We don’t have any real way of obtaining solid sales numbers from Amazon with regard to the Kindle line. They simply don’t choose to make that information public. Still, analysts are generally able to make decent guesses on how the devices are doing and where they stand with regard to the competition. According to Cowen analyst Kevin Kopelman, things are not looking up.
Kopelman, who had previously estimated that sales of the Kindle Fire tablet in 2012 would hit approximately 14 million units, has lowered his estimates to 12 million. He calls his previous numbers “unrealistic” in the wake of Google’s strong competition. Along with this revision, the Cowen analyst has revised his expected growth of the eReader side of the Kindle line from 30% to 3%. Factors such as Amazon’s focus on pushing the Kindle Fire to the exclusion of everything else and the long wait in getting a front-lit eReader to customers are cited as important considerations.
This may change depending on consumer reactions to the anticipated Kindle Fire update, of course. We don’t have any real information yet and it has to be assumed that Kopelman is similarly in the dark regarding the specifics of the new design. This didn’t stop him from mentioning the rumored iPad Mini in his analysis as a source of competition, but even imaginary Apple products often require special treatment at the moment.
The idea that the Kindle Fire will be completely wiped out by its Nexus 7 competition is far fetched at best. If Amazon never released a hardware update to the current model, that might be possible. As it stands, however, there is every reason to believe that significantly more is being done to make owning the next generation of Kindle Fire even better than owning the current one.
Add into that the benefits of the tablet’s integration with Amazon services and you have a recipe for ongoing success. To be fair, Kopelman’s report doesn’t disagree with this. He simply indicates that another 7” Android tablet is taking up consumer attention. That is going to happen. Will Amazon always be the best selling brand in small tablet design? Probably not, given their interest in creating devices for fairly narrow use cases.
Take this for what it is. Amazon will still be doing just fine with their tablet sales, they just finally have some impressive competition at the same price point. The Nexus 7 could be the Kindle Fire’s Nook. Competition always brings out the best in situations like this. Short of somebody else coming in and completely destroying the budget tablet market, which is unlikely in the case of either Apple or Microsoft despite the impending release of Windows 8, Amazon is going to be invested in things here for the indefinite future.
That means more Kindle Fire sales, more features, and more reasons for customers to be interested. This is a company known for its customer satisfaction, which makes it especially unlikely that they’ll drop the ball on a major product push like this.
Remember when we were predicting a Kindle Fire launch with multiple tablet sizes to choose from? Well, better late than never. Chad Bartley, a Senior Research Analyst over at Pacific Crest, has predicted that we will be seeing a 9” Kindle Fire before the end of 2012, possibly as early as this summer. Along with this, an update to the already incredibly popular 7” model is expected. While previous estimates for upcoming Kindle tablet sales had been falling in light of a rumored iPad 3 launch that may include a 7” iPad meant to compete directly with Amazon, the same analyst has upgraded his estimates to account for anticipated demand.
We first heard rumors of an 8.9” Kindle tablet on the way in 2012 via a Digitimes report back in November that indicated a May launch was planned. While Digitimes is often less than perfectly reliable, they have managed to come up with some good information before on many occasions. In this case, they also reported that the choice of screen size was meant to simultaneously take advantage of pushes by LG and Samsung to promote the smaller screen size and to avoid competing directly with more established tablets like Apple’s iPad and Samsung’s Galaxy Tab.
What this will mean to Kindle fans is hard to say at this stage. The immediate concern for owners of the original Kindle Fire will be continuing support. As many owners of the 1st Generation Kindle can attest, Amazon has a tendency to quickly move forward without worrying about ongoing backward compatibility for their newest efforts. At the same time, however, there has obviously been an increased awareness of the importance of consistent branding. While the second generation of Kindle eReader was a fairly noticeable break from the original, subsequent offerings have all remained fairly obviously related. Add to that the fact that the Kindle Fire is already capable of running more recent versions of Android (as demonstrated by recent videos involving ICS installs) which would be the most obvious thing for the company to change on the software side of things, and there is reason to believe that there will be at least a few years of supported life for the current Kindle Fire.
More interesting will be seeing how they handle the upgrade. Will the new model or models bow to customer demand for a camera, for example? There have also been indications for some time that NVidea is interested in getting involved with Amazon’s tablet efforts, which could mean a jump into the Tegra 2 or even Tegra 3 for the larger new Kindle Fire. Either of these would make sense given the emphasis on video and app use that Amazon has made apparent.
Unlike previous rumors, this one is adding up from a number of different sources and seems to be confirmed by the most recent Kindle ad uploaded to Youtube. In this, the iPad’s flaws as a reading device are still emphasized in a familiar message, but they also make a dig at the high price tag relative to the $200 Kindle Fire and imply that there is little the iPad can do that the Kindle line can’t accomplish collectively for less money. To many, this seems to be setting the stage for more direct Kindle vs iPad conflict.
It’s safe to say that the Kindle Fire has made an impression. Tablet prices are dropping across the board, some major hardware developers seem to be reconsidering their desire to enter the fray, and Amazon has increased their expected sales numbers on the order of millions of units beyond what was originally planned for the 2011 holiday season. Not only does this spell good news for Amazon’s first non-eReader (or maybe post-eReader? Hard to say precisely where to draw the line since it technically can show you books), it means that the hardware line is sure to continue and expand as time goes on.
