Analyst

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.

Source: TechCrunch

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?

1. Gee, if only my book was portable, I could take it with me…
2. Pushing a button to bookmark my place is SO much easier than bending a page corner.
3. Those nasty paper cuts.
4. 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.)
5. 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?)
6. 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