Kindle vs Nook US market share

[fjtorres]

Originally Posted by boswd

I can see Sony jumping into the LCD screen market. But they'll screw it up by charging something like $500 for it.

I don't know who's in charge of the North American Operation but lets look at their track record this past decade.
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If I was the CEO in Japan I would be like "What the bleepedy bleep is going on in North America?"

I wouldn't be so quick to blame the local Sony unit chiefs; it isn't clear they have enough autonomy to screw up much beyond their marketting.

I'm hardly a Sony fan (far from it, in fact) and I agree that Sony has pretty much screwed up everything they've launched in the last decade-plus but the core misteps all seem to have originated in Japan, mostly by their clear inability to read market trends and consumer needs.

Sony simply doesn't do integration well; not in the company structure, where individual units regularly undercut each other or ignore mandates from the Board, costing the company billions (it got Kutaragi fired but by then it was too late), and not in products. Ten years after iPod launched, Sony *still* doesn't have a handle on how to use online services and content to add value to hardware or vice-versa. Add-in that Sony doesn't seem to bother with market research or customer preference. (Three years after it became clear people buy Kindles because of Whispernet and the bookstore, Sony is still insisting touchscreens are a more compelling feature than either. Which it is. For 4 percent of the market. Maybe.)

Trying to guess which way those guys will go is a job even the Pythia at Delphi would refuse. They are just as likely to drop out of the market next week as they are to introduce a 3D grayscale ebook reader. They have a solid brand and rabidly loyal customers. But their management (whether in NA or Japan) is just totally out of it.

There's no telling if they'll even notice their product line is in trouble.
For all we know, they might actually be satisfied with a few thousand units a month in sales, as if they were a China-sourced online-only startup.

[Lemurion]

I agree, Sony does have issues with integration; they seem to think everything exists in isolation. Having said that, they do make nice hardware.

[jbcohen]

To what do you attribute the dominance of the Kindle?

Certainly there is somewhat of an image thing that is promoting kindles - go out to the park with your Nook or Nook Color and see what reaction you get from others "Is that a Kindle?" you will be asked. "No its a nook" you will get some strange looks.

[SCION]

My NOOKcolor has always been mistaken for an iPad. I stopped correcting people.

[Lemurion]

Originally Posted by jbcohen

To what do you attribute the dominance of the Kindle?

Certainly there is somewhat of an image thing that is promoting kindles - go out to the park with your Nook or Nook Color and see what reaction you get from others "Is that a Kindle?" you will be asked. "No its a nook" you will get some strange looks.

Marketing: Amazon leveraged the fact that they were already the default online destination for book-buyers into a dominant position in eBook sales.

They took advantage of that status in conjunction with aggressive advertising and pricing to get themselves to the top of the heap. It's no surprise that they didn't open up the Kindle store to other devices until after they had gained dominance in the market.

[Andrew H.]

Originally Posted by Lemurion

Marketing: Amazon leveraged the fact that they were already the default online destination for book-buyers into a dominant position in eBook sales.

They took advantage of that status in conjunction with aggressive advertising and pricing to get themselves to the top of the heap. It's no surprise that they didn't open up the Kindle store to other devices until after they had gained dominance in the market.

"Marketing" suggests that the Kindle was basically equivalent to other e-readers and simply used advertising gain market share. But that's clearly not the case, as the Kindle was, for most users, the better product.

Amazon initially recognized that people buying an e-reader really wanted more than hardware; they wanted an infrastructure to buy books on, too. And so when you got a Kindle, you not only got decent hardware, but you also got access to a much larger bookstore than Sony's, with cheaper prices, and an easier way to get the books on your Kindle. (Until the K3, all Kindles came with 3G).

Sony never seemed to be very serious about their store, and after the Kindle came out, it seemed almost like a joke.

I think it's significant in this context that the #2 reader used the same approach Amazon did (which owes much to Apple's iTunes system) and also handily trounced Sony.

I also think that Sony shot themselves the in the foot with their 300/600/900 series reader. It's an *e-reader*. Touch is nice and all, but don't add touch if it makes the screen *blurrier*...people bought the device to *read* on.

[Bilbo1967]

Originally Posted by jbcohen

To what do you attribute the dominance of the Kindle?

Certainly there is somewhat of an image thing that is promoting kindles - go out to the park with your Nook or Nook Color and see what reaction you get from others "Is that a Kindle?" you will be asked. "No its a nook" you will get some strange looks.

Depends where you are. That may be true where you live, it certainly isn't here in the UK.

[Bilbo1967]

Originally Posted by Bilbo1967

Depends where you are. That may be true where you live, it certainly isn't here in the UK.

Just saw the full title of this thread - d'oh

[fjtorres]

Originally Posted by jbcohen

To what do you attribute the dominance of the Kindle?

Not necessarily in order of importance:

1- They understand that mainstream ebook readers are for accessing ebooks. In other words: it's all about the books, not the specsheet.
2- They got in relatively early in the game (pre-ePub, even) with a good plan and stuck to it.
3- First reader that was fully standalone and not a PC accessory. (Whispernet, whispernet, whispernet) Even PC-phobics can use it.
4- Oprah.
5- Early installed base (see 1, 2, 3, & 4) means they have the visibility with the public and the clout with component suppliers to get first crack at new tech. (Pearl screens, for starters.) It also allows them to spread software, engineering, and marketing costs over a larger base, allowing lower prices.
6- Customer service on hardware *and* ebook sides.
7- K.I.S.S. = reliability. Plenty of other readers have more features, but what Kindle does, it does well.
8- Availability + price: they're the only true global player on hardware and one of only two in multiregion ebookstores. (Both should change but early leads matter.)
9- Multiplatform software apps support the flaship reader gadget; Kindle is an ecosystem, not a gadget. (They understand Integration.)
10- Immunity from herd disease (aka, "standards religion")
(More seriously: they *own* their tech--DRM, Format, servers, etc--and all the infrastructure that supports the Kindle. They depend on nobody else and control their own destiny.)

