Oh, and for the FWIW department, as of right now, the multiples for the EPS valuations are:
AMZN 44.7
APPL 18.8
Apparently, more readers are investors than iPod music drones.
WHY DON’T WE OWN THIS MARKET?
And don’t give me the iPone or iPod Touch can do this too, I have both, and a Kindle { actually just sold it yesterday USED for a dollar more than I paid for it to buy the new one } and there isn’t a real comparison for an avid reader.
Apple should DOMINATE this market on the hardware end, and would, if Stevie hadn’t had a curse out on literate sorts.
In defense of SJ, I will state that whenever a company is disciplined in restricting the number of things it does, it will necessarily miss opportunities. It is also evident that Amazon has the content. Could Apple “own” the hardware for book readers without it?
The Kindle is a good product. Amazon is a good company. Notwithstanding that, the PE disparity is staggering.
The question is, does Apple need to enter this market yet? There is a huge hole in between the iPhone and the Macbook, and Apple will want to have the definitive product in this space. You also have to understand Apple is an incredibly conservative company - I’m not sure Apple will commit to the display technology used by Kindle until it’s of proven durability.
Edit: to clarify, the main issue is the service life of the electrophoretic display. Kindle is an early adopter device, and customers are expected to replace it with newer better cheaper (like a cellphone) before the display dies. I don’t believe Apple is in the business of selling limited life early-adopter devices.
A secondary issue with Kindle is the use of proprietary DRM, so that the device can neither display free PDF’s, nor is there any guarantee that books your have “bought” will remain readable in the future, in the same way that all rivals to fairplay have ended up with the content dying with the device when the DRM used fails in the market.
[ Edited: 09 February 2009 01:12 PM by sleepytoo ]
Amazon’s Kindle Becomes Apple iPod For Books? Or Better?
Posted By: Jim Goldman
This is a big day for Amazon [AMZN 66.06 -0.49 (-0.74%) ] and its legions of Kindle fans who were shut out for the past couple of months if they were trying to buy one of those new electronic book readers that have been sold out everywhere. Today’s Amazon announcement of the new and improved Kindle might be the tech industry’s worst kept secret, but at least we now know some of the new specs, and why some key analysts on Wall Street seem so excited about this device.
The new $359 version will ship in a couple of weeks, and will be “thinner, faster, crisper with longer battery life,” and capable of holding 1,500 complete, electronic books. It weighs just over 10 ounces, and is about a third of an inch thick, and will boast 16 shades of gray instead of the 4 shades that came with the original version. The company also wants to make books available in less than 60 seconds, wirelessly, from anywhere you happen to be. The longer battery life means readers can read for 2 weeks on a single charge.
“We’ve included an onboard dictionary so you can look up words on the fly,” says Jeff Bezos, Amazon’s CEO, at this morning’s event in New York City. “I love the Kindle. It’s a gate-way drug. I’m reading more,” he proclaims. “I’ve read an astonishing number of books.”
The Kindle 2.0 already enjoyed pop culture’s ultimate stamp of approval when Oprah herself proclaimed the device in its first version as the greatest product she’s ever seen. That episode of the program, featuring Bezos himself, led to instant sell-outs of the device and a long, long wait for customers. Pent-up demand now promises big-time sales once again and the company is taking pre-orders now.
Last week, Amazon got quite a boost when Citigroup’s Mark Mahaney dramatically increased his Kindle sales estimates. Back in August, he suggested the device would sell 378,000 units in 2008, about double his initial estimates. In his most latest note, Mahaney now estimates that the Kindle sold a half million units instead, and speculated that the Kindle could generate $1.2 billion in revenue, or 4 percent of Amazon’s business, by next year. Juicing revenue by 10-fold, going from roughly $150 million in revenue this year to over $1 billion next year, is no small feat. He also says that if Kindle hadn’t sold out toward the end of 2008—and Amazon hadn’t stopped building the older generation model to prepare for this newest version, that the company could have sold 750,000 units.
Barclays estimates $700 million in revenue and more than $100 million gross profit by 2012. Sanford C. Bernstein is a little less sanguine, anticipating 750,000 units sold this year, calling Kindle a niche product that’ll unlikely impact 2010 EPS significantly.
Still, even if these range of numbers is the ballpark for Kindle sales, then the device is outselling those early versions of Apple’s iPod by about 30 percent. That too is no small feat. I’m not saying that Kindle sales can sustain the growth they’re seeing now, so that this thing actually overtakes iPod sales, but it sure seems like a compelling start for the little book-reader that could. Signing Stephen King, in much the same way Apple [AAPL 102.00 2.28 (+2.29%) ] signed U2, is also a sign of the electronic book’s times, with the author preparing to release his next novel exclusively on the Kindle first, and then going to a Simon & Schuster hard copy version later.
