Demand for Kindle, Kindle Fire Declining, Analyst

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Kindle Demand for Amazon’s Kindle readers and its Kindle Fire tablet is decreasing, according to Pacific Crest analyst Chad Bartley. In a research note, the analyst told clients that an intent-to-purchase survey conducted by his firm found fewer people planning to buy a Kindle Fire, and far few people intending to buy one of Amazon’s E-ink Kindle readers.

In the brokerage firm’s Q1 survey, some 4.9 percent of respondents said they intended to buy a Kindle Fire tablet. In the Q2 survey, which was just conducted, that number had declined to 4.5 percent. This matches the analyst’s supply checks, which indicated a 10 percent month-over-month decline in component orders in February, and a further 15 percent sequential decline in March.

The analyst is modelling for sales of 2 million Kindle Fire units during the first quarter. That’s lower than his earlier forecast of 2.2 million unit sales. For the full year, he now expects 13.5 million Kindle Fire sales—that’s down from 14.9 million previously forecast, but he is leaving that forecast intact due to potential sales of a Kindle refresh expected later in 2012.

It’s Amazon’s E-ink-based Kindle reader devices like the Kindle and Kindle Touch that are really taking a hit. The analyst slashed his forecast for 2012 sales of the device from 24 million units to just 12.3 million. The analyst fond that 5 percent of respondents intended to buy a Kindle reader, down from 10 percent in the previous survey.

“We attribute weakening demand to the large install base of Kindle e-readers—over 28 million— and maturing of the category after initial adoption by avid readers. We also believe ebooks are being read on a broader array of devices,” the analyst said in his research note.

He cited Pew Internet Research data that found 41 percent of e-book readers read on an e-reader device like Kindle or Nook, that 42 percent read them on a computer, that 29 percent read them on a cell phone, and that the other 23 percent read them on a on a tablet like iPad or Kindle Fire.

“The significant decline in demand for Kindle e-readers adds to risk for Amazon,” the analyst concluded.

The news doesn’t seem to have hurt Amazon’s stock, however, which was trading higher in the late afternoon session at $190.87, up $2.90 (+1.54%), on light volume of 3.9 million shares trading hands.

Comments

Lee Dronick

Burning money when you buy a Kindle.

Constable Odo

Amazon is about to unleash a flood of new Kindles on the tablet market.  I doubt it would do this if there was a decrease of demand.  Well, would they?  Amazon’s share price doesn’t seem to be suffering any.  Bezos is still smiling and saying that Kindle sales are doing just fine.  So many analysts were claiming that the Kindle Fire was going to practically steal iPad sales away from Apple.  Maybe there’s just a bit of misinformation on this analyst’s part.

selby

bwahahaha - This, from a site called “Mac Observer”

On the contrary, demand is rising - particularly due to the fact that it’s way cheaper and does all the same things people need (ie: angry birds) and is a superior book platform (hands down) The Ipad is overpriced, oversized and caters to snarky arrogance from it’s users.

Bryan Chaffin

Calling Dr. Freud…Dr. Freud, to article comments, please.

Lee Dronick

Also send an English Teacher.

Geek

Remember when some said the same things about the I-POD?

greatgazoo192

Unfortunately I don’t believe the eBook reader/low cost tablet will follow the same sustained explosive growth as the iDevice market.
As a long time owner of iDevices, when Amazon first released the Kindle (and B&N and Sony released their e-readers), I thought “Great! Someone will do for books what Apple did for music!”, namely make it possible to carry a large quantity of books in a small space AND at a lower price point than physical books while making it possible for writers and publishers to retail reasonable profits.

Everyone in my family is an avid reader, so we spend a great deal of money on books every year and they tend to fill up the house.  Because of this, after ereaders had enough time to work out the new product bugs, several people in my house went out and purchased Kindles.  So started our travails on the shift to ebooks as both a space saving AND “cost saving” measure.

Unfortunately, the dream of Amazon/eBooks being like iTunes/iDevices never fully materialized for us.  Sure, Amazon has a fair number of books for low cost or even free, but by and large we’ve either already read those books or aren’t interested in them. 
In looking at the books we do buy (mostly new releases), the Amazon price for the ebook is either close to the same as (or in some cases even higher than) their paper equivalent.  So rather than taking the money saved (from not printing and shipping the books, and the extra money that should be earned because ebooks can’t be recycled at a used book store and resold to the profit of the used bookstore and not the publisher/author) and “splitting it” with the consumer, it appears between the publisher and Amazon they have decided to take the extra money and run.

