The Kindle, Amazon’s ugly but useful ebook reader that launched in November 2007, may be a burgeoning hit, says Citigroup Analyst Mark Mahaney. Citi expects Amazon to generate between $400 million and $750 million in revenue from the Kindle by 2010, or 1% – 3% of Amazon’s total revenue.
The key points of differentiation with the Kindle and competing devices is the fact that books and other content is delivered to the Kindle wirelessly and that the Kindle has the largest book selection by a significant margin (more than 120,000 books, magazines, newspapers, and blogs, including 98 of 112 current New York Times Best Sellers). Mahaney also points out that the Kindle has more memory than competitors, and supports newspapers, magazine and blog subscriptions. See Mahaney’s comparison chart below for additional details:
Mahaney points to slim public data about Kindle sales to date in making his predictions:
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 4
GB 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.
Citi took this indirect sales data and built a model based on the adoption curve of the iPod “Here’s what’s known. Launched in CQ4:01, the iPod went from 129,000 unit sales in its first quarter to becoming a mass market phenomenon, with a current installed base of approximately 100MM.”
They apply similar adoption rates to the Kindle that the iPod saw (starting at a much lower base: 129,000 iPods v. 10,000 – 30,000 Kindles in first three months on the market) and then discount the entire model by 50% – 75% to hedge risk in coming up with the three year revenue model. “So perhaps, if Amazon executes right with its Kindle product and marketing strategy, the iPod analogy for the Kindle won’t be too far stretched,” Mahaney says.
About half the projected revenue is from Kindle sales, half from book sales after purchase.
What’s our take? I was down on the Kindle when it first launched but quickly fell in tepid like with it once it was in my hands for a few weeks. But then John Biggs at CrunchGear borrowed it from me in January, apparently permanently. I’ve learned to live without it. The biggest issue I had with it, once I got the hang of it, was accidental page turns. I’m still buying a lot of normal books, but when I get my Kindle back I’ll happily switch back to the ebook world.
Love my kindle.. Get the WSJ and IBD daily on it. Ordered a few books as well. A lot lighter than newspapers and a great device. It’s an awesome device… just need to eliminate the charge for blogs and it’s perfect…
Trying to see if Sarah Lacey’s book is going to be on it tomorrow, we’ll see..
Does it come in other color then white?
syed
http://sirehdancengkeh.com
I always thought Kindle is getting more publicity that it deserves. I guess I am wrong
Kindle = suck. I’ll take an iPhone thanks.
Take those Kindle volumes down by an order of magnitude and maybe you’ll get a better idea of how many were actually sold.
“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… We believe that this helps provide something of a proxy for how many Kindles have likely been sold”
What kind of stupid logic is that? Since when did reading and rating a review equate to someone who bought the product?
http://www.myadulthookup.com/
The web’s first real free adult dating site. No cost to send and receive messages.
Am I the only one who senses a huge publicity scam by Amazon about the popularity of the Kindle? I’m the the techie world, and I’ve never seen anyone with one nor heard mention of anyone having or wanting one.
Are these revenues only from kindle sales or what is the revenue from books/ magazine’s/ subscriptions? And how much Amazon is paying for FREE wireless service to all customers? So many questions and unknowns..
I was about to buy a Kindle after reading this article. Then I realized its not available in Canada or anywhere outside of the USA.
Sigh.
I’ll believe this piece of horsecrap about the kindle when Dean Kaman makes some money on the aweful segway… when Pets.com comes back to life… when webvan gives back the $375 million it wasted. But what do I know other than I’ve hated that thing ever since I first saw it — it makes me think rich people have WAY too much time on their hands and even less common sense – - just wasting money… if it is a hit like these people are suggesting I owe people with no brains and too much money an apology — which I’ll gladly give.
Well, I love my freakin’ kindle. I’ve had it for about 3 weeks now, and have read more books than I have in the last 6 years.
Which was my point in buying it. It’s light enough to carry easily and I can fit in a ‘chapter’ at a time.
Try it, you’ll love it.
Does it change the analysis when you factor in that Steve Gibson plugged that review on Security Now, which has a large and pliable listenership?
Also, enough with the Kindle hate, people. I can’t afford one, either. Doesn’t make it a bad product.
why is this ugly box so popular?
Yes, it is another Amazon PR stunt. Everybody in display panel business know E-Ink/PVI’s weak factory output. Amazon probably sold less than 20,000 units at this point.
dude the kindle is crap and boring who fucken reads anymore any way video baby video
I’ve had my Kindle for a few months, and I like it. A few weeks back I was sitting on Waikiki beach, browsing the Amazon bookstore and downloading books. It’s like having the bookstore in the sky. It’s easy to import non-Amazon books into it as well.