Nothing is preventing Apple from adding books to its iPod line, though the tiny screens, even on the Touch, may preclude a book’s success on that device. Meantime, as Amazon continues to generate excitement with the Kindle, Sony [SNE 20.35 -0.53 (-2.54%) ] is trying to hitch its wagon to the eBook gravy train with its $299 Reader and Google [GOOG 375.00 3.72 (+1%) ] now offers an electronic book search with 1.5 million titles in a new app available for Apple’s iPhone. Electronic books as a movement is happening and Amazon is establishing itself as the go-to vendor for the cool device that brings them to you. And as I’ve written before, don’t underestimate the power of the Oprah touch.
There’s also something to be said for a device that does one key thing, and well. I love the concept of smart phones, that let me listen to music, watch videos, play games, e-mail, web surf, and oh, make phone calls, too. But with limited battery life, I’m usually sacrificing one task at the expense of the others, and I hate burning battery time by “playing” only to be left scrambling for a charger when I need to make a call or send a note. That alone makes the Kindle an easy sell. And Amazon knows it.
And apparently, so do consumers. Kindle’s evolution will be fun to watch.
A secondary issue with Kindle is the use of proprietary DRM, so that the device can neither display free PDF’s, nor is there any guarantee that books your have “bought” will remain readable in the future, in the same way that all rivals to fairplay have ended up with the content dying with the device when the DRM used fails in the market.
Sure it can, the “workaround” is to email yourself the PDF file to your Kindle email address, it is then totally readable, just as any other book is.
Sheesh, come on guys,there is $$$money$$$ here that the design team of AAPL has to have been aware of, and old Steve and his hippy California thinking just blew this one.
They can still move in here, but the time is a waste’n and one a firm gets the first post dominance, taking that away can be awfully hard.
Apple had ALL the elements here, the capacity to design, the money to market, and the distribution system already in place via the AppStore and the iTune store. My guess is the book publishers would JUMP at a secondary large player in the market, after all, just look at how the music boys are complaining how dominant Apple is for music, they would GLADLY sell their content to a second and third and fourth outlet, just to preclude a situation where Amazon dictated to THEM what they could net for a product.
I’m chalking this one up to the “sidelined gipper” and his myopic viewpoint that eveyone is just like him, they are not, and the sooner they move out of the NICHE they have taken the more they can deploy that $28 billion now earning a magnificent 3% BEFORE taxes.
Sheesh, come on guys,there is $$$money$$$ here that the design team of AAPL has to have been aware of, and old Steve and his hippy California thinking just blew this one.
Yeah, right, spread yourself thinly and copy everyone else - a real Microsoft approach.
Sheesh, come on guys,there is $$$money$$$ here that the design team of AAPL has to have been aware of, and old Steve and his hippy California thinking just blew this one.
Yeah, right, spread yourself thinly and copy everyone else - a real Microsoft approach.
It’s not just books, but magazines, newspaper. If Apple decides to compete against Kindle I would not expect anything until Iphone 3.0 is out. Assuming the redesign of the Iphone implements a SOC designed by the PA SEMI folks, Apple will want to use the chip design in as many devices as possible to lower the cost per unit. A large Itouch is a logical extension of the device family but Apple more likely would target release for 2nd half of the year to catch the education and Christmas spending.
A secondary issue with Kindle is the use of proprietary DRM, so that the device can neither display free PDF’s, nor is there any guarantee that books your have “bought” will remain readable in the future, in the same way that all rivals to fairplay have ended up with the content dying with the device when the DRM used fails in the market.
Sure it can, the “workaround” is to email yourself the PDF file to your Kindle email address, it is then totally readable, just as any other book is.
Note my use of the word “free”. The point is that Amazon retains 100% control of the content; emailing yourself a pdf is a chargeable action, resulting in conversion at a central Amazon server of the content to proprietary format for the device (as I understand it). Even iPhone directly displays PDF’s and plays MP3’s etc, which you can get from anywhere and transfer to your device without reference to Apple. Amazon’s business model may not be sustainable in the face of a developed market for ebook reader devices; Apple treads a careful line between the margin and innovation crushing Linux and Windows PC model, and the total lock down that Amazon currently offers on Kindle. Microsoft tried to achieve that with Windows Media DRM/Janus, but Apple proved that it was unsustainable, even starting from MS’s incredibly strong position.
What I’m saying is that I believe Amazon’s current Kindle business model is not scalable to a fully developed e-reader market. It’s simple naivety that’s preventing commentators from criticizing Kindle in the same way Apple is constantly criticized for for over-controlling iPhone/iPod.
Sheesh, come on guys,there is $$$money$$$ here that the design team of AAPL has to have been aware of, and old Steve and his hippy California thinking just blew this one.
Yeah, right, spread yourself thinly and copy everyone else - a real Microsoft approach.
This is not a market Apple should be in… Yet.
How many books a year do you buy?
Ironically I have about 12 in my current reading pile. Why you ask?
Another major update is a new Whispersync service which makes it easier for original Kindle owners to transfer e-books they’ve already purchased to the new device. Whispersync will eventually work on a number of mobile devices as well, enabling Kindle owners to read their books on other devices.
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