To make matters worse, many ebooks retain the age old philosophy that the first readers will be required to buy at a much higher price (for “Hardback” ebooks) and only later readers will be allowed to purchase at “paperback” ebook prices.  This means we still have to either plop down a premium for the privilige to read a long awaited “ebook” or sit and wait out the publisher’s “hardback” toll period to read the book.  In the iTunes/iDevice approach you aren’t charged up to double just for the privilege of being one of the people to download a song/album in the first 6 months it is available.

Add to that the fact you can’t load up the car with old ebooks and trundle them down to your local used book seller to recoup some of your money, ebooks have actually increased the cost of our book reading mania, not reduced it.

We still use our Kindles because they do help to save a lot of space in the house/suitcase, but we are still waiting for the cost savings to kick in.

In short, due to the unwillingness/shortsightedness of publishers/Amazon to break from their old system/cost structure, they fail to create another iTunes/iDevice phenomenon because they do not make it cost compelling for BOTH publishers AND consumers the way iTunes/IDevices did for music.  That’s not to say ebooks/ereaders will fail entirely, just that their appeal will not reach its’ full potential.

Note: My observations on this matter were formed well before Apple had released their ebook store, so although the DOJ and others want to lay the high cost ebook problem at Apple’s feet, I do not see how Apple can be “the one” to blame. I think the fault squarely lies with the publishers and Amazon.  grin

Geek

2 weeks ago Amazon sold out its refurbished Kindle Fire’s in ONE day!

Does that look like a product that has weak demand, NO.

Amazon will be releasing a family of revised e-readers soon, likely by the end of May to take advantage of Graduation season. It’s time for a refresh.

The notion that demand is weak lacks credibility.

Lee Dronick

2 weeks ago Amazon sold out its refurbished Kindle Fire’s in ONE day!

Does that look like a product that has weak demand, NO.

How many did they sell? There is a difference between we sold out and we sold out all of 200,000 we had in stock.

Anyway people should buy the device that fits their needs, and to a lessor extent suits their way of working, the OS that they prefer.

Bryan Chaffin

Let’s see, anecdotal observations from some dude, or intent-to-buy surveys coupled with supply channel checks from an analyst? Which has more weight?

Be that as it may, no one is predicting doom and gloom for the Kindle platform that I know. There’s a vast difference between weakening demand and the fate of the TouchPad.

Indeed, note that the analyst’s Fire model decreased by less than 10% for the March quarter, while his full year forecast remains untouched based on the demand that future model refreshes could foster.

It’s the Kindle e-reader devices that seem to be in the most trouble. This also is not surprising as more people choose tablets and smartphones over dedicated e-readers. Robbed of its ability to price dump (until the DOJ restores said ability), Amazon has had to start sharing some of the dedicated e-reader market with Barnes & Noble, too.

mrmwebmax

+

It?s the Kindle e-reader devices that seem to be in the most trouble. This also is not surprising as more people choose tablets and smartphones over dedicated e-readers.

Agreed that this is not surprising. It’s like what’s happening with the iPod: Yes, as far as dedicated MP3 players are concerned, iPod is still king. But demand is waning, largely because of iPhone and similar smartphones that do everything the iPod can do, plus a whole lot more.

Point-and-shoot digital cameras are suffering a similar fate, again, due to iPhone and other smartphones. Who wants to buy a point-and-shoot digital camera and an iPod, when an iPhone does all of that plus a whole lot more?

Same thing happened with those hand-held digital camcorders that saw a brief moment of glory, before being obliterated by smartphones. Devices primarily geared for one purpose—MP3, P&S camera, camcorder, ebooks—are simply outgunned by multipurpose smartphones and tablets.

I have a P&S digital camera, and an iPod. I never use them, because my iPhone 4S does everything they do, and is always right by my side. I don’t have a tablet or ereader, but if I did, it would be an iPad, simply because it does a whole lot more than one primary function.

Geek

A valid question, however some had reported that the Fire had a large return rate and if that were so, a Fire sale (pun intended) should have lasted more than 24 hours.

The transition from conventional reading material to e content has only just begun with the market still in its infant stage.  The transition from records, to tapes, to CD’s to MP3 took some time however the adoption of technology is now more rapid.

The e book and content market is evolving and the reports of static growth highly questionable.  The article was clearly intended to raise concern that I don’t believe is valid.

Hawnz

All speculation, but if Amazon would release their true sales, there would be none.

treehouse

The Kindle Fire 2 is on its way. That is a main reason why consumers have hold back to wait and buy in this new tablet. The Fire is smaller and cheaper than the iPad. It is also well-supported with the Amazon ecosystem. Consumers got great benefits purchasing the Fire and its Amazon prime membership. It is a greatest feature which might defeat Apple iPad on this competition. Apple consumers cannot get this benefits while purchasing an iPad. Plus, Amazon consumers seem to be saving more and getting more out of the Fire. With this current economy, who would want to spend more and not save?

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