The biggest opportunity for improvement is in the page turning controls. The edge of the entire right hand side of the device is the page turning clicker, so it’s difficult to hold the thing without jumping forward several pages.
The eink display is readable, but would benefit from a white background to achieve better reflective contrast with the black letters.
Bottom line, the Kindle is going to spark tremendous growth in the ebook marketplace. Good for readers and authors alike.
Mark Coker
http://www.smashwords.com
Digital self-publishing
For those of you who have not seen a Kindle, they are very nice. Sure, they look like oversized calculators (though they are smaller than I imagined), but the display is CRISPY. I have never seen text displayed so clearly on an electronic device. Good for weary eyes.
As several have pointed out, it is absurd to base a sales estimate on how many times a review has been given a helpful rating.
All that takes is a click. Buying a Kindle requires spending $400 plus the money to begin to build a library of books.
Yes, Amazon may sell $750 million in Kindles by 2010, and I may be a billionaire by then. But neither is very likely (or has any real data to back it up).
First, there are way more than 100MM iPods out there, closer to 150MM.
Then, this assumes that nothing else will come on to the scene in terms of digital consumption of traditional print material by 2010. A device by Apple or another company, or even an enhanced PDF reader customized for such a purpose on the iPhone might upset those projections. I explored that here:
Why is the new Kindle eBook reader from Amazon and not Apple?
http://countern...ndle-vs-iphone/
Finally, there’s scant little data to backup current or future Kindle sales.
Umm, you might want to email Steven Windwalker–the guy with the “Kindle Tips and Tricks Book”–and just ask him how many copies he’s sold.
The #s might surprise you.
$750 million Kindles is definitely a lot. We just have to wait and watch.
It won’t be selling that many unless they are ramping up development. Until the screens are ‘paper-like’ rather than ’screen-like’, I don’t think such a product will become mass market.
Companies like Plastic Logic are developing such screens and will be releasing products like Kindle soon I expect: http://www.plas...om/products.php
With that type of technology, I will be a convert.
holy crap that would be fantastic….
Bezos is more like Steve Jobs than the guys from walmart
he IS a freaking genious…
who would have thought.
I am very bullish on AMZN now
this will change my way of reading digital books
I’ve now changed my thoughts after a little education, and some good conversation with some smart people. I haven’t yet tried the Kindle, but I can see there are some compelling advantages for the extreme readers only:
* Carry thousands of books in one device. Save space in your bags
* You can instantly purchase a book – the barrier is zero, and you don’t have to transfer it to the device.
* It comes with an unlimited data plan to download books – I think from Sprint ? It’s built into the price you pay upfront.
What a joke. Reading isn’t as pervasive or hip as music listening, therefore to compare the ipod with a kindle makes no sense.
Wouldn’t Amazon be releasing sales numbers if they were so impressive?
I was at the Dr’s office the other day and saw an older man reading from a Kindle. It looked totally natural.
I don’t know if the Kindle is the one but e-readers are coming. I think we’ll all start to see them popping up.
@Rich – “publicity scam”
Oh man, Arrington is an expert in publicity scam, he gets paid good money to do that.
Nobody owns a kindle, nobody uses one.
That’s what the web and a laptop are for (or an ipod).
Total Failure no matter how much they “inflate” the numbers
Pigs may fly by 2010.
So far I have purchased 4 Kindles, one for myself and the rest as gifts. The Kindle has completely changed the way I read. I get up in the morning and there is the newspaper on my Kindle. No more messy pages the majority of which I don’t even read. I have read more in the last 5 months than the last 5 years. I carry it with me everywhere and read whenever I get a moment.
Before the Kindle, I would normally buy a new book from Amazon every month or two. Since I bought the Kindle I have purchased over 20 books. It is so easy to purchase with the 1-click and wireless download. In addition, you can download samples of Kindle books which usually include 2 or 3 chapters. Consequently, I am reading a wider variety of authors and genres than in the past.
I agree that it is ridiculous for Mahaney to base the Kindle sales estimate on the reviewer rankings. However, one thing is clear from the reviews, the majority of people who actually own the Kindle give it 4 or 5 stars. Most of the 1 star reviews on Amazon are from people who don’t own one, haven’t tried one, hate the idea of the Kindle, hate the DRM aspect, etc.
I think the Kindle will be a big boost to all e-readers and maybe its time has finally come.
