Analysts Say Kindle Now Creates Nearly 10% of Amazon’s Revenue

It seems that Amazon’s Kindle is poised to hit something of a milestone in terms of its influence on the company as a whole.  A recently released Citi analysis has come to the conclusion that the Kindle now accounts for just short of 10% of Amazon’s total revenue, if you take into account all hardware and media.  While this would be a big deal in any case, it apparently merits recognition by Citi because of a rule they have which states that any segment of a particular company must achieve 10% of its total business before it can impact the growth rate of the company.  Surprisingly enough, this is not the only bit of interesting information on the report.

We all know by now that Amazon has been selling more eBooks than print books recently.  It seems to be the start of a trend.  When commenting on this development, the report also states that “We believe that industry-wide, eBooks will surpass Print books in terms of sales within 2-3 years.”  Apparently this has held up in the UK as well, where the Kindle has experienced even more rapid adoption than in the US, with Kindle books already outselling hardcovers at a rate of 2-1. They also make note of the fact that Kindle book sales have managed to triple in the past year and show no sign of tapering off any time soon.  This year over 310 million Kindle books will have been sold and next year we are looking at perhaps as many as 751.5 million. That’s a combined total of $3.8 billion from Kindles this year alone and as much as $6.1 billion next year.

Aside from numbers, what does this mean for the Kindle line?  Well, estimates have been favorably improved recently.  Amazon is now projected to sell 17.5 million Kindles this year and perhaps 26 million in 2012.  In addition, the success of the Kindle w/ Special Offers, which has managed to become Amazon’s best selling eReader so far in the short time it has been available, lends merit to the idea that we may see a Kindle priced under $100 by the end of this year. According to many analysts, this is the tipping point whereat the Kindle can feasibly become an impulse buy for customers rather than an investment, giving it that much more influence over the eReading and Publishing marketplaces.

Interestingly, none of the Citi analysis’s predictions for the remainder of 2011 or 2012 make any note of the potential merits of the upcoming Kindle Tablet.  While it has not been officially confirmed, which may well be the reason for the exclusion, it is hard to do research on Amazon at the moment without finding some information pointing out what’s coming.  Given Citi’s use of actual numbers in their sales figures and projections, something that they certainly didn’t get from the notoriously tight-lipped Amazon, it is clear that they go more than a bit beyond press releases and PR interviews.  It could have been interesting to see what their take was.


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