After a decade of interesting but ultimately failed efforts by various electronics manufacturers to hit the sweet spot of potential for an electronic book reader, Amazon launched the Kindle reader in November 2007. Although the Kindle quickly attracted critics and naysayers who predicted failure for the device, they failed to understand either Amazon's passionate commitment to the Kindle concept or how well the company is positioned to achieve dazzling success. Amazon's relationships with readers, early adopters, authors, and publishers provide the company with tremendous advantages over any competitor that might consider bringing an e-book reader to market, and Amazon has not squandered its opportunity. The device sold out about five hours after launch, sold over 200,000 units in its first six months (based on figures released by its Taiwan-based display-screen manufacturer), and is unlikely to look back after it reaches the one-million mark in Kindle units in circulation sometime early in 2009.
It is probably obvious to you already that I am keenly interested, as an author, in the commerce, technology, and business of publishing reading material of all kinds. Frankly, I have difficulty understanding how any writer can fail to be interested in these matters, because they bear so heavily on the ways in which we can connect with readers and the economics of the writing life for all of us, from those who are doing fabulously well to those for whom the struggle to keep the wolf from the door is constant. In any case, if you are thinking about publishing your work for the Kindle, I strongly recommend that you find out as much as you can about what this device can mean for the future of reading and writing. A good place to start is to navigate to the video of Charlie Rose interviewing Jeff Bezos on the Kindle's launch date (there's a link on A Kindle Home Page). It's worth spending the 54 minutes because it is worth knowing the extent of Bezos' commitment to this product from the first day of its launch, and to understand that his personal vision for the Kindle is explicitly inclusive of a fascinating range of possibilities for author and publisher experimentation. He speaks unabashedly about his belief that the Kindle eventually will allow readers to access every book ever written. It is equally clear that he expects, eventually, for a very large percentage of serious readers to own Kindles.
Of course, it would be easy to conclude that Bezos is just trying to line his pockets by playing cheerleader for the Kindle. Personally what I see is more significant than that. Here's a guy whose net worth is $9 billion putting all of his credibility behind his claims and hopes for a revolutionary product, in an industry where his company is the single most influential player. Bezos' passion does not cinch the Kindle's success, but it persuades me to listen carefully to his efforts to express his vision for this product.
Some of the dialogue between Bezos and Rose seemed like the big tease:
Rose: "Why the name, 'Kindle?'"
Bezos: "To start a fire. "
R: "In your mind, your imagination, wherever?"
B: "Absolutely."
R: "To start a fire, to create a revolution in the world of books?"
B: "Absolutely."
What is remarkable, for now, is how little we know, numbers wise, about the Kindle. I had hoped that Amazon would share some information, when it released its quarterly 10-Q financial reports on January 30, 2008, concerning how many Kindles were sold and produced during the fourth quarter of 2007. Not a peep, outside of his statement that he was "super-excited" at demand for the Kindle. I have seen no disclosures and very little in the way of useful estimates on this question, which is important to me as a Kindle author. At best, when I wrote my first draft of this chapter in mid-February 2008, I was able to extrapolate a very conservative estimate of 20,000-plus "Kindles in circulation" based on the following:
* Of several titles I have offered for sale in Kindle editions, one title had sold 2,079 Kindle copies since it became available in late December, and it had averaged about 100 copies a day from January 23 to mid-February. This had been enough to place the title in the top 5 to 7 Kindle titles for a few weeks.
* It was my educated but unscientific guess that it was extremely unlikely that more than 1 out of 10 Kindle owners had downloaded this title, so I concluded crudely that there were at least 20,790 Kindles in circulation, and that Amazon had been shipping 500 to 1000 a day, on average. I believed at that point that these guesses were conservative, and that the real number was north of 40,000. But it was all just extrapolation and guesswork.
The April Amazon conference call came and went without any more guidance from the company about the number of Kindles in circulation, but at just about the same time, somebody finally sang. In an April 18 article on the Digitimes website, Rachel Kuo and Rodney Chan reported an announcement by the CEO of Taiwan-based Prime View International that it had been supplying Amazon and Sony with 60,000 to 80,000 e-reader display screens per month, and that about 60% of the total had been shipping to Amazon for the Kindle. Based on five months of history at the time, this suggested that there might be 180,000 to 240,000 Kindles in circulation as of May 1, a number higher than most estimates that had been made at that point.