If I had to focus on just one, though, I'd go with number 3. Everything else flows from there.

Kindle rules (for now) because Whispernet works.

[fjtorres]

Originally Posted by Bilbo1967

Just saw the full title of this thread - d'oh

No need to induce concussion.
Kindle's dominance may vary by location but it is not limited to North Am if we go by the best available numbers.

[Fbone]

Sony Reader president Steve Haber is quoted as saying they sold millions of devices. He also states there is not enough supply to meet demand.

http://www.publishersweekly.com/pw/b...-of-e-ink.html

It's possible they have a decent share of the global market. Ebooks sold is the unknown quantity.

[fjtorres]

Originally Posted by Fbone

Sony Reader president Steve Haber is quoted as saying they sold millions of devices. He also states there is not enough supply to meet demand.

http://www.publishersweekly.com/pw/b...-of-e-ink.html

It's possible they have a decent share of the global market. Ebooks sold is the unknown quantity.

The quote is that the Sony Readers *have sold* millions.
That would be *all* the readers over the entire history of the product line.
That's easy to believe.
4% share in the US alone works out to almost 400,000. If their "rest-of-the world" sales match or better that, they could easily be selling a over a half-million more. Previous (2009) reports had them selling about 800,000 units a year so a lifetime install base of 2-3 million is an easy reach given they've been around for five years or so.

Do note that Kobo got to one million is barely over a year and Nook got past two million in one year.

As for running out of product at *those* levels? Well, that is just bad planning. (Or, worse, lack of clout with the screen supplier.) Hardly something to brag about when Kindles sold ten times as many units and, while supplies got tight, they didn't run out for more than a couple of days.

The issue with the Sony Readers isn't that their *absolute* numbers aren't significant; it's that their relevance to the market is fading. (In at least some markets, Wal-Mart replaced Sony with Kobo and Nook.
http://www.the-digital-reader.com/20...le-at-walmart/)
The market is exploding and Sony sales aren't. 400,000 a year in the US was a great number for 2008, even 2009. For 2010? Not so great. For 2011? Dreadful.

Yet over the long haul, hardware sales isn't what the business is about; ebooks is where the *real* money lies.
Note that the top three vendors are all booksellers.
One of the (many) side effects of the Price Fix Agency ploy is that sales of the Price Fixers ebooks help subsidize the walled-garden Kindle, Nook, and Kobo hardware but do nothing for Sony or the other hardware-only vendors.

Consider that Kindle has (for now) been selling to heavy readers, the kind of people that buy enough books to justify the investment. Your basic one (or more) books per month readers. Say they average a bit less; ten per year. On Price-fixed books, Amazon's take can run around $30 a year profit per reader. On a device selling for $139. 22% pure profit. And that's at just ten bestsellers per year. And just the first year. Over a three-five year lifespan you could easily see over 100% pure profit. Some buyers will bring in less, by avoiding the PriceFix books, but others will bring in more. Amazon, Kobo, and B&N can sell the hardware at just over cost and make plenty of money. Sony can't.

More, this is an immature, developing business; early market share translates into enduring mindshare. When people see an reader in the wild and ask if its a Kindle it tells you that even people who've never seen one know they exist, that they equate reader devices with the Kindle brand. Just like media players are associated with the iPod brand and tablets with iPads. You can't often *buy* that kind of brand awareness, not without millions upon millions worth of ads. Sometimes not even *with* it.

If Sony *were* to drop out of the business it woudn't be because their readers don't sell; it would be because there simply isn't enough money in selling them to justify the investment. If they can't sell them at US$300 (which, apparently they can't; seeing the slow 950 sales), then without associated ebook sales there may not be enough profit in the product line to keep trying to keep up with Kindle and NookColor and whatever new hot product comes out.

But with Sony's management structure and track record there really is no way to tell what they'll do. Just that it looks as if very soon it won't much matter.

[Andrew H.]

Originally Posted by fjtorres

On Price-fixed books, Amazon's take can run around $30 a year profit per reader. On a device selling for $139. 22% pure profit. And that's at just ten bestsellers per year. And just the first year. Over a three-five year lifespan you could easily see over 100% pure profit. Some buyers will bring in less, by avoiding the PriceFix books, but others will bring in more. Amazon, Kobo, and B&N can sell the hardware at just over cost and make plenty of money. Sony can't.

Good post. But the 30% is *revenue,* not profit.

[Andrew H.]

Originally Posted by fjtorres

The quote is that the Sony Readers *have sold* millions.
That would be *all* the readers over the entire history of the product line.
That's easy to believe.
4% share in the US alone works out to almost 400,000. If their "rest-of-the world" sales match or better that, they could easily be selling a over a half-million more. Previous (2009) reports had them selling about 800,000 units a year so a lifetime install base of 2-3 million is an easy reach given they've been around for five years or so.

Another issue is price - until 2010, Sonys were priced a lot more competitively than they are now.

[fjtorres]

Originally Posted by Andrew H.

Good post. But the 30% is *revenue,* not profit.

True but the costs on Kindle books are inherently lower than their competitors because they own the tech and the infrastructure. For example, no Adobe tax. So, in a fixed-price environment they get to keep more money than the opposition. Giving anything close to 30% to a company geared to prosper at 5% is not the wisest move the BPHs could've made.

As pointed out, before the Price Fix, hardware prices were competitive and everybody was rushing to get in the business. Post fix, Nook and Kindle operate at a different level from the hardware-only vendors and pretty much all the no-names are moving to LCD android tablets instead. Coincidence?