Citi: Amazon Kindle Is Next iPodAug 12th, 2008 | By James Lewin | Category: General, iPods & Portable Media Players
Citi analyst Mark Mahaney is bullish on the prospects for Amazon’s Kindle ebook reader.
He estimates that Amazon (AMZN) will sell 378,000 units this year, double his initial guess. And he thinks instead of being a $750 million business that accounts for 3% of Amazon’s sales in 2009, the Kindle will be a $1.1 billion business that accounts for 4%.
Mahaney upward estimates for Kindle sales are not based on any hard figures from Amazon, but are based on numbers taken from the TechCrunch blog:
“We acknowledge being “out-sourced” by TechCrunch. But we believe the 240K number was well-sourced and believe reports of 40,000 shipments a month may also be reasonable.”
Mahaney will probably take a lot of heat for basing his sales figures on blog posts based on anonymous tips. Nevertheless, Mahaney is making the case to investors that Amazon has the next iPod on its hands.
I’m not convinced by Mahaney’s case, because there are a lot of reasons the Kindle is not like the iPod:
- 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.
There are many niche’s where the Kindle makes sense. One example is college text books. But the Kindle hasn’t demonstrated, yet, that it has what it takes to become a mainstream success.