long-term gains, may be exactly what Jeff Bezos envisioned.

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JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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