I’m in a publishing program at school right now and think I am surprised about all of the negative kindle comments here. I expect it from my classmates who seem to have a strange obsession with the smell and feel of brandnew books (they won’t even consider purchasing a used book…they are as bookie as it comes). But I thought that a tech blog would have readers with more open minds.
I think the thing people consistently forget is that these technologies aren’t necessarily for us (anyone 30+) they’re for the younger crowd. They expect things instantly. They will expect their newspapers instantly when they get their first banking job in NY. They will expect to read their blogs on the subway on a device that is kind on the eyes. They will want their professional books available at all times.
I like the design but not the business model. I’m not paying Amazon $400 just so I can pay them for content. Apple is a bit more open. I’d pick the iPod Touch before the Kindleing.
Was this guy from Citi a transfer from their subprime loans division?
eInk eBook Readers: They’re All Dead, Jim!
The Kindle isn’t repeatedly selling out because it’s selling so well (although I’m sure that it is doing much better than Amazon’s expectations), it’s because of long lead times on components, more plastics tools etc caused by their original under estimations.
If Apple are truely working on an iPhone/iPod Touch-type tablet, then Kindle will be killed by it I think.
(having issues submitting a comment today for some reason)
I like Mahaney, think he’s smart and usually spot on. However, I just don’t see an iPod like adoption curve for the Kindle. Not even at 50% to 75% discount rates.
If you are a reader, its hard not to like the kindle. The eBook concept is nice, but you can read on your laptop, iPod, cell phone, etc… although the UI while reading a book on the Kindle is nicer. The wireless aspect is what makes this a revolutionary device. I can be just about anywhere in the US and I have 120,000+ books, dozens of newspapers and magazines, and thousands of blogs available to me on a little 10 oz device.
(ah, does TC not like my link within the post, I thought that was OK)
The Kindle is no iPod
Despite it’s appearance and design, or lack there of, the kindle brought back fond memories of the 70swhen i first saw it (pong, battlestar galactica, micronauts) . It has that 70s inspired space-age look to it, though it does feel cheap and the leather cover that was included looks like a jr high home-ec project.
That aside, this is a very useful device. You essentially have the world’s library at your fingertips in a form factor–comparable to a book, that’s pleasant to read from vs squinting at a tiny screen on other mobile devices.
The kindle may never get the market penetration of the ipod as many in the US prefer music to cracking open a book but the hype is real. I waited almost 3mos to get mine along with thousands of other customers because Amazon couldnt keep up with demad. Making customers wait that long would be stupid marketing ploy by anyone in business…
Ok, really? What kind of stock do you think they have for a product like the Kindle?
25k are you kidding?
I would say that it is a disaster if they are too far from the 100k mark by now!
Jeez, you aren’t that smart, are you Arrington?
I love all the comments by from people that have never even used, or seen, the device. I actually own a Kindle and love it. My wife and I have to “negotiate” over who gets it for the day. It’s looking like I’ll need to buy another one.
I’ve tried reading ebooks on my laptop, tablet PC, and PDA, but never liked the experience on any of them. The Kindle is the first electronic reading device that can actually replace paper for me. Reading on it is a pleasure, and I have yet to have a problem with accidental page flips (I just hold it on the keyboard area which is disabled in when reading a book). The wireless integration is great, but what I really like is just the simple convenience of being able to take all my reading with me on one device. And since I usually listen to audio books on my long commute, I can put those on the Kindle as well. I think the Kindle is a game changer for readers, and from that POV the comparison with the iPod is certainly appropriate.
I surf the web 10 hours a day from pcs laptops and ipods even in bed. No need for a kindle.
You say you have 100k books to choose from?
I have the whole internet to surf, which in my opinion is way more interesting.
Can’t beat that.
One last thing, when Apple comes with a 9″ MacNano or iTablet, where you gonna put that kindle?
I have a Kindle and love it too. I particularly like the ability to sample a book before I buy it. I have easily spent as much money on books as was spent on the Kindle originally (it was a Christmas present), and doubt I will slow down. I think most of the negative comments are from people who simply aren’t that big into reading books. But I would far rather read an in-depth book on a subject than a short Internet article. When I’m done with the book, I know the subject far more completely. Anyway, the Kindle is the best electronic tool I’ve ever had. And while I love books (and still buy paper versions), the ability to carry around thousands of books and search them all is priceless.
There’s been some recent studies done in which 82% of readers still prefer printed books over new technologies. While that may not surprise many people, the reasons why are very interesting. Take a look…
http://www.zogb...ews.dbm?ID=1513
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