Kindle Fire
Amazon is selling its line of Kindle products at a rate of more than one million a week. REUTERS

Amazon tablet Kindle Fire will help the company post record sales, according to Stifel Nicolaus analyst Jordan Rohan.

The analyst believes Kindle Fire's low price point (only $199) and considerable offering of e-books, music and video content (via Amazon) will make it a star among Amazon's products.

Kindle Fire has staked out an important market position due to its loyal Amazon customer base and attractive device pricing, Rohan said in a note to clients. We believe the lower hardware price will correlate with high e-book and video content attach rates.

The analyst said he was impressed by Amazon's distribution prowess to define and dominate the low end of the device ecosystem and is betting on the tablet so much that he has even he raised his estimate for fourth-quarter Fire sales to 6 million units from the previously projected 5 million.

Amazon's device proliferation strategy has broader implications than most appreciate, Rohan said. Tablets including iPad and Kindle Fire are rapidly taking share from PCs and notebooks.

And, though Rohan's projection of 6 million Kindle Fires is a far cry from iPad sales (last week, Apple announced that it sold 15.4 million iPads during the fourth quarter), the analyst thinks Kindle Fire has carved a niche for itself after iPads and Android tablets.

We believe that software attach rates correlate inversely with the hardware price. From Amazon's perspective, this could drive real upside in its North American media segment revenues, Rohan said. From a cost perspective, the shift to digital delivery of content could help Amazon avoid costly free shipping subsidies. Hence, we believe there is a great deal more to the Kindle device strategy than most have discounted.

But Jeffries analyst Youssef Squali has projected a lower figure.

Squali said he sees potential upside from Kindle, but though Amazon may have shipped 5 million to 6 million Kindle Fires, only 4 million may have been sold so far.

Amazon is scheduled to report on fourth quarter results on Tuesday, but don't expect the online retail giant to formally provide sales figures of any Kindle-branded hardware products.