Quote:
Originally Posted by kacir
I have no idea whether Amazon is selling with a loss, or with zero profit, or with modest profit.
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According to Bezos, Kindles *have* to sell at a profit as they internally bookkeep each division (Readers and ebookstore) as separate businesses. The guessing is it is in anticipation of a legal/regulatory challenge from a loser operation like Sony, probably in the EU. So most likely they run Kindle on single digit profit margin to stay clear of the law.
They can do this because they sell Kindles by the million. (Current estimate: 3.5 million for 2010, which might be as much as *one-third* of the world market for eink readers.
) Some Digitimes estimates put Nook in the 1-2 million unit range, with Sony slightly under a million. Doesn't leave much room for other players. It does explain Amazon getting first dibs on the Pearl screens.
The problem, economically speaking, is the US makes up some 60-70% of the eink reader market (I've seen estimates that NorthAm runs over 80% of the world market). And since it is the most open, most competitive, least protectionist market for books there is a vast base of would-be customers waiting for a reader at their price. Again, I've seen estimates that there are at least 30 million two-book-a-month buyers in the US who could reasonably justify getting a dedicated ebook reader. (Not sure if its before or *after* the 2.5-3.5 milion that *already* have Kindles; I'm assuming its 30 million *more*, since it works out to 10% of the legal residents of the US.)
There is room for competition.
There is also room for added distribution.
But the next phase in the battle for NorthAmerican readers isn't going to be fought on Mobileread or in online sales. The next phase in the battle is going to be fought at WalMart, at Target, at BestBuy, at Canadian Tire & Future shop, at Borders and B&N and Indigo/Chapters.
The next phase is Retail.
And that is not going to be pretty.
(Lost in all the hype over the K3 price and screen is that Bezos said they are going to put Kindle in more venues.)
My guess is Target and AT&T phone stores, maybe Radio Shack & Best Buy.
BestBuy would be nasty for Sony and Nook as customers could actually look at the screens and weight. The good news, such as is, is that Kindle will *never* show up at Walmart.
There is still room for competition but the window is closing on NorthAm. Economies of scale are now in play.
Value is being redefined.
Whoever survives the next year is in, most likely.
But there will be casualties.
Hopefully, not Pocketbook, but they need to improve distribution and start playing up their strengths to *consumers*. And that is easier said than done.
I think somebody needs to sit down with Adobe and get them to start marketing ADEPT to consumers. It's time *they* earned their keep.