Rise of the eReader

If you are a self-published author of a novel, such as I am, you soon become acutely aware of certain facts:

  • Kindle, along with the Kindle app, dominate sales
  • It is almost comically easier to publish your work on Kindle than iBooks (or anywhere else)
  • The numbers are shockingly in your favor. My first novel, The Empty Spaces (go buy it!) is available for $2.99 on Kindle. For that extremely low price, you are supporting a budding writer in a way that just a couple years ago was impossible. For $2.99, I receive about $2.00 per sale. For all but the most established, popular authors, $2.00 per sale on a paperback, say, was nearly impossible. Even if priced at $10 a copy.

All of which means that soon all of us will be published authors.

And the market continues to grow bigger and bigger...From the New York Times, on the cusp of (still another) content revolution:

For adults, tablet computers and e-readers were the gifts of choice, judging by a new report that indicates the number of adults in the United States who own tablets and e-readers nearly doubled from mid-December to early January.

The increased ownership of tablets was especially pronounced among highly educated people with household incomes of more than $75,000. Almost one-third of people with college degrees now own tablet computers, the report said.

Women were heavier buyers of e-readers than men, a finding consistent with surveys that indicate women tend to buy more books than men.

Bookshelf porn

I love my Kindle. I love iBooks on my iPad. I love the very notion, to say nothing of the reality, of having 1,000 books at my disposal, anytime, anywhere.

1,000? Hell, 10,000! More books at my fingertips than I could ever read in a life.

More books than the greatest king could ever amass.

And it gets even better! With, say, an $80 Kindle and all the free books Amazon offers, even the poorest of children can soon have a giant library, ready to inspire and enlighten and educate and protect.

What could be better?

Still, some, because they are hoarders or because they have a need to show off how well read they are and some because of their sheer love of books, in physical form, prefer something else.

For those, I give:

Bookshelf Porn

bookshelf porn

6 million Kindle Fires by Christmas!

So says Goldman Sachs.

"Millions and millions" says Amazon.

DigiTimes predicts 5 million Kindle Fires sold in Q4!

From over a month ago, my published number:

 

My Q4 sales estimate for Kindle Fire

Amazon is suggesting 5 million. My estimate is 2.87 million.

 

Business Insider -- today:

We're estimating Amazon sold ~3 million Fires, which is well below Goldman Sachs's bullish estimate of 6 million units sold for 2011. 

Careful, boys and girls -- and all you pundits who read me, copy me then fail to provide your source. I only make it look easy.

Amazon says no Google allowed

Amazon appears to be succeeding where many others are trying to succeed: using Android for their own mobile sales and services strategy, free from the clutches of Google.

This is no surprise. Amazon wants the emphasis on its app store, its digital media ecosystem, its payments platform, its recommendation services, its cloud infrastructure, its brands. Hell, even the Amazon designed browser for the Android-based Kindle Fire seeks to keep Google out. 

A Kindle Fire user is, in Amazon's view, an Amazon customer. Not a Google customer.

Only, I did not know this: per Xconomy, Amazon is, apparently, not even allowing others to use Google for their Kindle Fire apps. This could get interesting:

As a much more stripped-down device, primarily intended for media consumption and shopping, the Kindle Fire doesn’t have GPS capabilities. And even though the Kindle Fire is based on a version of Google’s Android mobile operating system, Amazon has aggressively asserted its independence from Google with the Kindle Fire.

That has meant keeping Google Maps out of Amazon’s Android app store, and telling Kindle Fire developers not to include any features based on Google’s Mobile Services—even though that meant the mega-retailer didn’t have its own in-app purchasing system when the device was rolled out.

So, to make its maps work on the Kindle Fire’s version of Android, Zillow’s app offers a mobile version of its regular online maps—which are already supplied in almost all cases by Bing. GPS-enabled services are turned off on the Kindle Fire app, but users can still search for an address or location to find homes they’re interested in scoping out.

That’s why you saw Zillow making a big deal out of the fact that it was “the only map-based real estate app on the platform” when it announced the app as one of the first to be available for the Kindle Fire.

Good stuff.

If Goldman is correct then expect an iPad Nano by late 2012

[Bless me, father, for I have sinned. The title of this post is obviously linkbait. God is displeased, my son. You must actually read the articles in Huffington Post for the next 36 hours for penitence.]

I've long written of the war between Amazon and Apple.  Apple makes far better, more profitable, more capable devices. They also do digital media sales slightly better. Amazon has a far better cloud infrastructure and pricing platform. Apple has its own physical retail footprint while Amazon dominates online retail. Each has an excellent billing and back-end infrastructure. Both can live out their days quite well in peace.

