The Kindle ecosystem - how big is it really? Analyst takes a guess.

[Alexander Turcic]

It's not a secret that Amazon keeps sales figures for its Kindle line of tablets, well, a secret. Fortunately, some analyst from Morgan Stanley got his crystal ball out of its magic cupboard to give us some estimates how well Amazon's Kindle business is really doing. AllThingsD reports:

In a report released last week, Morgan Stanley said it estimates that Amazon will sell $4.5 billion worth of Kindle e-readers and tablets this year, up 26 percent from 2012.

Growth will slow next year, when the business will do $5 billion in sales, Morgan Stanley estimates, followed by similarly modest growth in 2015, when Amazon will do an estimated $5.5 billion in Kindle sales.

$5.5 billion a big number, but not that big if you keep in mind that, in 2012, Amazon's total revenue was a whopping $61 billion, with forecasts for 2013 somewhere between $73 and $76 billion.

And e-books? Again, the shiny crystal ball has the answer:

Morgan Stanley estimates that Amazon will do $3.8 billion in digital media revenue this year, and that the business will generate more revenue than device sales next year - with an estimated $5.7 billion in revenue.

In total, Morgan Stanley estimates that the Kindle ecosystem - which also includes advertising revenue of $192 million - will account for 11 percent of the company’s total revenue this year, but 23 percent of its operating profit.

[image by anurag agnihotri via Flickr]

[speakingtohe]

That is a lot of cash

Even if the figures are way off in either direction that is still a lot of cash.
Helen

[fjtorres]

One can take those numbers a step further and WAG they are selling about 30M gadgets and 500M ebooks a year. With an attach rate of about 16 books per device.
(Hey, this is a game anybody can play!)

Edit: Oh and if you believe the margin numbers, ebooks are subsidizing the *rest* of Amazon.

Doesn't mean I believe them, but they are certainly more credible than the whines about Amazon "selling ebooks at a loss".

[Rizla]

Ecosystem. Noun. Pity ecosystem, a case of what happens when good words fall in with a bad crowd. Rebecca Greenfield explains, "This reasonable science-related word has been co-opted by the tech writing community, which has senselessly ravaged it. The true meaning of the term translates to a 'biological community of interacting organisms and their physical environment.' As in, the place where living things live together. To tech writers, however, ecosystem involves a lot of non-living things that just happen to share characteristics. The Android ecosystem, the app ecosystem, the tablet ecosystem, the digital ecosystem, the start-up ecosystem — it's not like at the end of the day all the little gadgets go home to their gadget neighborhoods and hang out."

[Rizla]

Originally Posted by Alexander Turcic

$5.5 billion a big number, but not that big if you keep in mind that, in 2012, Amazon's total revenue was a whopping $61 billion, with forecasts for 2013 somewhere between $73 and $76 billion.

So when does Amazon start making enough that they have to pay tax?

[pilotbob]

I assume all this includes the Kindle Fires are well as the eInk versions.

BOb

[kevinp]

Originally Posted by pilotbob

I assume all this includes the Kindle Fires are well as the eInk versions.

BOb

"Digital Media" would mean videos on the Fires as well, I would imagine.

[Fluribus]

Originally Posted by Rizla

"The Android ecosystem, the app ecosystem, the tablet ecosystem, the digital ecosystem, the start-up ecosystem — it's not like at the end of the day all the little gadgets go home to their gadget neighborhoods and hang out."

Shows how much Rebecca knows. They do. Right next-door to me. Little bastards party all night. Such a ruckus.

[tubemonkey]

Originally Posted by Fluribus

Shows how much Rebecca knows. They do. Right next-door to me. Little bastards party all night. Such a ruckus.

[ucfgrad93]

Originally Posted by Rizla

So when does Amazon start making enough that they have to pay tax?

When lawmakers start writing a coherent tax code.

[jersysman]

Originally Posted by ucfgrad93

When lawmakers start writing a coherent tax code.

We can't wait that long!!!!

I don't have that much time left on this earth.

[Rizla]

Originally Posted by Fluribus

Shows how much Rebecca knows. They do. Right next-door to me. Little bastards party all night. Such a ruckus.

So you have a Kindle with the ads.

[JAcheson]

It seems that electronic books aren't going to completely replace hard copy any time soon.

Also, video didn't kill the radio star.

[Fluribus]

Originally Posted by Rizla

So you have a Kindle with the ads.

I do. He's not so bad. Doesn't like parties any more than I do.

[TadW]

It looks as if Amazon generates more revenue selling Kindles than selling digital wares (including e-books). On the other hand, I have no doubt that earning margins on e-books are a lot higher.