Amazon Kindle 2.0 Pre-Launch Buzz: Mass vs Niche?
This story was written by Rafat Ali.
Analysts have written and speculated aplenty about Amazon Kindle 1.0 and the imminent launch of its 2.0 version this morning at 10 AM in NYC's Morgan Library & Museum. Some more morning quarterbacking from Barclays Capital analyst Doug Anmuth and Sanford C. Bernstein analyst Jeffrey Lindsay, not surprisingly contradicting each other about Kindle potential, if not the actual numbers.
From Barclays Capital's Anmuth, some bullish Kindle numbers about its potential in educational/academic market:"by potentially lowering the overall cost of books for students & improving accessibility, while also preserving economics for publishers & authors (Ed: that's slightly questionable for now). We estimate the Kindle could generate ~$700M in revenue & more than $100M in gross profit in 2012 in the educational market. Combining our edu projections w/those for the traditional market Kindle opportunity, we believe the Kindle could add a total of $3.7B in revenue & $840M in gross profit in 2012 as the Kindle could then account for more than a double-digit percentage of our current revenue & gross profit projections. We estimate the Kindle could reduce annual textbook costs per student from $750 to ~$400. Our analysis suggests that more than 1 million Kindles could be present on college campuses during 2012."
Compare this to Sanford C. Bernstein & Co.'s report from Jeffrey Lindsay and team, where they still consider it a niche opportunity going ahead: "Although some hail the device as an 'iPod for books,' we are not so sure that it will be a catalyst for sales growth at Amazon (NSDQ: AMZN). Even with aggressive assumptions for pricing$99 per devicewe doubt Amazon could sell more than 5 million units next year. Instead, we expect Amazon to act conservatively and even maintain current skim pricing of $359 and sell 750,000 units in 2009. Kindle could add 3% -10% to 2012 EPS if Amazon prices conservatively (more likely) or aggressively. Even so, we think Kindle is still a niche product unlikely to impact 2010 EPS significantly." Meaning Amazon still wants to continue pushing its bread and butter: the physical products, and Amazon won't continue undercut it: "Unlike *Apple* with the iPod, which cannibalized somebody else's salesnamely the music industryAmazon with Kindle is in part cannibalizing sales of its bestselling product, and this must be factored into the economics." But we won't know any numbers anyway, until we know...lets hope Jeff Bezos has some number to show today
Meanwhile, WSJ reported last night that Amazon has signed Stephen King, the best-selling horror novelist, for an exclusive new "book" that would be available exclusively on the Kindle, and may be published as a physical book by King's current publisher Simon & Schuster at a later date.
By Rafat Ali