How Amazon’s Kindle Can Kick the Apple iPad’s NSFW
Never let it be said that I dwell exclusively on the negative side of an e-commerce story. I am fully capable of finding the silver lining inside Elvis’ gold lame suit. Yes, we’re running an Amazon Death Watch. But it’s a watch, not a dead cert. The company could still get its NFSW together. They enjoy a big lead over their natural competitors, including a robust website, top-notch fulfillment, pleasant customer service reps and money, money, money! And now’s the time to spend it on their book biz, what with Apple’s iPad and iBook Store threatening to douse Amazon’s Kindle. Although e-books account for a paltry percentage of Amazon’s total revenue (stats after the jump), who the NSFW does Apple think it is, muscling-in on Amazon’s core competency? Hey Steve! Take two tablets and put them where Johnny Paycheck told his boss to place his employment contract (don’t hear much of THAT nowadays). And call me in the morning. But before the morning after, the night before. Cap and gowns on boys! We’re going in hot!
First, that promised stat on the relative unimportance of e=books to the multi-billion dollar advertisement for the short term profit potential of uncontrolled brand extension known as Amazon. It comes to us via TechCrunch, whose Erick Schonfeld offers a killer analysis of the two e-book grapplers, uh, grappling.
[Citi analyst Mark] Mahaney estimates that Amazon will sell 3.5 million Kindles this year and 100 million eBooks. He estimates total Kindle hardware and eBook sales (assuming the $9,99 price) to come to $1.9 billion, or 5 percent of Amazon’s estimated total revenue for 2010. If Amazon can’t hold the line on the $9.99 price, it will be harder to sell 100 million eBooks and there might also be less demand for Kindles. (The ability to buy new books at a steep discount is one of the Kindle’s main appeals). Every million Kindles Amazon doesn’t sell will result in a 1 percent reduction in Amazon’s total estimated revenue for 2010. (Barclays analyst Douglas Anmuth estimates only 3 million Kindle sales this year). Will the iPad dampen sales of the Kindle and its eBooks, and by how much?
Amazon learned everything it knows about corporate reporting from the Leonid Brezhnev. So I’d take Mahaney’s three million Kindle sales estimate with a salt cellar’s worth of sodium. Previous press reports indicate that Amazon’s sold somewhere between one and two million Kindles (what’s a million Kindles between friends?). I’d be extremely surprised to hear that sales of the device have doubled.
Otherwise, points taken. The iPad is a media darling; the fight between Jobs and Bezos sells newspapers (or whatever). But even if the iPad trashes the Kindle, it’s hardly the end of the world for the online superstore. And yes, cheap software has been fueling the Amazon e-reader’s fire. OK, kindling. Now that Amazon screwed the pooch with publishers’ prices, they’re going to have a harder time moving the hardware.
So . . . what to do? What to do?
First, Bezo’s boys need to relax. “Amazon cannot afford to lose this war”? Uh Erick, didn’t you just prove that they can? “Not so much because of the potential revenue impact this year,” Schonfeld equivocates, “but because as digital books become more popular they will become a bigger part of Amazon’s business than of Apple’s.” In fact, the writer has [almost] put his finger on the reason why Amazon can take a step back and survey the e-book thing from the high ground: branding.
Although Amazon has done everything in its power to widen (a.k.a. kill) its brand—trying to sell every product made to every human on planet Earth with access to a computing device—the company is still known as an online bookseller. Apple, not so much. Not at all, come to think of it. If you were pretentious enough, you might even say Amazon owns the electronic book mind-space. It’s in a perfect position to leverage its literary legacy and crush the iPad.
Amazon should ignore the iPad completely (best not to draw attention to the comparison) and launch an all-out effort to sell the joys of e-books generally. A rising tide lifts all boats. So rise the tide now, before Apple gets its boat in the water. Amazon should endeavor to expand the overall e-book market now, while they dominate it, to link the Kindle with the category. E-books = the joy of reading. Kindle = e-books. Kindle = the joy of reading.
Get off the price thing. Apple’s pulled the rug from under the $9.99 per e-book deal? Fire all the employees who didn’t see that one coming and move on. After you’ve touted the joys of not darkening the doorway of a bookstore or cluttering your house with cheap crime novels, sell the Kindle’s convenience. Or portability. Or eye-friendly design. Or some damn thing. But don’t dwell on the Macmillan debacle; that’s Inside Baseball stuff about which your customers couldn’t give a NSFW.
