Originally Posted by J. Strnad
I'm taking all Amazon sales figures with a grain of salt. Since there's no substance to the claims in the form of actual statistics, we can't really trust the conclusions.
As L. J. says, we don't know if they're talking units or sales or profit or what, exactly. Do free ebooks count as sales? What about all of those short stories sold separately?
The analyst specifies revenues. He calculates that ebook sales will account for 3.7 billion dollars in revenue, and ereader sales 2.4 billion dollars in revenue. Now how does the analyst calculate this? He doesn't give a method, but I presume there are ways to deduce. For instance, we know total book sales because they are reported by publishers to investors. What we don't know the distribution of the book sales, i.e., whether those books are sold in large retailers or small bookshops. However, because most books are sold by major public corporations like Barnes and Noble and Wal Mart, analysts can subtract those known sales from the total sales. After that they have to calculate the sales of smaller book sellers, and there are ways to do that. One way might be to look at a sample of the tax receipts of smaller booksellers, and then extrapolate based on the known number of smaller booksellers sellers to determine their share of the market. Any marketshare unaccounted for can be, for the most part, attributed to Amazon.
Ereader sales might be a little trickier, but calculating the sales of ereaders might depend on looking at the ereader supply chain. All ereaders use the same parts, like eink screens and batteries and so forth. Undoubtedly, some of these parts will be produced by corporations, who must report their earnings to the public. If, for instance, eink screens where made by a corporation, they could easily calculate the total number of eink screens produced. Since a companies like Barnes and Noble and Sony are corporations, they can easily ascertain the number of ereaders they produced. The nondefective eink screens unaccounted for can be attributed to Amazon.com and other eink companies like Kobo. At that point they might have to do a little guesswork to determine Kobo's marketshare, but assuming that it is fairly small, they can get a rough estimate of how many ereaders amazon sells. Consumer surveys can also help, as well as determine the percentage of defective kindles.
Note, I am not saying this is what they do. I am not an analyst, just a lowly grad student in the humanities. But I presume that there are ways they accurately estimate the number of ereaders and ebooks sold.
What is even more impressive to me is the astounding growth of amazon, even in a stagnant economy. Their revenues are growing 30-40% a year, even as the overall economy is only growing 2-3% a year. At first, I was doubtful about the claims of the article, because 6.1 billion dollars at 9.9 percent would mean that Amazons revenues in 2012 would be 61 billion dollars, a growth of 80 percent over their revenues of 34 billion dollars in 2010, which I didn't think possible. Yet, from a quick google search, I see that Amazon's revenues are consistently growing 30-40% over previous year quarters, and its revenues are expected to be 100 billion dollars by 2015. To put that in perspective, Target, the second largest retailer, has revenues of about 68 billion dollars, so in the next three years Amazon will be the second largest global retailer, far behind Wal Mart, which has annual revenues of 420 billion dollars.