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Amazon Kindle: Why it cannot match the success of Apple iPod?

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Amazon dropped its price on Kindle 2 today.  Reading the article prompted me to think about the market for eReaders and comparing them to MP3 players.

Remember when Apple iPod was launched in 2001? In the beginning it attracted the die hard Apple fans, and MP3 aficionados but within three years it had overtaken all MP3 players and established itself as a clear winner. Apple sold 376,000 iPods in the first year, second year they sold 937,000 – crossing a million in the first two years since introduction.

Contrast that with the Amazon Kindle – estimates range from 189,000 to 600,000 in the first year. A February ’09 post on paidContent estimates the Kindle sales to 374,000 life-to-date.

The same article talks about why Kindle sales cannot be compared to Apple iPod:

—The iPod was introduced in 2001, which is very different period than 2009 when it comes to consumer electronics, not to mention consumption of digital media. So just because initial sales are comparable, or even greater for the Kindle, doesn’t mean that you can draw any longer-term grand conclusions.

—The number of people who read every day is likely much less than the number of people who listen to music daily (25% of all people do not read books at all
– can the same be said about music?).  As a result, early adopters have likely driven early sales, and sales growth will probably come down to earth once the device has reached the masses.

Consumers who  purchased MP3 players and Apple iPod had access to massive amounts of free content to load on their iPods:

  • Digitize their own existing CDs
  • If not for their own CDs they could borrow from their friends or family
  • or even worse download pirated music

Note the Apple model was the reverse of the Gillette Razor model – Apple makes it money and tons of money on selling devices i.e. iPods not on selling music.

The challenge with Amazon Kindle and eReaders in general is that consumers are forced to buy content given that the free content is limited or boring. It is extremely challenging to scan books and move them to the Kindle or should I say next to impossible.  Amazon has chosen a model where they are not subsidizing the Kindle and neither are they making content cheap.

Jeff Bezos would be better off either subsidizing the Kindle or content and gaining massive consumer acceptance rather than having somebody or something like iPhone steal the market from Amazon.  Having mass adoption as in tens or hundreds of millions will allow Amazon to offer content and services other than books.


Written by Ashu Joshi

July 8, 2009 at 10:02 pm

Posted in Consumer Electronics

Tagged with , , ,