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Kindle Sales In Freefall?


Amazon Kindle
Are people closing the book on e-ink readers and moving over to iPads instead?

Sales of Amazon’s Kindle ereader plummeted by a shocking 75 per cent in the first quarter of 2012, according to analyst Paulo Santos, who studied the Kindle supply chain and went through Amazon’s latest financial results pretty closely.

Amazon has never officially revealed how many Kindles (of any type) it has sold but it’s possible to make an educated guess based on the fortunes of other companies such as E Ink Holdings, which makes the displays for Kindle readers.

Writing on SeekingAlpha.com, Santos says that Amazon needed no new E Ink displays for the first quarter of this year. In previous quarters he estimates that Amazon was shifting about seven million of its ereaders, but he calculates that sales in Q1 2012 were only 1.75 million. That’s not counting the Kindle Fire tablet that uses a conventional LCD screen, but he comes back to that later.

Put simply, sales must have fallen by at least 75 per cent since the end of 2011 if Amazon had a surplus of parts and did not need to order any more.

Scott Liu, chairman of E Ink Holdings was quoted in the Taipei Times as admitting, "Our major customer was too optimistic about its sales in the fourth quarter of last year and ordered too much from us. That made the customer order almost nothing from us in the first quarter."

Amazon Kindle Fire tablet

The drop in demand coincided with the US launch of the Kindle Fire, which Santos thinks was a contributing factor. He says, “The drop in Kindle e-reader sales came with the introduction of the Kindle Fire, and the cannibalisation has been nothing short of stunning, massive.”

So, customers who may have been thinking about getting an e-ink Kindle may have instead opted for the more tablet-like Fire, at least in the US. However, it’s not like the Kindle Fire is a runaway success either.

Santos says its sales are now falling sharply too because it suffers a similar problem to other Android tablets in that hardly anyone is buying and using them compared to Apple’s iPad, which dominates the sector.

Santos concludes that Amazon’s latest financial results prove his theory. The Kindle line is sold to customers almost at cost price as a way of drawing users in to Amazon’s more lucrative digital media store.

The retail giant revealed strong earnings in the first quarter of the year, which tallies with the idea that it’s no longer taking a big hit in the wallet by selling Kindle hardware for no profit.

Perhaps the rumoured addition of Harry Potter to the Kindle store will give the platform a boost.

Have ebook readers peaked? Are people starting to prefer more multifunctional tablets, even though they are heavier, more fragile and less readable in direct sunlight? It will be interesting to see where this goes.

Via Seeking Alpha

Go to comments


May 10, 2012, 5:34 pm

I'd think the reason is that everyone who wants one already has one. And outside the US there isn't a way to upgrade them. So it's primarily people who are replacing them that are buying

The only place an upgrade was available was the US and most people who were prepared to upgrade did so immediately and then you're left with two groups - those who don't want a kindle and those that have the one they want.

An e-reader is a pretty basic device and it's hard to find a significant way to upgrade the kindle touch without making it colour. So no one bothers to upgrade. Thankfully for Amazon the Kindle is the gift that keeps on giving (or the sale that keeps on selling)

Martin Daler

May 11, 2012, 3:38 am

"Kindle is the gift that keeps on giving"
Would that it were. I bought my Dad a new Kindle last Christmas, in the naive expectation that we would all be able to buy him books for it thereafter. People do that - give books as presents - and it hardly seems far-fetched that you should be able to do so via Kindle. Perfect for family members scattered around the globe.

Or so you would think. But no, astonishingly, it is not possible to buy and send a book to another Kindle user. I was gobsmacked. So having bought my Dad a Kindle, if I now want to send him a book on his birthday I still have to put a real one in the post! Guess what - I won't be buying the books from Amazon!


May 11, 2012, 9:15 pm

I doubt ebook readers have peaked at all. Have laptops and camera's peaked as well!? Tablets are one of those silly fads that consumers go crazy for without really thinking about how well they fulfil their needs. Hence people walking around taking holiday photos with an ipad.

I actually believe tablets will peak or in fact already are peaking. Just look how desirable the Eee pad transformer is. Now is that a laptop with a detachable screen or a tablet with an add-on keyboard!? Likewis the ultrabook format will surely erode away the tablet market too.

But focussing on the ebook reader and eink screens, the current and previous generation of kindle are fantastic devices, the stuff of computing legend, i find it mind boggling when people say they dont want a kindle. Since i got mine my casual reading levels have increased exponentially. The advantages of an ebook reader over a tablet are too numerous to list, the obvious ones are that you can read the ebook reader outside and the battery almost never needs charging. And how about silly interruptions, reading on a kindle is a peaceful experience and good therapy the Divided Attention Disorder (DAD) that most of us seem to have developed since using instant messaging, browsers and skype.

The really exciting thought for me is where e-ink displays could be deployed in the future. Perhaps the perfect marriage might be as a secondary screen for laptops or tablets, in which case the ebook reader's days may well be numbered.

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