According to some recent research by Pacific Crest analyst Chad Bartley, the demand for both Kindle E Ink eReaders and Kindle Fire tablets has fallen noticeably from Q4 2011 to Q1 2012. There is some fairly compelling argument to be made, however, that changing any predictions based on this would be at best premature. Regardless of the way things stood a month ago, the Kindle world is about to be turned upside down and interest can’t help but rise as a result.
This is not meant to be a criticism of Bartley’s analysis. Based on the information at hand when he was writing, his report was accurate. A combination of consumer polls about intended purchasing and inside information about Amazon’s supply chains show a marked decline in interest in Kindles from month to month. He attributes this to a maturation of the eReader market, an increasingly well covered customer base, and consumer willingness to read on a variety of things besides eReaders. All good points.
Since we now know that three of the Big 6 publishers have already settled with the US Department of Justice to avoid an ongoing legal defense of their price fixing arrangement, that is all more or less irrelevant. The beginning of the end of the Agency Model will mean a return to lower prices on popular eBooks and a far more active marketing campaign on Amazon’s part. There has literally never been a better time to buy a Kindle.
Regardless of where you stand on the state of publishing, it is undeniable that things are about to change in such a way as to allow for lower pricing. As most of the problem with adopting eReading recently has been the fact that eBooks are commonly priced higher than their paper counterparts, changing the balance of things will open up new markets for the Kindle. Customers who were previously on the fence about a purchase will now have much more appealing opportunities in front of them and Kindle ownership will be that much simpler to justify as paying for itself in savings over a short period of time for any active reader.
Will there be ongoing and constant increase in interest in the Kindle? It is probable that sales will plateau at some point. It is also probable that Amazon’s luck from the DOJ has pushed that point off into the future a bit. Estimates may be down for the moment, but they will be revised soon enough. If anybody knows how to exploit a major opportunity like this, it is Amazon.
This is a great time to have a Kindle. If you don’t have one of your own yet, it might be useful to check out the Kindle Keyboard. Still in many ways the best iteration of the product line to date, it will serve you well in any reading situation. Might as well take advantage of the situation, since the customer benefits more than anybody in all of this.
2 thoughts on “Analyst Says Short-Term Kindle Demand Falling, DOJ Settlements May Upset Those Predictions”
This is a foolish study. Those involved with business know that you can’t compare a previous quarter to the next, as it often doesn’t mean much. Instead, you must compare the given quarter to the SAME quarter of last year, as this more accurately reflects the yearly ebb and flow of sales.
For one, Q4 is the biggest consumer spending quarter of the year, with the holidays, it would naturally make sense that there is less demand following the holidays, in Q1, than during the holidays in Q4.
As such, I lend no credence to this study, and feel that it fails to accurately represent the current state of Kindle sales.
If there are any analysts out there who don’t seasonally adjust their numbers (and are still employed) they probably just need to get some headlines. Investment banking is a cut-throat business.