Thread: Why e-books?
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Old 10-29-2016, 05:30 PM   #355
ratinox
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Quote:
Originally Posted by darryl View Post
They are all overheads of running a very big business. Even accepting that some part of these expenses are attributable to book storage and sales, divided by the huge number of books stored. or even by the lesser but still massive number of books sold? Almost certainly still negligible.
Amazon sells about 1 million Kindle books each day. Amazon's "full price" tier, which accounts for roughly half of Kindle book sales, is a range of $2.99 to $5.99 per book. Call it $4.50. And assume that Amazon skims 30% (which is a very high-ball figure given that Amazon is well-known for selling at much lower margins) which is $1.35 revenue per book making Kindle revenue around $500M annually.

Amazon operates 38 data centers with between 50K and 80K servers per DC. Each data center is rated at 25-30MWh, or about 1045MWh world-wide.

According to a 2012 Morgan Stanley estimate (dated, I know, but it's what I can find), Kindle accounts for 11% of Amazon's total revenue but 23% of its operating profit. I'll split that and say 17% of Amazon's server capacity is dedicated to Kindle books. Hm. That seems high to me so cut that in about half and say that 10% of Amazon's total server capacity is dedicated to servicing Kindle sales.

Based on that estimate, 10% of Kindle server power draw is about 100MWh. At 25 cents/kWh for generation and delivery, Kindle's electric bill is about $220M annually.

If my math is correct and my estimates are even vaguely accurate then it costs Amazon roughly 50% of Kindle's revenues just to keep the servers running.

References:
http://authorearnings.com/report/feb...rnings-report/
http://datacenterfrontier.com/inside...nfrastructure/
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