Summary
> Various manufacturers have tried selling e-books in the past. > For a variety of reasons, they have always failed. > Will the Amazon Kindle be different?
Analysis
This analyst has mixed opinions on the device—and many others are predicting failure. For one, the barely-5” tall display will be challenged to show large-format material such as newspapers, ironically said to be the area of greatest potential use. At this size, the unit seems too big to be conveniently carried, yet too small to provide a comfortable display, and some bloggers say the device is “amazingly ugly.” In addition, the 4-bit gray scale (and presumed low display update rate) make the device totally unsuitable for video. And at this price, users may instead opt for the latest iPod or iPhone, either of which provide more utility. E-books have been attempted several times before—with dismal results. Sony’s Sony Reader and its native-Japanese predecessor the LIBRIé have failed to get noticeable market results.
At the same time, Amazon’s marketing clout, together with various deals from big publishers, could instill enough curiosity to get beyond the gadget freaks. Last month, Amazon announced plans to buy Audible, the largest online seller of audiobooks, for $300 million. The deal will add to Amazon’s growing collection of digital media products. Yet, as we all know, the bottom line is product price: make the unit cheap enough, and it is sure to attract a wide cross-section of buyers. But that means high volume, and Amazon may be challenged to generate enough sales to enter the mainstream with this device. The appeal of carrying electronic text probably awaits the arrival of a viable flexible-screen display—one that you can roll up and carry with you—but a durable solution is still unavailable.
Will the Kindle affect Amazon stock prices? Last year, Amazon announced that third quarter sales were up 41% from the same period the previous year, and met their own expectations by reporting their best holiday season ever. According to the company, their top holiday electronics sellers included the Apple iPod nano and Amazon Kindle e-book reader. Speaking in last month’s quarterly earnings call, CEO Jeff Bezos described the e-book reader as "outpacing our expectations," with customers still on waiting lists for the device.
