Daniel Eran Dilger
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Amazon Kindle sells half as well as Microsoft Zune


Daniel Eran Dilger
If you’re hooked on phonics, you’re probably stoked about Amazon’s Kindle, which allows users to load up books, newspapers, and even blogs and Wikipedia articles from the web over-the-air for reading on a slow refreshing, grey e-Ink screen. But did you know it’s selling half as well as that barometer of epic failure, the Microsoft Zune?
At least one analyst is excited about the potential of the Kindle to become a blockbuster, if only it follows in the pattern of the iPod. In other words, the task Apple accomplished in selling music players should be easy to replicate in any business: eBook readers, PDAs, Tablet PCs, UMPCs, even iPod clones. Since the Kindle sold 500,000 units in its first year, it must be due to sell twice as many during the global crisis of 2009, according to Citigroup analyst Mark Mahaney.

AppleInsider | Amazon rumored to introduce Kindle 2.0 next Monday

Everything Counts in Large Amounts.

Just ask Microsoft, which has introduced all manner of consumer products that will all sell really well once they hit the same iPod magic curve that fires their sales up in the stratosphere automatically. Actually, that didn’t ever happen, and it looks like it won’t ever.

Exuberance about PDAs peaked shortly after 3COM took its Palm subsidiary private in 2000 and have grown increasingly inconsequential every year since. The Tablet/UMPC devices that Bill Gates pitched incessantly from the early 90s right up to his retirement from leading Microsoft have never achieved any measure of broad success outside of a few small niche markets.

And Microsoft’s attempt to replicate the iPod’s success with its own Zune resulted in intractable failure, with the company initially resorting to fire sales that liquidated the first year’s inventory at as much as 60% off, and second year sales that never broke out past that million unit per year mark that defines the baseline of failure in consumer electronics products today.

The Egregious Incompetence of Palm
Mobile EEE PC, UMPC, and Internet Tablets vs the iPhone
Zune Sales Still In the Toilet
Microsoft’s Zune crashes as iPod sales grow

There Can Be Only One.

Launching a brand new product, or even a new implementation of an existing product category, is very difficult. That’s why it’s more that a little impressive that Apple, while at its lowest point after the dot com bust, was able to successfully launch the iPod and turn it into a phenomenon within a couple years, despite having a full set of determined competitors, including both hardware companies like Sony with years of acumen in building gadgets, and software platform companies like Microsoft which were armed with existing industry relationships with the music studios and hardware partners that Apple lacked back then.

The success of the iPod involved shipping a good product that worked well, delivered a simple but obvious premise, was marketed well by a reputable company, and hit the market at just the right point to define itself as the gold standard for its kind. That type of success is very difficult to achieve, but Apple continued to hold onto the ball with the iPod for the rest of the decade, and still retains a 71% unit share of the US market and strong international sales.

Apple then did the same thing again in smartphones, a business that was entirely new to the company in 2007 when it launched the iPhone not just as an Apple branded phone, but as a fuller-featured iPod and a functional web browser. Pundits wrote the iPhone off at the time as being a fancy toy out of the price range of most consumers, but Apple sold nearly 4 million in its first six months on sale, well above that million unit per year barrier of failure.

The next year, Apple sold well more than ten million, not including the spun off iPod touch version. At the same time, Apple has continued to sell more iPods than ever despite the obvious cannibalization effect of all those new iPod-replacing iPhones hitting the market. That’s a level of success the market doesn’t spend much time contemplating.

Is Number Two Amazon Rivaling iTunes in Music Sales? Haha No

The iPod of Killers.

Really, where would analysts find the time? They’re all busy making assumptions that every new product that hits the market will be “the iPod of” that segment. The Kindle was supposed to be the iPod of book readers, but it turns out that not everyone has the inclination to carry around “an iPod” for each activity they pursue.

When pundits asked Steve Jobs when Apple would be coming out with a Kindle-killer of its own, Jobs shrugged off the idea by saying that people don’t even read books anymore. Of course they do, but in the sense of an activity that would sustain a standalone device, book reading just isn’t there. Apple’s solution for reading books on the go is suggested in the company’s ad which recommends downloading an app that lets you read books on the iPhone.

Technically, that experience is less ideal than the Kindle. There’s no easy on the eyes e-Ink screen on the iPhone, it’s smaller, it uses annoying color to paint up the screen, it has to be recharged more often (a serious problem for 24-hour book readers who need to sit more than five feet away from a wall outlet), and using the iPhone makes you look like everyone else, not an elitist nerd on the cutting edge of eBook readerdom.

But for 80% of the market, reading an occasional book (or more likely, web content that actually works like a desktop browser) is far more satisfying when it can be done on a pocket-sized device that also doubles as a phone, an iPod, a game machine, a calculator, a novelty fart device, and 10,000 other things in the App Store.

And that’s why, even with a nice redesign, Amazon’s Kindle is not going to hit an iPod-like critical mass to become a billion dollar market any time soon, particularly not in the middle of a long term recession where people are more worried about their jobs and keeping their homes than at any point since the Depression.

