Kindle Sales | 30,000 Kindles Sold | $400MM Revenue
Citigroup Analyst Mark Mahaney predicts that Amazon will generate between $400 million and $750 million in Kindle revenue by 2010 based on a to-date Kindle sales estimate of between 10,000 and 30,000. TechCrunch’s Michael Arrington does a nice job taking the Mahaney report and extracting the relevant points. In particular, the issue is the slim amount of public data on the Kindle. The $64,000 question … er … $400 million dollar question is just how many Kindles have been sold.
Here’s how Mahaney arrives at the 10,000 to 30,000 range.
How Is Kindle Doing So Far In The Marketplace?
Our ability to answer this question is very limited. Amazon is the sole retailer of the Kindle and it has disclosed no information about its sales other than to say that it sold out in the first 5 1⁄2 hours. But we have pieced together four different clues to gain a sense of Kindle’s traction.
First, we note that Kindle has consistently been ranked among Amazon’s Bestsellers in its Electronics category. Ahead of the Apple iPod Nano, the Garmin GPS Navigator, and the Canon Powershot Digital Camera.
Second, we note that the Kindle has received a very large number of customer reviews. Per the exhibit below, we note that Kindle has received more customer reviews than any of the other Top 10 Bestselling items in Amazon’s Electronics category – 2,537 reviews as of May 12th – vs. 663 for the Apple iPod Nano 4 GB Silver (3G), the #2 Bestseller. This is in part an unfair comparison. Kindle is a new product sold only on Amazon.com, while there are numerous versions of the iPod, and they are sold by numerous retailers. But still, the volume of reviews does indicate material traction for the Kindle.
Third, we see that the quality/tone of the customer reviews the Kindle is receiving is relatively positive. Below we compare the Star Rating Diffusion – 5 Stars vs. 4 Stars vs. 3 Stars etc… – for each of the Top 10 Bestselling Electronics Items on Amazon. What we see is that the Kindle actually receives fewer high scores than the other Bestsellers – 69% of its reviews are 4 or 5 Stars vs. an average of 80% for the other items. And it receives more low scores than the other Bestsellers – 22% of its reviews are 1 or 2 Stars vs. an average of 13% for the other Items. But for a Version 1 of a product “competing” against a several times iterated leading consumer electronics item like the iPod, a 69% Star 4 or 5 rating is relatively positive.
And fourth, we note that the most reviewed Customer Review of Kindle (“Why and how the Kindle changes everything” by Steve “eBook Lover” Gibson) has been reviewed by at least 27,000 people. Specifically, as of May 13th, 26,931 have read Steve Gibson’s review and actually commented on it by pressing the Yes or No button when asked if the review was helpful. And logically, there would be more people who read the review and didn’t bother to vote, although the voting step is hyper-easy. We believe that this helps provide something of a proxy for how many Kindles have likely been sold. We’d peg the number as somewhere between 10,000 and 30,000 Kindles sold to date.
I’m glad Mahaney speaks to the fact that the Kindle is only sold at Amazon which would boost it’s standing for both bestsellers and customer reviews. However, using the review rating number as a proxy for Kindle sales seems shaky. It is hyper-easy and there’s a lot of vitriol around Amazon, eBooks, DRM that could encourage this type of ‘monkey click’ behavior. I’m not saying Mahaney is wrong because he’s very smart and is most often correct. I just don’t think this is as much an indicator given the buzz and inherent troll behavior on the Internet.
The model Mahaney uses is based on the iPod adoption curve, but using a smaller base and discounted substantially. Clearly, any type of adoption even half as successful as the iPod would be a massive success. The problem (for me) is that I view the iPod and Kindle as very different, and am concerned that the initial rush of sales was far more indicative of a gadget obsessed innovator segment and not representative of how it would translate to the other stages of the innovation adoption curve.
You can read the details of my argument against large Kindle adoption, but in general I simply don’t think reading has nearly as large a market as music; reading is active rather than passive; the portability issue isn’t nearly as troublesome; and the reading market is, in general, less inclined to adopt these new technologies based on an aging demographic.
The one place I can see large adoption would be within the textbook market. Not only would Kindle Textbooks be a boon to Amazon and students, it would groom a whole new generation on the medium in which they read books.
