Recent releases from Amazon(NASDAQ:AMZN) have indicated that the Kindle, proving it deserves its place as Amazon’s #1 Best Selling item, has tripled in sales this year compared to last, in part due to last month’s price slashing. While many deride that move as the end of the Kindle as a profitable endeavor, there can be no doubt that the greater the availability of the eReader and the platform in general, the healthier the product-line it supports will become.
Being spread, as it is, between the Kindle device, iOS applications, Android applications, various smart phones, and PC applications, there are surprisingly few people left who cannot, should the choose to do so, access the eBook of their choice in a convenient and comfortable setting. As some reports indicate that the eBook market has grown by more than 160% in the past year, this increasingly pervasive presence gives Amazon an impressive advantage and even further encouragement to keep the momentum up. We already know that Kindle Editions are outselling hardcovers by a significant percentage these days, even if you exclude free eBooks from consideration and don’t exclude hardcover sales for books not available on the Kindle. It’s starting to feel like this is only the beginning of a much larger trend, however, that could truly change the way we enjoy books.
It seems like the USA Today has decided to include Kindle book sales in their best seller lists. This move demonstrates just how significant the Kindle is becoming in the publishing world. Sales on the Kindle store have grown to such a large number that they’ve come to be considered just as signifcant as traditional sales.
This move is also a great way for the USA Today to increase the influence of its best seller list. For most people, best selling books is synonymous with with the New York Times Best Seller List. The New York Times list the one recognized by Amazon (where Best Sellers are discounted) and most other retailers. Not to mention the fact that you usually don’t see advertisers quoting a book’s position on the USA Today Best Seller List. But by adding Kindle sales, the USA Today is trying to anticipate current trends and make headway against the Times list. So far, the USA Today is the only publication to have done this, which might mean that their list will be more accurate.
Unless of course The New York Times already counts Kindle sales. The data used to compile their list is a trade secret, so its possible they already include electronic sales and just haven’t told anybody.
I guess the figures had to come out sooner or later.
240,000 Kindles have been shipped since November 2007, according to TechCrunch, that’s what their source claims. We know that Amazon always stays coy about sales as part of its company policy so we may never get any conformation from Amazon about this.
TechCrunch says that their source is close to Amazon with direct knowledge of the numbers, possibly the same source that claimed Kindle v2 is on it’s way this fall — we’ve yet to see any evidence of that prediction.
TechCrunch goes on to say;
Doing a little back of the envelope math, that brings total sales of the device so far to between $86 million and $96 million (the price of the device was reduced to $360 from $400 last May). Then add the amounts spent on digital books, newspapers, and blogs purchased to read on the device, and you get a business that has easily brought in above $100 million so far. (Each $25 worth of digital reading material purchased per Kindle, add $6 million in total revenues).
From these numbers is appears that Kindle is already a profitable operation and has been so from the beginning, however, what we don’t know is whether after research and development costs have been factored in if the Kindle project overall is in profitability.
Wall Street has also came out with some new estimates;
Scott Devitt, an analyst at Stifel, Nicolaus & Co., predicts that Amazon is on track to sell 500,000 to 750,000 more Kindles over the next four quarters (including this one). He estimates that Kindle owners will buy an additional $120 to $150 worth of books and other content for each device, bringing the total revenues over that time period to somewhere between $225 million and $355 million. Based on that, he values the Kindle as a $1 billion business for Amazon.
So by this time next year there could possible be over a million Kindle’s sold by Amazon. In May, Citi analyst Mark Mahaney was estimating that total sales of Kindle’s this year would only reach 189,000. The image below shows what he thought would happen. Turns out that his numbers were way off, that’s analysts for you! Its time for him to significantly revise his estimate.
240,000 Kindle’s shipped, would you call it a success? It certainly has proved the nay-sayers wrong, it’s proved Wall Street wrong as-well.
If the numbers are to be believed, then its a wonderful start for the Kindle, the revenue from hardware sales alone is an estimated $100 million. When you begin to add on book sales, Amazon looks like its earning some major money for its shareholders.
Rampage is literally the word to use in this instance. A Time magazine article last week said;
“on a title-by-title basis, of the 130,000 titles available on Kindle and in physical form, Kindle sales now make up over 12% of sales for those titles.”
“Title-by-title basis…Kindle unit sales more than 6% of total book sales”
Incredible! A doubling of sales in the publishing industry is unheard of! in two months Amazon has managed doubled sales with a device which many critics claimed was not ready for prime time. The supply problems and pessimistic early reviews haven’t dented growth at all.
