Kindle Analyst an Honor Student at Strained Credibility Academy
OK. So maybe Amazon’s Kindle isn’t “the Zune of reading.” Certainly, that’s the impression given by CitiGroup analyst Mark Mahaney’s prediction that the e-book reader will generate three-quarters of a billion dollars for Amazon (AMZN) by 2010. That’s about 1% to 3% of the retailer’s revenue.
“We admit having very limited visibility into the current ramp of the Kindle,” he writes. “And there is the obvious point that Kindle sales could easily cannibalize existing AMZN book sales. But we believe the broader point is that it is not unreasonable to see the Kindle as having a material impact on AMZN’s revenue–low single digits–within two to three years. That may not sound like a lot, but given the company’s current $20 billion revenue run rate, that’s impressive.”
Sure is. If you have hard metrics on which to base such a claim. Sadly, that’s not really the case here. Because Mahaney’s estimate is based on, get this, Kindle’s sales ranking on Amazon’s site and the number of customer reviews it’s been given. From those stats, and Amazon’s apparent difficulty in keeping up with demand for the device, Mahaney figures that 10,000 to 30,000 have been sold in about three months. And then, referencing iPod adoption rates, he extrapolates his figure of $750 million by 2010 from that. Seems a jacktastic stretch of the imagination, doesn’t it?
Comments
Yes, I was surprised that other sites accepted that absurd sales figure without any skepticism.
It is much easier to click yes, this is helpful than to spend $400 (plus money for books) on an ugly Kindle.
Plus as someone pointed out in the comments on one site, the author of that review has a popular blog where he promoted his review.
And if ebook readers finally do begin to catch on (something that has been promised for over a decade), there will be competition from better, prettier ereaders.
But what people have been using to read on are the crappy screens on their treos and blackberries because they are there when they’re on public transit or waiting for an appointment). And now the far better screens on their iPhones (especially since we’ll get some decent easy to install reader software soon).
Posted by Steve Rhodes at May 15th, 2008 at 4:53 pm