Even as they get OFF the e-book price thing, Amazon should get ON the Kindle’s price. As in drop it. Sell the Kindle for $199 and the Kindle DX for $399. Throw in some clobber. If the Kindle sells out, even better. Nothing builds buzz better than limited availability. This is a life or death struggle. Take the hit.
Sure, Amazon’s Washington lobbyists will have to defend the mothership against charges of price fixing and dumping and whatnot. By the time the feds stop shouting about the importance of the free market and start doing something about “Amazon’s monopoly,” the online superstore will have added an extra four or five million users to their installed base. And it’s all about the base baby.
Meanwhile, Amazon should take a dump truck full of cash and back it up to the houses of James Patterson, Steven King, Dan Brown and anyone else whose work hangs-out at the top of the best seller charts. Publishers? NSFW them. Lock down a good proportion of the top twenty authors and see who’s whose bitch. If the publishers retaliate by withdrawing their titles from Amazon, launch the media campaign you forgot to launch with Macmillan. Go to the mat. Sort-out your access to software once and for all.
Moving forward, the last thing Amazon should do is imitate iPad’s infinite gee whizzery. I know: Amazon just brought a touch-screen company. Well good for them! They should use the touch screen technology to make the Kindle an even better e-reader. If, however, Amazon chases Apple in this “one device to rule them all” mishegos, they will lose the battle AND the war. Amazon achieved its power by being a bookseller. If it returns to its roots, it will prevail. As Sun Tzu said, “If you know the enemy and know yourself you need not fear the results of a hundred battles.”
about 1 month ago
As someone whose income was, for many years, influenced by the price of paper (i.e., “we can’t raise our writers’ pay because paper is more expensive this year”) I am appalled at the publishing industries position on e-book pricing. This might be a purely emotional response, of course, but it keeps me from being a Kindle customer. Show me that the authors are getting a larger piece of the pie in the e-book arena and I could change my mind. But maybe not: as Leslie Geddes-Brown wrote, “Books Do Furnish a Room.”
Just sayin’, is all.
about 1 month ago
Its interesting how this whole thing is being analyzed in the media as a war between book sellers. “Amazon’s core business vs Apple’s”. I don’t see that it matters that Apple has just entered the book sales market. Apple has done just fine with iTunes. While I agree that many people will choose (Kindle vs iPad) based on the title availability and price, I think that many more people, going into the future, will base their decision on what the platform offers as a whole. I buy a Kindle and I get a book reader. I buy an iPad and I get a book reader and a whole bunch of other stuff. And iPad syncs with my iPhone/Mac, ect. For many, the question isn’t “what does this offer as a reader.” It’s “how does the device itself fit into my life?”
The point is that they’ll decide on the device first. Hmmm. Slim form factor, color screen, I can surf, read email, books, play games, be the coolest douchebag at Starbucks. I don’t even like the concept of the iPad. But I want one now.
If Amazon is smart they’ll offer all books in an iPad friendly format as well as Kindle.
about 1 month ago
It’s iBookstore not iBook Store.
I think Amazon will continue to sell more books.
about 1 month ago
I don’t think at all think most think Amazon is known primarily for books at all.
about 1 month ago
Amazon is, was and will always be a bookstore. They might fancy themselves a superstore, but most people in my circle consider them a bookstore and music shop first, and everything else is secondary or tertiary.
Bezos started it as the world’s largest bookstore and that is why the first department listed on the homepage is Books.
With success comes hubris—Amazon’s Kindle digital rights management terms have pissed off a fair number of vocal people. When you buy a Kindle e-book, you’re really just buying the right to read a digital copy. You have no provision to lend or sell your “copy” of that book. It’s a terrible, hobbling idea; people rationalize their shelves of books as investments even though the likelihood of them ever selling their books is slim. With Kindle you don’t buy books, you buy the right to read a book (and that right might be taken away from you based on a publisher’s whim). Think about that.
Apple could really take the e-market from Amazon if Apple used its clout to demand from the publishers liberal DRM policies for their customers’ sake.