Late last year, one would have thought Amazon’s Kindle was doing very well. Yes, Apple’s iPad dominated the tablet market but Amazon could boast that the Kindle was the most successful Android tablet to date. Sales were growing and Kindle buyers would provide a steady stream of revenue as they bought books and merchandise from the Amazon ecosystem. The Kindle Fire did exceptionally well during the 2011 holiday season so what could be wrong?
Plenty, it turns out. Apple sales fell in the post holiday months but its overall share of the tablet market surged from 54% to 68%. Amazon doesn’t break out tablet sales but rumor has it that the demand for Kindles collapsed as the Kindle Fire’s LCD is significantly better than the e-ink screens of the lower priced models. Worse still, it seems the the Kindle Fire is not selling as well as expected, leading Digital Trends to comment:
Amazon timed the Kindle Fire — and set its $199 price tag — to capitalize on the end-of-year holiday season, and the strategy seems to have worked: the Kindle Fire was a hot holiday item. However, new figures from IDC claim that Kindle Fire sales since the holidays have essentially tanked. IDC claims the Kindle Fire’s share of the worldwide tablet market during the fourth quarter of 2011 was 16.8 percent; but during the first quarter of 2012 that share fell to just 4 percent. IDC found that sales for all Android tablets were “down sharply” in the first quarter — and, of course, Apple sold 11.8 million iPads.
And the future? Not clear but with Microsoft investing in Barnes and Noble’s Nook, Google planning to offer its own tablet, and with Apple pushing new models down the development pipeline, things look cloudy indeed. Amazon is a curious company: at times they seem to execute brilliantly. And then they turn around and lose their way. Not all that different from Starbucks.
Since last April, the Kindle has topped physical books in sales on Amazon and with the Kindle Fire, the ecosystem will continue to expand. More remarkably for a device introduced in 2007, this has taken place while the sales of printed books have continued to expand rapidly for Amazon in the current Recession. But with the new Kindle Fire on the market and older models facing price cuts, expect digital books to far exceed traditional book sales on Amazon (and elsewhere). The eBook market has not resolved all the issues at stake, but the format has finally hit a convenience threshold. And of course, the introduction of the iPad (03 April 2010) has had something to do with this as over 30 million are now in the hands of consumers.
And Microsoft? They announced in August that Microsoft Reader will be discontinued in August 2012. With the rapid pace of innovation, a program designed for reading on computers and Pocket PC’s as simply left behind
The graphic below from Dan Frommer says it all:
Amazon Kindle Growth Rate
Fast Web-browsing on a relatively low-end device – you know there has to be a catch. There’s a roundup of the positive (and not-so-glowing) reviews about the Kindle Fire on The Atlantic Wire, but few note how it will give Amazon the ability to develop an astonishingly extensive record of everything users do online. At ZDNet, Steven Vaughan-Nichols quotes Amazons own description of the Silk browser:
Each time you load a web page, Silk makes a dynamic decision about which of these subsystems will run locally and which will execute remotely. In short, Amazon Silk extends the boundaries of the browser, coupling the capabilities and interactivity of your local device with the massive computing power, memory, and network connectivity of our cloud.
Every page they see, every link they follow, every click they make, every ad they see is going to be intermediated by one of the largest server farms on the planet. People who cringe at the data-mining implications of the Facebook Timeline ought to be just floored by the magnitude of Amazon’s opportunity here. Amazon now has what every storefront lusts for: the knowledge of what other stores your customers are shopping in and what prices they’re being offered there.
And as he points out, this is all done on a version of Android, in effect using Google’s platform to undermine the latter’s own data gathering efforts. Spinoza offers an unsettling vision of the future:
This is the first shot in the new war for replacing the Internet with a privatized merchant data-aggregation network.