NEW YORK ( TheStreet) -- With margins always a concern for Amazon ( AMZN) investors, the company can ill afford to lose market share for the Kindle Fire, the product designed to tie everything it does together. But it looks like the tablet could have its flame extinguished if Amazon keep pace with the competition on innovation. A new survey by research firm IDC estimates the Kindle Fire lost significant market share in the first quarter, dropping down to 4% from 17% in the fourth quarter.
Apple ( AAPL) was the main winner here, taking 68% market share, up from 54.7% in the fourth-quarter of 2011. As tablet sales overall slowed in the first quarter of 2012, Apple continued to dominate the market profoundly, and this could potentially be the beginning of the end for Amazon, if it fails to innovate. One hedge fund analyst, who declined to be named, expects Amazon to release another one or two versions of the Kindle Fire to try to get it right, but if they don't, Amazon could be in big trouble. "Game over," he said, when asked if Amazon was in trouble. "Apple reasserted its dominance in the market this quarter, driving huge shipment totals at a time when all but a few Android vendors saw their numbers drop precipitously after posting big gains during the holiday buying season," said Tom Mainelli, research director, Mobile Connected Devices at IDC in the press release. "Apple's move to position the iPad as an all-purpose tablet, instead of just a content consumption device, is resonating with consumers as well as educational and commercial buyers."