Can The Amazon Kindle Become An iPod-Like Hit?May 15th, 2008 | By James Lewin | Category: General
Citi analyst Mark Mahaney says the Amazon Kindle could be an iPod-like hit within two years, contributing 3% (750 millsion) to Amazon’s revenue.
Here are Mahaney’s reasons:
- The Kindle doesn’t suck. Mahaney likes the Kinde’s automatic downloading feature and slightly lower-price books ($9.99 vs. $18 for the physical books).
- The current Kindle is a 1.0 product and future versions will be much sexier. See the original iPod.
- The Kindle’s sales ramp will follow that of the iPod but be only half as popular (i.e., sell half as many units).
- Kindle price will drop 15% per year.
- Amazon recognizes Kindle unit sales revenue over two years.
- Kindle owners will buy one e-book per Kindle per month.
I’m still skeptical about the Kindle’s prospects.
Much of the success of the iPod can be attributed to the fact that it adds value to your existing investment in CDs. For many people, a $200-$300 iPod takes 10 or more years of purchased CDs and makes them portable. The Kindle requires additional purchases to be useful.
iPods/iPhones are also a doorway into a vast quantity of free content ranging from podcasts to Internet videos & even the Web. Amazon wants you to subscribe to Kindle versions of publications that are freely available on the Web.
Finally, the iPhone and iPod have become platforms for content and application development. There are tens of thousands of people developing media for the iPod and over 200,000 have show interest in developing applications for the iPhone. There’s no sign of this sort of interest developing with the Kindle.
Until Amazon can address these issues, the Kindle is likely to remain a niche device.