Amazon Is Said to Exceed Kindle Sales Estimates by 60 Percent
Dec. 21 (Bloomberg) — Amazon.com Inc. is likely to sell more than 8 million Kindle electronic-book readers this year, at least 60 percent more than analysts have predicted, according to two people who are aware of the company's sales projections.
Context & Ripple Effects
The Kindle has been outgrowing every public forecast since it launched: Citi's early-2009 tally put 2008 sales at just 500,000 units and a $1.2 billion business, and by the end of that year Amazon's own stock was moving on e-book sales strength attributed to the device. An OUPblog analysis back in mid-2008 had already flagged that both Amazon's and Sony's readers were outselling official numbers, so today's Bloomberg report fits a two-year pattern rather than arriving cold.
If the reported figure holds — more than 8 million Kindles in 2010, per two people aware of Amazon's projections, still unconfirmed by the company — the installed base would be an order of magnitude larger than what sell-side models assumed just two years ago. It also lands two weeks after Amazon opened browser-based Kindle reading to third-party sites via Kindle for the Web, a Chrome OS launch partner, extending the platform beyond hardware owners.
First-order effects
- Analyst models for Amazon's Q4 and full-year 2010 are understating the Kindle hardware line by at least 60 percent if the sourced projection is right, forcing immediate revisions to revenue and EPS estimates heading into earnings season.
Second-order effects
- A multi-million-unit installed base strengthens Amazon's hand with publishers and gives its e-book store more pull against rival ecosystems, while Kindle for the Web turns every participating website into an additional storefront feeding the same catalog.
Third-order effects
- Two years of consecutive beat-the-estimate surprises suggest analysts structurally misjudge devices Amazon sells direct online without disclosing units — a disclosure gap that keeps the market pricing Amazon's hardware and content flywheel below its actual scale.
The trend: Closed-ecosystem devices sold direct-to-consumer, like the Kindle, keep compounding past Wall Street's estimates as Amazon converts each reader into recurring e-book revenue.