Amazon Should Thank Apple for Increased E-Book Sales

(MoneyWatch)  For a retailer with a heavy discount mentality, it took Amazon (AMZN) a long time to realize that its Kindle e-reader price was too high. The company has announced that sales went up when the price finally came down. However, the way Amazon addresses its "tipping point" is fishy. What the company leaves out of the explanation is even more telling than what it puts in. When you bring all the facts together, it becomes clear that nothing Amazon did with Kindle pricing could have been responsible. No, Amazon's e-book success is due to Apple (AAPL).

Let's start with a look at the quasi-data that Amazon put into its announcement:

• Kindle has been the bestselling item on Amazon.com for two years
• "Millions of people are already reading on Kindles."
• Kindle device sales are up year-over-year and month-over-month during the company's second quarter
• Dropping the price to $189 from $259 seems to be the triggering factor
• hardcover sales continue to grow, but the Kindle format has overtaken them, selling 43 percent more in the last quarter; in the last month, it was 80 percent more Kindles, excluding free Kindle books
• Amazon has sold hardcovers for 15 years and Kindles for 33 months
• Amazon sold more then three times as many Kindle-format books in the first six months of 2010 than in the same period in 2009.
• On July 6, Hachette announced that James Patterson had sold 1.14 million e-books to date, of which 76 percent were in the Kindle format.
• Five authors have sold more than 500,000 Kindle editions each.

Well enough, and no doubt that Amazon has had significant success with the Kindle. Frankly, comparing e-book sales to hardcover sales seems like the misdirection of a magician. Hardcovers are premium-priced. People who are more price sensitive buy paperbacks. E-books are even cheaper, so comparing the two market segments doesn't mean much.

However, there is a bigger intentional twisting of facts. Remember that Amazon finally dropped the Kindle's price, but only after Barnes & Noble (BKS) dropped the price of its Nook to $199, with $149 the price of the Wi-Fi-only model. Amazon followed because it had to. That was on June 21. Notice a little discrepancy? Even assuming that Amazon is being straight about the uptick in e-book sales, there is no way that the price drop of the Kindle could have been responsible for the three-month claimed increase of e-book sales.

So what could have? The Apple (AAPL) iPad. In under three months, Apple sold 3 million units. My guess is that Amazon doesn't want to pin down the number of millions of Kindles it sold because it would be fewer than iPads sold. Keeping in mind that the first iPads started to ship in early April, let's remember that Amazon already announced the iPad edition of Kindle software in mid-March. Kindle was among the first applications available. It's availability is the one new thing that Amazon did that could have affected the entire quarter.

Instead of patting his company on the back, Jeff Bezos should be embracing Steve Jobs. Only, that would seem awkward, and make Amazon investors, publishers, and customers wonder why they shouldn't just do business directly with Apple, instead.

Related:

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• How Apple Will Whip Amazon in E-Books: Paying Publishers More