Which begs the question, have Kindle users started to purchase more e-books? and is that because e-books are significantly cheaper than their printed counterparts? or has Amazon been selling a stack load of Kindle’s, far more than previously thought.
Time magazine has a theory;
A couple of things could explain the uptick. The Kindle quickly sold out shortly after it was unveiled on Amazon at the end of 2007. However, the company recently cranked up supply to meet demand, and cut the price at the end of May from $399 to $359. Some analysts estimate Kindle sales at around 55,000 a month. At the same time, the Kindle is quirkier than your average gadget, and consumers are learning how to use it. It’s possible that as Kindle owners warm up to the gadget — and as the library of titles rapidly grows — they increase the rate of their purchases. We now return you to more scrutable data points…
So we are asking you, have to started to purchase more e-books for your Kindle now that you have had the device for a few months? or have you recently purchased the Kindle and was that because of the price drop?
Portfolio contributing editor Kevin Maney interviewed Jeff Bezos in a packed auditorium at New York University’s Stern School of Business. Bazos and Maney discussed many topics during the lengthy 1 hour 30 minute interview – everything from Bazos personal life, how he makes business/personal decisions, the founding and growth of Amazon, Amazons Infrastructure Services, Amazon Prime, Amazon A9 and of course the Kindle. It is a very in depth interview, Bazos goes into great detail about what the vision is for Kindle and how Kindle came to be – it is a fascinating interview and if you have the spare time its well worth watching.
We don’t all have a couple of spare hours every day, so if your just interested in what Bazos has says about the Kindle then you can skip most of the interview – Bazos starts talking about the Kindle in part 3 at 3min 25sec into the interview.
Portfolio: Let’s talk about the Kindle. What do you want it to be?
Bezos: Any book, in any language, ever in print should be available in less than 60 seconds. We worked on it for three years. It’s been selling out since being released.
Portfolio: You sold how many?
Bezos: You asked that so innocently, but you know I’m not going to answer. We have a long-standing practice of being very shy about disclosure, and I’ll stick to that practice. The Kindle has substantially exceeded our expectations.
Portfolio: Every effort at e-books has failed. Why should this one work?
Bezos: We decided we were going to improve upon the book. And the first thing we did was try to determine the essential features of a physical book that we needed to replicate. The No. 1 feature is that it disappears. When you’re in the middle of reading, you don’t notice the ink or the glue or the stitching or the paper — all of that disappears, and you’re in the author’s world. Most electronic devices today do not disappear. Some of them are extraordinarily rude. Books get out of the way, and they leave you in that state of mental flow.
In a joint statement today, Amazon.com and Simon & Schuster said will make 5,000 additional titles available for the Amazon Kindle in 2008.
“At Simon & Schuster, we are excited by how many Kindle books we’re selling and the feedback from readers who want to read our titles on their Kindles. We have also learned that readers aren’t just looking for new or bestselling books, but also books that are older or hard to find,” said Carolyn Reidy, President and CEO, Simon & Schuster, Inc. “These are the books that have proven themselves to be of enduring interest, and we want readers to be able to find them anytime, anywhere. We are pleased to take another big step toward that goal by making this great percentage of our active backlist available on Kindle by the end of 2008.”
“Kindle is re-igniting a love of reading — after purchasing a Kindle, customers purchase, on average, just as many physical books, and their total book purchases on Amazon increase by 2.6x. Kindle books are also becoming a meaningful portion of Amazon’s overall book sales much sooner than we anticipated — of the 125,000 books available both as a physical book and on Kindle, Kindle books already account for over 6 percent of units sold,” said Jeff Bezos, Amazon.com Founder and CEO. “This commitment from Simon & Schuster moves us closer to our vision for Kindle, which is to make any book, ever printed, in any language available in less than 60 seconds.”
Simon & Schuster said that it will be doubleing their content available for the Kindle.
One particular sentence in the statement stood out to me;
…after purchasing a Kindle, customers purchase, on average, just as many physical books, and their total book purchases on Amazon increase by 2.6x
2.6 times! I’m sure the executives at Amazon are thrilled with this particular statistic, it could mean that the Kindle has been a profitable ‘experiment’ — as Amazon puts it — from day one. I have no doubt that Simon & Schuster, and other publishers, want to grab a piece of the action now that they are aware of just how many e-books Kindle owners are buying.
Our old friend Walt Mossberg sat down with Amazon CEO Jeff Bezos this morning at the “D: All Things Digital Conference”.
