Amazon’s Kindle hopes to become the iPod of books
By Michal Lev-Ram
Is Amazon’s Kindle a success or a flop? It’s probably too early to tell, but one thing is clear – if the electronic-book reader takes off, it could end up doing for the publishing industry what Apple’s iPod did for music.
The Kindle is a gadget that lets users browse, buy and read over 115,000 books, newspapers and magazines on a 6-inch, portable screen. Like the iPod, the Kindle wasn’t the first of its kind. But though companies such as Sony had made earlier attempts at selling electronic readers, Amazon (AMZN) may be uniquely positioned to finally get it right and jump-start the market for digital books, setting the standard for future devices.
For starters, the e-commerce giant is one of the world’s largest book retailers. That means it’s already got deals inked with publishers and an enormous amount of content readily available. What’s more, the device’s built-in wireless capability (it operates on Sprint’s 3G network) simplifies the process of buying electronic books, since it allows customers to download content “over the air,” directly to their device without having to get it through their computer first.
“In the end it’s all about getting people the content they want in an easy and fast way,” says James McQuivey, a principal analyst at Forrester Research. “That’s the single most important factor in driving adoption.”
But McQuivey also says that the long-term success of the Kindle will depend on what a second-generation version will look like, and how soon Amazon will be able to get it into users’ hands.
“By next Christmas everyone that was willing to buy the first version will already have one, and they’ll need to launch a new one,” says McQuivey, who adds that an updated Kindle will likely include social networking features such as the ability to share favorite chapters with friends.
However, Amazon spokeswoman Heather Hustoon said that the company has no plans for further iterations of the device.
It’s hard to tell how well the current version of the Kindle is selling, since the $400 device has only been on the market for six months and Amazon has yet to disclose any sales figures. The company says it sold out of Kindles within hours when it launched last November, and that it just recently caught up with demand. Of course that doesn’t necessarily say much about the success or failure of the device, since the company hasn’t said how many units were originally manufactured.
McQuivey says Amazon will be lucky if it sells 50,000 Kindles by the end of the year.
Mark Mahaney, a Citigroup analyst, believes the Kindle could generate up to $750 million in revenue for Amazon by 2010, which would represent about 3% of the company’s total sales.
But beyond the Kindle’s market opportunity and its potential to become the “iPod” of electronic-book readers, Mahaney also sees the new product’s success as a crucial part of Amazon’s growth strategy.
“The structural challenge facing Amazon is that approximately 60% of its revenue is generated from the sales of books, music and videos — three product categories that are all in the process of being digitized,” Mahaney said in a recent report.
For Amazon to continue to grow, it must “jump the chasm from Internet-ordered/mailman-delivered media products to Internet-ordered/digitally-delivered media products.”
In other words, Amazon needs the Kindle to take off much more than consumers need a new way to read books. Then again, we didn’t really need the iPod either.
I love Jeff Bezos’ analogy of this device as an upgrade from horses to cars. I could imagine some peoples original thoughts after seeing the price of a transportation device and thinking how rediculous it would be to pay that much when they have a perfectly healthy horse in the barn, not to mention emtional attachments like most ppl have with their pets… yet over time the convenience and benefits that cars provided won the battle. However, it’s not a perfect analogy, as the move to an e-reader will be GOOD for the environment unlike the move to cars.
I do see a move from books to an electronic device for the majority of the population in the future… how long it will take and which companty will it be are the questions. I hope it will be the Kindle, but even if it’s not… imo it will happen eventually. Also, if you read a lot, please review everything that the kindle offers as far as functionality and decide for yourself if the price is worth the pros vs cons… if you’re on the fence, then wait for version 2…. this is a 1st gen reader for amazon. For the pros… don’t overlook the e-book prices at the kindle store. If you don’t like the “DRM” software (the software that only allows the ebook you buy to be read on YOUR kindle only), and I’m sure you won’t, you will find that the kindle store prices imo somewhat cancels out that ding if not altogether. No more hassle with reselling books… the savings come up front when you buy it!
For those that simply cannot give up the enjoyment from visiting a book store and reading from a physical book, I don’t blame you… that was a sacrifice that I decided to make due to the countless convenience factors the kindle offers. Also, just b/c i have a kindle doesn’t mean I’ve given up buying books altogether. I can still go horse riding right? 
Not interested in Kindle v1.0. When it integrates photos/pictures with a color display then it gets interesting. When there are active links to character profiles and summaries and related web content then I’m very interested. When the price drops to $200 and includes one or two books of my choosing then I’m buying.
Digital books are all well and good. But does Amazon plan to sell books in other languages? What about books on art and photography which necessitate having the ability to see the photos in color?
If Amazon wants to get academic customers on board, they’re going to have to start selling academic texts, books in languages other than English (notably French, Spanish, Italian and German) as well as come up with a Kindle that has a color display.
Kindle seems like an innovative product and it is definitely the future. I wouldn’t say that the book is dead or dying, but e-books are the way to go in tandem with paper.
Kindle’s competitor iLead, which was introduced in The Netherlands about one month ago, is already slashing its prices from E 650 to E 600 ($ 79 off). This is not a smart move. iLead is too expensive for a new product entry. And their marketing and communication capabilities are as novice as the product itself. Where did we see the similarity of starting with a ‘letter’ followed by a cap (iPhone)! Kindle or iLead should have teamed up and integrated with a digital world brand, such as TomTom (GPS route assistant), which is into travel. However TomTom used mainly by car owners, their customers also travel by plain and train and that is where a digital book device comes in. The Private Equity parties and other investors are standing by to snap up these companies for a dime when the time is right.
Christian ter Maat MCC, MMC
Carevolution Management Consultants
Communication articles from author Christian ter Maat can be found at replytoall
(Dutch and English). For example: External threats to tourism destinations; how to act upon?
Sony clearly has no plans of releasing a new e-reader, and if they do they’re waiting to long. If Apple ever releases an e-reader, that would be amazing, and would out sell the Kindle in a day. I do disagree with Bob13, in my opinion reading on the Kindle is a lot more fun than reading paper books, since it ads the technology side, which younger readers want. If more college books were added to the Kindle, than it would REALLY be a success. Apple, PLEASE release an iReader, it would really rock!!
First comment is Sooo an Amazon executive talking. Kindle will never replace normal books. The reading experience is just not the same. Plus, digitized books will devalue them as a product in so many ways.
I love my Kindle! Wished I had it earlier instead of boxes full of pocket books, read once and shelves bulging and bending with hard copies!
Thanks for the wonderful invention.
R.H. Norian
McQuivey’s assumptions are more than bold, they are ridiculous. See http://www.alleyinsider.com/2008/5/amazon_kindle_a_750_million_ipod_like_business_by_2010_amzn_. Be sure to read the comment titled The Amazon Fondue Poy.
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The spokesperson is quoted AMZN plans no future iterations of the Kindle, yet if I’m not mistaken Bezos was just quoted at Book Expo America saying that several iterations are planned, just none immediately forthcoming. I own a Kindle and I think it’s great - it’s easy for people who haven’t tried it to pan it, yet once you try it it grows on you. If future iterations can address the clunky user interface and improve the screen with backlighting or color, this could take off in a big way. Of course lower prices will help too.
Mark Coker
Founder
Smashwords
http://www.smashwords.com
ebook self-publishing for indie authors