Except such businesses are never content with their current lot. There will be no peace, only war.

Thus, the current tablet skirmish. The beloved iPad 2 vs the crappy Kindle Fire. iBooks vs Kindle books. Amazon Prime streaming and free cloud locker vs iCloud + AirPlay. iTunes vs Amazon Music. The App Store vs the, er, app store. And so it goes...despite differing strategies, which sees Apple making almost no money on content but billions on hardware and Amazon prepared to take a loss on every sale of each of its hardware devices in exchange for increased content sales and extending its shopping presence to each of us, wherever we are.

Despite BigBlog hype and breathless media anticipation, the low-priced, $200 Kindle Fire is now, in the eye of the Christmas shopping hurricane, receiving negative review after scathing negative review. Though its a mere $200, about the same as last year's Kindle 2 eReader, and offers web browsing, eReading, apps, movies and more, plus a host of goodies for Amazon Prime members, some tech bloggers are now writing off the Kindle Fire.

As I wrote just yesterday, this is a mistake. Amazon's ecosystem is solid, well-priced, extensive. Its ecosystem can challenge anyone's, including Apple's iTunes. Even if it should lose, Amazon's ecosystem will put up a great fight. Likewise, the Kindle Fire, at (technically) $199 is priced perfectly to sell tens of millions.

The problem is that, as with the first iteration of the original Kindle, the device itself sucks. But Amazon has too much at stake here and too much to offer to even contemplate abandoning the device-as-platform. They will get this right. Kindle Fire 2, or whatever they choose to name it, will be good, not crappy. Kindle Fire 3, out sometime in the next 18 months, will be awesome.

But the question we have today is: how many Kindle Fires will Amazon sell this quarter?

Last month, I predicted 2.87 million.

Today, Goldman predicts 6 million.

This rapid early adoption of Amazon’s first tablet device does not surprise us. While the Kindle Fire certainly doesn’t have the breadth of functionality of the iPad (no camera or microphone, shorter battery life and less memory), it does a few things very well, which just happen to be the few actions that users utilize the tablet form factor most often for, in our view. The interface, which is designed around activities (i.e., watching video, listening to music, reading) as opposed to applications, is very easy to use. This essentially allows the device to do a great job of facilitating quick consumption of media; whether it’s stored in the cloud or on the device or needs to be purchased from the Amazon store, the user just needs a few clicks within the particularly activity to get the desired content up and running. Once it is, we view the experience of streaming video and music and reading books to be as good as any.

For the long term, Goldman sees Amazon selling between 15.5 million and 20.5 million Kindle Fires during the first full year of availability.

6 million Kindle Fires, these crappy Kindle Fires, is huge. 15-20 million Kindle Fires in (full) year 1 is amazing. If correct, that would reveal a heretofor unknown yet certainly pent-up demand for tablets that I guess neither Amazon nor Apple ever imagined. 

Except, I still think the number is too high. For the capable, if limited -- and crappy -- first iteration of Kindle Fire to sell 6 million units in its first quarter, then 15-20 million units in 2012, I believe it must be priced at an almost-disposable level; where consumers know that they have no right to bitch or complain or demand more.

That price, as HP's TouchPad fire sale has revealed, is $99.

Until Kindle Fire is $99, which won't happen til 2013 at the earliest, I think Goldman's numbers are off by about 2X. I'm sticking with my prediction of (just under) 3 million units for this quarter.

That said, if I'm wrong, or more to the point, if Goldman is right, or even close to right, then that absolutely will get Apple's attention. iPad 2 and Kindle Fire are different devices, with different strengths, different markets, different use cases. But, as we all know, there is a great deal of overlap.

Thus, if you're an Apple fanboy, take heart. If Kindle Fire sells as well as Goldman states, then Apple absolutely will jump into the 7 inch, limited function mini-tablet space. Fast. They will not cede a large market for tablets. Period.

Is the Kindle Fire the Amazon Edsel?

[Update: Kindle Fire rebuke is clearly in the ether. It appears that moments before I wrote this, Harry McCracken posted something similar, and moments after I wrote this, TechCrunch did likewise.]

 

Love that title. It's from a review in the Detroit Free Press, one of an increasing chorus of scathing reviews for the Kindle Fire:

Early buyers of Amazon's tablet-like e-reader, the Kindle Fire, are beginning to find what many had feared: it's not really a tablet computer at all.