Walt Mossberg gave the Kindle a luke-warm reception back in November calling it “mediocre” and “marred by annoying flaws”. He liked the idea and the shopping experience behind the Kindle, but thought that the device itself was where Kindle’s flaw lied.
Jeff Bezos does his normal sales pitch about the Kindle, but this time he throws in a bit of new information about Kindle sales. Walt asks point blank “How many Kindles have you sold?” Jeff politely refused to answer the question instead he gave us a new stat: “Title-by-title basis…Kindle unit sales more than 6% of total book sales”. So of the 125,000 titles available for Kindle, of all those 125,000 titles that were sold — digital and print — Kindle accounted for 6% of sales. Jeff also said he envisioned a time when e-book sales formed a substantial portion of book sales at Amazon.
Jeff Bezos also commented on a Kindle v2:
“There will be a second version, a third version, a tenth version. … but a second version is not that near.”
It may take a decade to get the product to where Amazon wants it, he said. So this has confirmed what many thought, that Amazon is committed to the Kindle and there will be a Kindle v2 release sometime in the future.
The interview wasn’t just limited to talk about the Kindle, Bezos also talks about the streaming video-on-demand service for Amazon, which will be released in the next couple of weeks amongst other things.
Mark Mahaney is the Citigroup analyst who last week made the assessment that by 2010 Amazon will be earning $750 million in revenue from the Kindle, which would account for 3% of Amazon’s total revenue. He also estimates that Amazon would shift between 189,000 – 600,000 units by the end of the year, growing to 2.2 million units by 2010. Some would argue these are very bullish estimates with good reason, and some would argue that Mark Mahaney is smoking crack, Scott Berry is one of those people who claims the latter.
This is what Scott Berry thinks:
Citi’s Mahaney has even gone so far as to suggest 3% of Amazon’s revenue (about $750M) will come from Kindles within 2 years. Worse yet, he assumes a sales ramp roughly half of the original iPod. Frankly, he’s smoking crack.
If Eliot Spitzer hadn’t brought an end to the practice some years ago (cough, cough), I’d almost think these two were trying to drum up business for their investment banks. Instead it’s probably something much more innocent, like say pumping the stock for the traders.
Strong comments indeed, lets take a look at the reasons why Scott Berry thinks like this:
Think about it: what problem is the e-book solving for consumers?
Gee, if only my book was portable, I could take it with me…
Pushing a button to bookmark my place is SO much easier than bending a page corner.
Those nasty paper cuts.
I can take my whole library with me. (Sure, I often read 10 books at a time. And I wish I could read fast enough to finish several books on a long flight.)
I can download a new book whenever I need one. (Yep. And how long does that take over a pokey wireless link? EVDO isn’t everywhere. And can I read the first page while the rest is downloading?)
It’s cheaper. (True, true. Unless you want to read blogs at $2/week or newspaper feeds at $15/month. That’s a lot to pay for portability.)
The first three points are quite sarcastic, and don’t add to his argument – I don’t think Scott Berry understands the concept behind the ebook. Point 4 sounds like a positive thing to me. Point 5 brings into question whether Scott has even used a Kindle before? On point 6, he is right about the blogs and newspapers being overpriced, $2 a week for a blog feed and up to $15.99 a month for a newspaper subscription is a bit pricey, but I wouldn’t call these ‘problems’ with the e-book concept.
Scott Berry’s arguments boils down to this: He thinks the entire e-book concept is a dud and wont take off and form the sound of his argument it look like he hasn’t seen, let alone used a Kindle before. Berry hasn’t spoken to anyone who has owned a Kindle, if he had he would have noticed that the vast majority of Kindle owners actually love the device, and there are rave reviews up on the Kindle discussion forums. Even may critics changed their minds once they got their hands on the actual device. And I also think he’s missing the bigger picture, the fact that it is Amazon behind the Kindle, you know, one of the biggest book retailers on the planet.
In time we will find out who is right and who is wrong, I suspect it is going to be Mr. Berry.
We have all heard this past week that Amazon is expected to shift around 189,000 – 600,000 units by the end of the year – then 2.2 million units by 2010, but how does this compare with other similarly ‘revolutionary’ devices in their first year in the market?
Silicon Ally Insider has compiled the numbers for us and as we can see from the comparison – if Amazon manages to hit expectations – it puts the Kindle in the same league as the first generation Blackberry’s and iPod’s. Now consider that the Blackberry and iPods are leaders in their field were both met with the same ridicule and suspicion that the Kindle is facing today. So if Amazon keeps plugging away, ignores the critics and keeps improving the device, by the time we get to the 3rd generation Kindle those reports which claimed that the Kindle will be the next iPod might not be so wrong after all.
