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.
Source: SeekingAlpha, Mobileread Forums