There is some contention at the moment about exactly which Kindle Fire followup we can expect to see next. Some are certain that it will end up being a 10.1″ direct competitor for the iPad while a newer contingent citing supposedly inside information from the production chain has started indicating somewhere around 9″ as the next step. Regardless of where you would place your bet, one frequent point of speculation is the potential for a Kindle Phone.
There has been speculation before that Amazon was interested in entering into cellular devices, but until recently that seemed doomed to be nothing but a rumor. This past week, though, Citigroup analyst Mark Mahoney noted that certain checks they have done indicate that development for an Amazon Phone is already underway with delivery expected in 4th quarter 2012.
To be honest, it is hard to know what to expect moving forward. While this seems to be fairly detailed information, it feels like there is little in it for Amazon in the end. The tablet makes sense since Amazon is able to completely control the data end of things and sell at near cost, undercutting the competition. In a cellular market closely controlled by carriers, there might well be less room for such tactics. When consumers are already used to getting hardware for less than half of its suggested retail cost, budget options aren’t as shocking.
What I could definitely envision, however, is a Kindle Fire-like device with a smaller screen and optional 3G coverage along the lines of what is available for the iPad. It would work marketed as an iPod Touch competitor but still have the hardware necessary to function as a communication device should the desire arise. Even without the 3G, relying on WiFi availability, such a thing would make a big splash at the right price.
As much as it might be a difficult thing to enter into the smartphone marketplace at this time, would Amazon be willing to pass up a chance to grab hold of what is only going to continue to be an expanding market? The Kindle Fire has demonstrated for them the potential of Android devices and the fact that they already have an Android fork fully developed and customized to fully integrate into their sales systems means that much of the work is already done. Maybe it’s just optimism, but I think the Kindle Phone is definitely on its way.
Admittedly I was one of many people who were initially a bit shocked and disappointed by the news that the Kindle Tablet would run on a forked version of Android from a pre-3.0 base. Since Android 3.0 was the first version optimized for tablets, and since I want the Kindle Tablet to be as useful a device as the Kindle, there seemed to be an important connection being missed somewhere along the line. After a bit of further research, though, this could be a great move to establish the new ecosystem.
There were some analyst observations made recently that brought the truth of things out pretty well. Essentially, since this isn’t just an early release of Android it may not matter quite as much that it isn’t based on the most recent release. The best way to think of this may be as an alternative to Android. The Kindle Tablet OS, by all accounts, is built on the Android base code but does not carry over any of the experience. It seems like something of a slight to Google to take their offering and run in another direction with it, but that’s another matter entirely.
What makes this an observation worth making is the way it increases the Kindle Tablet’s potential for creating a real presence for itself. On the developer end of things, Android development is forced to exist in such a fragmented environment at this point that there is no simple way to keep up with everything. Amazon is in a position to immediately take a dominant position among non-iPad tablets. The combination of a huge user base and a stable environment could be enough to persuade many developers to release software exclusively for the Kindle Tablet, even leaving out the ability to make assumptions about the hardware capabilities of the end user. A greater selection of apps than competing tablets is a big draw for customers, if the iPad can be taken as an example.
On the customer end of things, Amazon has already proven to be more effective than Google in moderating the content of its own Android App Store. They’ve also shown a fair degree of insight into meeting user demand, as demonstrated by the Kindle, Kindle Apps, and the Amazon.com websites in general. Combine the expected $249 price with a unique and positive user experience and it is hard to argue with a purchase, especially compared to more expensive and less impressively backed competing tablets.
Yes, it would have been nice to see Amazon having used a more recent release as their starting point. The fact that they didn’t does imply that they’ve been at work for quite a while making the best product possible. The Ars Technica preview that brought so many of these details to our attention in the first place emphasized how fluid and intuitive the tablet was to use, so apparently they have made good use of that time. While I will continue hoping for certain hardware improvements in the form of a high end Kindle Tablet(Hollywood?), there seems to be no reason to find fault with their software decisions at the moment.
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.
That’s what analyst Steve Weinstein of Portland’s Pacific Crest told the San Francisco Chronicle, adding that Amazon has sold around 40,000 units so far this year and could sell between 700,000 – 800,000 by the end of 2008 hitting $2.5 billion in sales by 2012.
Considering that Apple sold 376,000 iPod units in its first year, the numbers look promising, that’s considering you believe Mr Weinstein’s numbers – we think his numbers are highly inflated and Mark Mahaney’s figures are more realistic. But that’s not the interesting part of Steve Weinstein’s analysis, he goes on to say that Kindle wont have the same impact on the industry as the iPod had on the music industry, – I think we can all agree on that – one reason being that that price of the Kindle, currently at $359, is too expensive for mass acceptance. Is $359 too expensive? what we have got to remember is that Kindle is the first generation device, and prices will inevitably drop.
Tim McCall, VP of sales at Penguin Group USA said “We see it as an incremental change” suggesting that the Kindle is a catalyst in an overall move towards an e-book distribution model for the industry. Tim McCall added “It’s certainly a device that has energized the digitization of books”.
Is the Kindle too expensive for mass acceptance? what do you think:
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