It’s not that the Kindle isn’t any good, it’s just not good enough to warrant being carried around by a large enough audience to matter. Add up all of the tech-savvy cat ladies who sit in on Oprah’s book club, and you have a narrow niche market, not another iPod.

In-depth review: can Amazon’s Kindle light a fire under eBooks?

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  • John E

    thanks daGUY for correcting my time sequence. all the memories kinda smudge together … but that 2003 date strengthens the point that iTunes made the iPod a success, especially once it was ported to Windows that year too, not vice versa. (wikipedia has very nice iPod timeline and sales charts for reference.) then the first Mini with the first click wheel came out in January 2004 … and the iPod began to get rolling.

  • LuisDias

    fnsonin, I’m sorry if I misunderstood you and also for the harsh tone. I don’t think I read you wrong, though. You presented your case as if it was representative of general population and as…

    the main reason that ebooks are never going to be as popular as music MP3s or H.264 videos.

    Surely, having 2000 books up your sleeve to get instant “quotes” isn’t quite “representative”. And much as noble as it can be, it’s nothing but a small fetiche of yours, so your statement is still ridiculous.

    My original post said absolutely nothing negative about the iPod nor the iPhone.
    For someone so passionate about the very limited Kindle book reader your reading comprehension leaves a lot to be desired.

    I never said you said anything wrong with the i’s. So your last comment is quite backfired really… do you shoot yourself in the foot this often?

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  • fnsonin


    Imagine if the iPod had not allowed you to use your existing content with the device. Instead you had to buy a special ‘iPod’ edition of the CD that you already owned. Would Apple have sold millions of iPods?
    The answer is obvious. Extending this to books. If the Kindle uses only special Kindle editions of ebooks and provides no consumer friendly way of using previously purchased books, then it will not be as successful as the iPod as a mass market device.

    Most normal people resent being forced to repurchase existing content merely to use it in another format. Perhaps that is a ‘value’ fetish or maybe a ‘not getting screwed’ fetish. I leave that for you the fetish expert to decide.

    It is not enjoyable to read an ebook. The experience is incredibly limiting. The only significant advantage an ebook has over a real book is portability of large collections.
    Therefore I was addressing the only valid use case of a Kindle. Pointing out that in its present form, the Kindle is an epic fail because it will not easily allow the reuse of existing content.

    I owned a Kindle and returned it because all of the content I wanted either was not available or looked like crap. It is easier to read a book.

    As for my reference regarding iPods and iPhones:
    “My original post said absolutely nothing negative about the iPod nor the iPhone.”
    It should have read:
    “My original post said absolutely nothing about the iPod nor the iPhone.”
    Obviously editing is not my strong point. Nevertheless, apology accepted and I hope that Amazon can figure out a legal way to import existing books into the Kindle. That would make it a keeper.

  • Joel

    If I ever launch a product, I wish it would have the “epic fail” of getting it Oprah, and selling out at 500,000 units. Perhaps, and here’s a strange thought, some times different people have different opinions…?

    Did you try any other e-readers, like the ones which fully support pdfs…? Or did you try to use the service provided by Amazon, or the other formats it supports. Perhaps the Kindle 2 will support pdfs…

    Its a bit like saying I can’t play ogg files on my iPod, and so all mp3 players must suck, and the Ipod is “epic fail”. Do one will want them things…! :D

  • KathyLee

    Hey! I’m a tech-savvy cat lady! :-D But I don’t follow Oprah… I sadly agree with Jobs, but not that I don’t read anymore – I don’t read fiction anymore. I spend a lot of time reading, but it’s online blogs, news, tech news and rarely any books. Even magazines are out-of-date by the time you get them. One thing about the Kindle which seemed neat, is the subscriptions to newspapers/mags. That could be cool if offered on the iPhone. I don’t want to carry an e-reader just for that – the back-lit LCD of the iphone is ok on my eyes (thus far) for reading articles, not sure what it would be like for entire books.

  • http://home.comcast.net/~daguy daGUY

    The Kindle 2 was just officially released today (well, available for preorder): http://www.amazon.com/exec/obidos/asin/B00154JDAI/ref=nosim/daringfirebal-20

    Overall, it looks like a solid update over the original – longer battery life, better display, better design (although it’s still ugly in my opinion…but at least this time it’s symmetric!), etc.

    At the same time, I still kind of feel like this is a solution looking for a problem. Don’t get me wrong – being able to carry around your entire library, search, look up definitions, etc. and download new books on the fly is pretty cool. But I feel like most people do more “short” reading nowadays (newspapers, magazines, blogs, websites, etc.), and while the Kindle can handle these things, other devices do it better (iPhone/iPod, for instance). Maybe I’m just not in the target market.

    Bezos mentioned in his presentation that books have been largely the same for 500 years. Maybe that’s because there’s not really anything wrong with them?

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