Amazon’s Kindle hits Millions already this quarter

Electronic retailing giant Amazon.com has never revealed how many units of its Kindle ereaders it has sold, always offering vague glowing statements that the Kindle is the company’s “most gifted” item and that Kindles continue to set sales records. However, without knowing how many Kindles the company selling, all those statements are almost meaningless: after all, if you sell three devices on quarter, selling four devices the next quarter is a 33 percent increase in sales!

Amazon dropped a hint about how many Kindles it is selling: the retailer claims to have sold “millions” of Kindles in the first 73 days of the holiday quarter, and furthermore that holiday quarter sales to date surpass the total of all Kindle sales for 2009. It’s still not a specific number, but it means that Amazon has sold at least two million Kindles so far this quarter—and that number is only going to go up as the end-of-year holidays loom closer.

Third-party estimates of Kindle sales for 2010 have generally hovered around the 4 million unit mark, although Citigroup’s Mark Mahaney recently increased his estimate of 2010 Kindle sales to 5 million, and forecast Amazon will move 8.4 million Kindles in 2011.

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Apple Updates Its iOS Mobile Operating System.

Just in time for the holidays, Apple is offering a new, or at least new-ish, product. The Cupertino, Calif.-based released an update to the software that runs its many mobile devices. The update, dubbed iOS 4.2, allows iPad users to read emails from multiple accounts, connect with one another using a game-themed social network and wirelessly stream music to their stereos.

In particular, the new features target Apple’s popular iPad, which hasn’t been able to perform many of the same functions of its siblings, the iPhone and the iPod Touch. The changes for the iPad are so great, says Apple Chief Executive Steve Jobs, they revolutionize a product he has already declared “revolutionary.”

The new system does give the iPad, already the standard bearer for tablet computers, some nifty new functions. The iPad can now run multiple applications at the same time, something the iPhone and iPod Touch have been able to do since June. For example, users can stream Pandora radio stations while surfing the web or reading a book on Amazon.com’s Kindle app.

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Color comes to E Ink, LG electronic-paper displays

The first commercial electronic paper displays that can show color were unveiled Wednesday at the Flat Panel Display International show in Japan. The screens open the way for electronic book readers like Amazon's Kindle and Sony's Reader to add color, but so far only a single Chinese device maker has committed to the technology.

Two companies were showing the screens: E Ink, which dominates the e-paper market, and LG Display, which is one of the world's largest display makers. Compared to the monochrome displays used in current electronic book readers, the new displays offer a dash of color, but users shouldn't expect the same sort of color depth and vibrancy that's seen in laptop computers and flat-panel TVs.

Mass production of the 9.7-inch screen, which has an 800 pixel by 600 pixel resolution, is already beginning and E Ink's first customer, Chinese device maker Hanwang Technology, was showing an e-book reader that features the screen.

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What a Day for e-Book Reader Market

In a matter of hours, consumers gained at the expenses of e-book reader makers' profit margin. I am talking about the price war initiated by Barnes and Noble this morning on its Nook e-book reader device and the swift action taken by Amazon.com to lower the price of its low-end Kindle. by the end of the day, the entry-level Kindle is $70 lower, from $259 to $189, while a new Wi-Fi only Nook costs $149. Even the price of the 3G Nook was lowered to $199.

I have tracked the portabl CE market for years but the past six months are also an eye-opener for me when it comes to the young mobile Internet device market. First we got a string of CES news of more than half a dozen new e-book reader brands to hit the market this summer. Then came the iPad debut and a new e-book distribution model that changes the game rules set by Amazon.com. The subsequent iPad success sent a clear message to standalone e-book reader makers that they have to adjust their products' market positioning and pricing in order to square off competition from multimedia Internet tablets. The precipitous price cuts by Amazon.com and Barnes & Noble are so far the clearest evidence that the standalone, monochrome e-ink panel-based e-book reading device market is in great danger of being marginized.

Will other device makers follow suit? Irex is already struggling; Plastic Logic's Que is nowhere to be seen; Copia's devices are still just Web descriptions; and Spring Design's $399 Alex reader looks expensive given today's news. Even Sony may have to re-design its e-book reader product line to survive the new competitive environment.

As an analyst, I am already revising my mobile Internet device forecasts in light of the latest developments after publishing a report on this topic in early April. And wait, iPhone 4 is coming up this Thursday, and don't forget that iOS4 now supports e-book reading function on iPhone and iPod Touch. Great!

The e-Book Market Is Garnering Rising Interest

Amazon.com stays mum about sales of its e-book reader the Kindle. Private sources pegged 2008 unit sales between 300K and 500K. More rosy is the forecast. An equity research analyst projected early this year that Kindle and its content can bring Amazon.com $1.2 billion in 2012.

Whether such forecast is accurate is anyone’s guess. But there is no doubt that electronic books and literatures are an under-monetized asset. This week I learned, in quite a surprise, that Shanda Literature, a subsidiary of China’s largest online game company Shanda Interactive, earned almost 100 million Yuan (equivalent to $14 million) in revenue in 2008. Shanda Literature operates three online Chinese literature communities where users contribute original stories and novels and share with one another. Visitors and community readers can opt to pay to read premium content, and Shanda Literature provides the distribution and payment platform and earn commission from each microtransaction. $14 million might be too small by American standards, but given the fact that Shanda just formerly established the subsidiary eight months ago (the portals were first set up in 2004), and the fact that the $14 million was based on micropayment, I would call Shanda Literature’s accomplishment “impressive.”

Let’s turn back to Amazon.com’s business model with Kindle. Earlier this month, Amazon made available an e-book reader software for Apple’s iPhone. It indicates that Amazon realizes that the Kindle is just half the digital literature market. The more lucrative part longer term might be the content and distribution business. Making e-book reader software available to more devices and platforms is just like Apple made its iTunes software to Windows-based PCs back in 2003. The goal is to expand the application’s reach so as to maximize the potential user base. Amazon will not be content with just distributing books in its physical form. It is reasonable to assume that its ambition is to become a digital publisher and play a commanding role in how e-books/literatures will be published and distributed. It may even distribute user generated content as the e-publishing platform tears down the all the barriers between an unrecognized yet talented writer and the traditional book publishing ecosystem. Since we could vote Kelly Clarkson as our “American Idol,” why we can’t let users vote their “Stephen King” or “Dan Brown” through an e-publishing system?

Perhaps recognizing e-book/e-literature market’s potential, two more collaborations were forged over the last two weeks. Last week, Sony partnered with Google to make the latter’s digital book content available on Sony’s e-book reader devices. Then Barnes & Noble yesterday announced that it will make its own e-book reader software available to RIM’s Blackberrys. Earlier this month, Barnes & Nobles also acquired an e-book seller Fictionwise.com. These deals revealed an intensified interest in the e-book business. As consumers get more accustomed to reading books on a digital device, the book publishing industry could be the next victim of the digital age.