Also of note might be Zune sales, which after a year sold just over 1 million units. (wiki)
Can Kindle really become the next iPod? please leave your thoughts and comments below.
Mark Mahaney – an Internet Analyst at Citigroup Investment Research – is predicting that revenue generated by Amazon from the sale of Kindle’s will be between $400m – $750m by 2010. That would account for 1% – 3% of Amazon’s total revenue, about half the projected revenue would be from the sale of Kindle devices and the other half from book sales after purchase. However, revenue is not profit and we don’t know what the profit margins are on the Kindle device.
Read the full statement by Mark Mahaney/Citigroup Investment Research below:
How Is Kindle Doing So Far In The Marketplace?
Our ability to answer this question is very limited. Amazon is the sole retailer of the Kindle and it has disclosed no information about its sales other than to say that it sold out in the first 5 1⁄2 hours. But we have pieced together four different clues to gain a sense of Kindle’s traction.
First, we note that Kindle has consistently been ranked among Amazon’s Bestsellers in its Electronics category. Ahead of the Apple iPod Nano, the Garmin GPS Navigator, and the Canon Powershot Digital Camera.
Second, we note that the Kindle has received a very large number of customer reviews. Per the exhibit below, we note that Kindle has received more customer reviews than any of the other Top 10 Bestselling items in Amazon’s Electronics category – 2,537 reviews as of May 12th – vs. 663 for the Apple iPod Nano 4GB Silver (3G), the #2 Bestseller. This is in part an unfair comparison. Kindle is a new product sold only on Amazon.com, while there are numerous versions of the iPod, and they are sold by numerous retailers. But still, the volume of reviews does indicate material traction for the Kindle.
Third, we see that the quality/tone of the customer reviews the Kindle is receiving is relatively positive. Below we compare the Star Rating Diffusion – 5 Stars vs. 4 Stars vs. 3 Stars etc… – for each of the Top 10 Bestselling Electronics Items on Amazon. What we see is that the Kindle actually receives fewer high scores than the other Bestsellers – 69% of its reviews are 4 or 5 Stars vs. an average of 80% for the other items. And it receives more low scores than the other Bestsellers – 22% of its reviews are 1 or 2 Stars vs. an average of 13% for the other Items. But for a Version 1 of a product “competing” against a several times iterated leading consumer electronics item like the iPod, a 69% Star 4 or 5 rating is relatively positive.
And fourth, we note that the most reviewed Customer Review of Kindle (“Why and how the Kindle changes everything” by Steve “eBook Lover” Gibson) has been reviewed by at least 27,000 people. Specifically, as of May 13th, 26,931 have read Steve Gibson’s review and actually commented on it by pressing the Yes or No button when asked if the review was helpful. And logically, there would be more people who read the review and didn’t bother to vote, although the voting step is hyper-easy. We believe that this helps provide something of a proxy for how many Kindles have likely been sold. We’d peg the number as somewhere between 10,000 and 30,000 Kindles sold to date.
The numbers look about right to us, what do you guys think?
For Amazon to hit the $750 million in sales figure a few assumption have to be made. The figures are based on the assumption that sales will grow from 189,000 units by the end of 2008 then to 2.2 million units by 2010 and that Amazon will drop the price to about $300.
Silicon Alley Insider had reported on Evan Schnittman’s – of Oxford University Press – response to unexpectedly strong sales via Kindle:
That prompted Schnittman to look at his royalty statements, which he said “stunned” him: He had expected to sell up to 200 Kindle titles in December, but says the real numbers were “an order of magnitude” more than that.
Schnittman says that a buddy from ‘one of the biggest trade publishers in the world’ called him this week and explained to him how well the Kindle formatted eBooks were selling. In light of this news Evan Schnittman went to look at his royalty statements which “stunned” him. Schnittman says he has no idea if these kinds of sales will continue, but says that this has turned him from a digital skeptic into a digital believer and with sales figures like that it’s no wonder he’s a believer now!
With all this success, it raises the bigger question – How many eBooks does Amazon sell each month?
Please leave a comment if you have any questions or thoughts.
It seems like the 
I guess the figures had to come out sooner or later.
Rampage is literally the word to use in this instance. A Time magazine article last week said;
In a joint statement today, Amazon.com and Simon & Schuster said will make 5,000 additional titles available for the Amazon Kindle in 2008.
Silicon Alley Insider had reported on Evan Schnittman’s – of 
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