News & Analysis
Opinion: Kindle ramp surprises amateur pundit
Mark LaPedus
8/10/2009 1:11 PM EDT
SAN JOSE, Calif. -- For some time, I dismissed E-book readers.
I called them fads. Expensive gadgets--or even the latest in a long line of product disappointments, such as digital homes, mobile TV, tablet PCs, WiMax and others.
But now, I'm changing my tune about digital book readers. First, my mother bought one. And now, I'm beginning to see consumers buying them.
More importantly, the Kindle, Amazon's E-book reader, is gaining traction. I am truly surprised, making me believe that the Kindle could potentially be a driver for select semiconductors and LCDs. It's not a ''killer app'' but a nice driver.
Worldwide shipments of e-books are expected to grow from almost 1 million units in 2008 to close to 30 million units in 2013, according to market research company In-Stat (Scottsdale, Ariz.). This shipment growth is expected to result in a semiconductor market of $1.1 billion in 2013, In-Stat said.
I am not so sure about Sony's E-book reader or other devices. But clearly, Jim Friedland, an analyst from Cowen and Co., is bullish about the Kindle.
''We are raising our Kindle estimates based on our analysis of Amazon's Q2:09 10-Q filing. We project that the company will generate GAAP device and content revenues of $266 million in 2009, up 13 percent from our previous estimate of $235 million,'' he said in a new report. ''We believe Kindle device and content revenues will account for 10 percent of Amazon's North American sales in five years, or $2.3 billion in GAAP revenues.''
Going forward, Kindle will continue to gain momentum. The Cowen analyst is ''increasing 2010E unit sales estimate by 11 percent to 1.8 million. We expect that Amazon will end 2009 with 1.5 million active Kindle units, increasing to 3.0 million by the end of 2010. We believe that 17 percent of active U.S. Amazon customers and 4 percent of the total U.S. population will own in a Kindle in five years.''
Not too bad. So why is the Kindle taking off? ''We expect growth to be driven by: (1) low-cost marketing on the homepages of Amazon's 50-55 million U.S. users; (2) lower prices for e-books versus traditional books; (3) declining device prices driven by cost efficiencies from higher unit volumes; (4) potential adoption by educational institutions; and (5) we believe it is unlikely that competitors will be able to make a dent in the iTunes/iPod-like position the Kindle is building in the market.''
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John Hennessy
8/10/2009 6:37 PM EDT
Logically e-book readers should succeed.To do so, they have to feel like conventional books, but better. You have to be able to read them in the back of the cab going to Hsinchu. They need to be able to transform magically into just about any book you want. They have to be cheaper than ... well that is one key question. Eventually you will be able to buy a reader plus (say) 20 recent books for $100. Then they will blossom.
Why is it taking so long. Well the Sony reader was a dog with appalling marketing. I tried one in the flagship Ginza Sony store and I was truly disappointed. I hope they have gotten better in both regards (Howard Stringer - can you hear me!)
John Hennessy
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timbo_test
8/11/2009 4:43 AM EDT
I agree with you John! I looked at a Sony ebook reader almost two years ago. The form-factor was OK, but even at the attractive offer price ($199, I think) it did not tempt me. It could and should have been so much more - a communicator, a navigator, and a fully functional personal organizer. If it just replaces a book (or even a library of books, then you/we/I am going to be carrying all that other stuff as well and frankly I'd rather carry a (paper) book and a smartphone than an e-book reader, a dumbphone phone, an organizer and a pile of charger adaptors to keep everything topped up!
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The Artful Bodger
8/11/2009 7:02 AM EDT
To me "E-Book Readers" are ancient history. I have been using so-called "Smart Phones" for most of the 2K's and they come with Microsofts E-Book reader (or it is easily installed).
Many Books exists in the required Formats and are easily found, formats like PDF etc. take some effort to convert.
The only reason I do not think the Kindle and it's like will take off is the simple fact that no-one actually reads anything anymore, at least not among mass market consumers.
Their reading needs are covered by Blogs, Trivia and other shallower than though stuff from the major net outlets and it's all free.
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Walter Greene
8/11/2009 9:14 AM EDT
I've never thought much of paying a large sum for a E-reader then paying prices comparable to paper books for the electronic book. Especially if the electronic book is in a proprietary format. Amazon has started to address some of the other risk issues of using this kind of thing by keeping records of what you buy and allowing you to get copies if your E-Reader bites the dust. But the greatest issue to me is the same issue I have with music and videos: If I've bought it once, I don't feel that I should every have to buy it again. That I've bought rights to the content, and not the medium on which it is acquired.
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Mohammed Hamed
8/11/2009 3:09 PM EDT
You know what's good about a book? You can store it anywhere, you can throw it around, you can fall asleep on it without fear of crushing it, you can mark it with whatever pencil or marker lying next to, you don't fear of it getting scratched or running out of batteries, and finally you can share it and pass it around. Until Kindle can do all that, I'm not paying the hefty price for it.
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PAJeff
8/11/2009 4:00 PM EDT
Wireless downloads and no need to have a computer involved. I believe that is what is driving Kindle sales. My wife and siter both have Kindles and that is what they both like the most. You do not have to be computer savvy to use a Kindle.
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memeB
8/11/2009 4:01 PM EDT
A CD is not the same as a MP3 file. Now look at the CD and MP3 market. With Kindle you have almost an entire library with you or most of what you want to read in that period. Can't lug around more than 2 books at a time. To be fair there are many restrictions on an DRM'd ebook that I don't like. When buying a book I always prefer an ebook over a traditional one. I pre-ordered my Kindle 2 when it was announced at $360 six months ago. And I still like it. There is no doubt in my mind it will be a huge market once the price of the reader falls below $150. But again there are way more people listening to music than people reading books.
memeB
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bdunphy
8/11/2009 4:12 PM EDT
I am an avid reader and have owned a Kindle for about a year and love it! I actually prefer the Kindle to paper books and am disappointed if a book I want to buy is not available on the Kindle. Since I buy a ton a books and the cost/book is cheaper on Kindle, I have more than recouped the cost of the Kindle in price savings of the books - although I do wish that there was a friends/family ability to share one's Kindle library. The Kindle is much lighter and easier to manage than a paper book and it is especially great for travel as I would normally carry multiple books. The battery life is excellent - days - especially if you turn off the transmitter when you are not shopping for books. So I only need to carry the charger on long trips I also like the ability to adjust the font size - larger when I am tired. I truly hope that the student/text book market for Kindle gets traction as I have to believe that those heavy backpacks of text books that my children are now forced to carry can't be good for their backs long-term.I have probably sold many Kindles for amazon.com by showing mine to friends, fellow airplane passengers and such. I'm actually surprised that amazon has not explored a retail outlet as I believe that many people could get past the high entry cost if they were able to play with a Kindle prior to purchasing.
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