These early adopters are running into an experience that is often clunky, a touchscreen that isn't super responsive, a Web browser that struggles on many websites and head-scratching hardware omissions. (There are no volume buttons.)

For Amazon, it's the product of impossibly high hopes for the device. When Amazon CEO Jeff Bezos unveiled the Fire earlier this fall, the expectation was that it would be able to fully compete with the Apple iPad 2.

The Fire was supposed to finally buoy an Android tablet ecosystem that has languished under expensive, clunky hardware from manufacturers like Motorola.

It has not done that.

The $199 device also lacks privacy controls. It displays a carousel of all the most-recently touched content, even if you don't necessarily want that romance novel brought to the front with each read.

And while many had hoped to gift the inexpensive tablet to a teenager, doing so would also allow younger users to have one-click access to be able to make any purchases on the device.

This and every one of the negative reviews on the Kindle Fire are spot on. Worse, Amazon has *earned* this backlash. They hyped the Fire, big time, while fostering the very real sense that it was a iPad 2 competitor.

It is not.

That said, it's time once again for a reality check.

The fools and haters that claim Apple is all about the marketing simply have no idea what they are talking about. None. No one -- no other company in the world -- can build consumer electronics/computing devices of the design, build quality and cost that Apple can. Not even Amazon. Suggesting that iPad sales are great because of some Steve Jobs reality distortion field only reveals that reviewer's ignorance -- or deception.

Secondly, people need to not be so dumb. The Fire is a $200 device designed, primarily, as a platform for Amazon's eBooks, Amazon's music streaming, Amazon's video streaming, and very little else. But that's why it's only $200! Even with that, Amazon loses a few dollars per unit sold. Spend $200 on an Amazon ecosystem receiving unit and then complain it's not as good as an iPad and you got no one to blame but yourself.

Lastly, fear not. Amazon will get this right. No, this truthism does nothing to alleviate the suffering of existing Kindle Fire owners. Still, you should make no mistake. The Kindle Fire, as a product line, is not going away. Apple and Amazon may have very different strategies regarding where they make their money, but both companies do have one thing in common:

they make sure the ecosystem is rock-solid and then build supporting hardware for the ecosystem

Today's $200 Kindle Fire sucks. Next year's $200 Kindle Fire will be pretty damn good. 2013's $150 Kindle Fire will kick ass. 

Philip Elmer-DeWitt has a story today that reflects just how strong the Apple and iOS brands are with America's youth:

Apple's (AAPL) iPad topped a new Nielsen survey of the most desired electronics products among young Americans this holiday season.

Among kids 6-12, Apple scored a hat trick, with the iPad (44%) first, the iPod touch (30%) second and the iPhone (27%) third.

In a similar survey last year, the iPad came in first at 31% and a generic "computer" was No. 2 at 29%

The teenagers surveyed had somewhat broader interests. The iPad was their No. 1 choice at 24% (up from 18% last year), but computers, e-readers, TV sets, non-Apple tablets and Blu-Ray players scored higher than the iPhone at 15%, perhaps because so many of them already have one.

Consider those numbers and review the graphic below from Nielsen. What America's teens, tweens and younglings want is Apple, for the most part. Pretty incredible, actually. Better still, those are the *best* products out there, dollar for dollar. Mac laptops, iPad tablets, iPod ipods, iPhone smartphones. Simply the best.

Except, even if it wasn't year 4 of a protracted great depression, what parents wants to drop $500 minimum on a tablet! I don't know any of them. The one percenters, I suppose. This is why I think the Kindle Fire will do so well. I've repeatedly called it the 'best Christmas gift' you can get -- for $200 or less. The boys and girls of America may not know about the Kindle Fire -- yet -- but I can certainly understand why their parents will get them one for the holidays. That said, talk of OMG APPLE WILL BE MARGINALIZED BY ANDROID JUST LIKE MAC WAS WITH WINDOWS reflects not merely journalist laziniess or general dumbness but an acute lack of awareness of reality: it is the *opposite* that is now occurring! This is year 3 of a 10-year *golden age* for Apple. 

They make the *best* smartphone, computer and tablet -- and have the *best* media ecosystem on the planet and the best supply chain and *strongest* brand name and a stellar retail operation and a robust presence in North America, Europe and Asia and their products are dollar for dollar still the best and any kind of app or software you want is *readily available* on Apple products. Do not accept stupidity from "journalists" "pundits" and others that suggest that the current Android market share means a retrenchment of Apple Inc. There is no company out there better positioned to be the first trillion-dollar company than Apple. 

Which is what gets Tim Cook out of bed every morning. 

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