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Originally Posted by kjk
The impact on Amazon's short-term and long-term future in eBooks because of the Nook, iPad, Google Editions, and the rapidly changing eBook market as a whole are all speculation right now. She seems to have taken all that into consideration when she cut her forecast for Amazon.
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Quote:
Originally Posted by =X=
The analysis does not understand the business model. While it is correct that Amazon will be losing $70 per unit, which is huge, amazons real business comes from the sales of books and not Kindles. The reason to push the kindles is that they eventually push book sales.
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Amazon is not "losing" $70 per unit at $189; they are ensuring future revenue streams of the sale of e-books. The reason Amazon has a "Kindle everywhere" strategy is to ensure the world buys content from Amazon -- on a iPad, iPhone, Android phone, Blackberry, Kindle e-reader, PC and Mac computer ... and anything else that comes along where folks want to read. They've taken great pains to ensure the reading experience can be synced cross-platform. And they are now layering in social networking.
The revenue, and profit, from the sale of Kindles alone for Amazon is a drop in the bucket vs. Amazon corporate activity. Let's hope the analyst isn't blinded by iPadism: Amazon is MUCH more than a Kindle hardware vendor, or even pbook or ebook vendor. They not only do a brisk business in a wide range of consumer goods, they are also the payment mechanism for tens of thousands of secondary retailers. And they also provide "cloud computing" for very large enterprises around the world.
If you look at the retail book business, Barnes & Noble just posted a much bigger than expected loss; Borders has been in chronic financial trouble; and other book retailers, in many nations, have been consolidating with peers trying to stay afloat. The reason isn't that the public has lost interest in books or reading: it's because Amazon is a fiercely consumer-centric competitor and is gradually winning (and I would argue earning) tons and tons of business. And making a profit at it.
I would not be writing down my Amazon stock (assuming I had some) at this point. In fact, I'd be a buyer. The recession is gradually lifting (fingers crossed) and Amazon sailed through that comfortably -- leaving it even stronger, relative to its peers, than ever before. That is not a recipe for ditching the stock.