Another way of looking at this metric is that of the 40 million unique individuals who visit Amazon's website, 0.45% had purchased the single product most prominently displayed on that website for the previous six months. Seen that way, 180,000 Kindles after 6 months does not seem like so many.
Even more stunning was a forward-looking statement made by the CEO of publicly traded PVI in the same announcement that PVI's production of e-reader display screen would ramp up to 120,000 per month by the end of 2008. It does not matter if it occurs on Wall Street or in Tokyo or Taiwan – if the CEO of a publicly traded company makes material pronouncements about the financial performance of that company, he better be telling the truth or he will face serious sanctions.
Assuming a very gradual ramp-up rate of 10,000 units per month, and allowing for gradual growth of Sony's production as part of the overall PVI order growth, any reasonable extrapolation from the PVI projections suggests that the number of Kindles in circulation would grow by 300 to 400 per cent from May 1 to the end of 2008, or perhaps allowing for a slower-than-likely manufacturing and fulfillment process, to the end of the first quarter of 2009. Without any regard for seasonality, I came up with this crude model for Kindle growth:
May 1, 2008 – 180,000 to 240,000 Kindles in circulation
May: 48,000 new Kindles sold
June: 54,000 to 56,000 new Kindles sold
July: 60,000 to 64,000 new Kindles sold
August: 66,000 to 72,000 new Kindles sold
September: 72,000 to 80,000 new Kindles sold
October: 78,000 to 88,000 new Kindles sold
November: 84,000 to 96,000 new Kindles sold
December: 84,000 to 96,000 new Kindles sold
Total number of Kindles in circulation by late 2008 or early 2009: 726,000 to 838,000.
I made those projections about May 1, and although I can be a relentless tweaker where such things are concerned, most of what I have observed in the intermittent months supports them.
Despite the absence of information from Amazon, I have been reading speculation in the media and in the blogosphere on at least a weekly basis about how many Kindles are in circulation. Some estimates have seemed more plausible and calmly reasoned than others. Some, on the other hand, have based their extrapolations on laughable "indicators" such as the fact that they have yet to see any Kindles "in the wild" or the number of customer reviews posted on Amazon's Kindle product detail page. In a thoughtful and interesting recent post publishing exec and blogger Joe Wikert lamented the spate of polemical putdowns of the Kindle by obvious, fairly simplistic and uninteresting haters. It is no accident, of course. Since the late 1990s Amazon stock has been followed by a large and raucous element of stock-shorters, who do little to attract followers with the shrill and poorly reasoned content of their attacks. At the same time, Amazon's entry into the hardware manufacturing market has brought a lot of barking critics into the open, with a certain amount of lashing out by partisans of all things Apple. In January, Steve Jobs himself dismissed the Kindle rather baldly with the public statement that "the whole conception is flawed at the top because people don't read any more." Other i-ophiles seemed to see the Kindle as a threat because of journalists' frequent speculation that the Kindle might become for books what the iPod, the iPhone, and iTunes has been for music.
Although I find fascinating things to chew on in nearly every Joe Wikert blog post that I read, and I appreciate the fact that he referenced my Kindle user's guide very nicely and used it as the centerpiece of his estimate about the "installed base" of Kindles, I have to challenge his basic argument. Joe notes the number of copies of my piece that I have sold – 21,112 as I write this, but who's counting? – and makes an interesting extrapolation:
With the benefit of zero insider information, I recently figured the Kindle installed base was between 5K and 10K, perhaps a bit more. But that was before I noticed Stephen Windwalker has sold about 20K copies of the preview to his Complete User's Guide to the Kindle. So while there are at least 20K Kindle owners out there, given the low price ($2.39) and popularity of Windwalker's preview, I tend to believe most Kindle owners bought it. If so, that probably means the installed base is in the 20K's and a far cry from iPod levels.
Here's my problem with Joe's math, or analysis, or both. Although I have been lucky to have my title in the #1 spot among Kindle Store bestsellers for a few weeks, it has been further down the list, in the range between #2 and #10, for over 80% of the time between February 1 and this writing. Various titles have placed ahead of my e-book in the Kindle Store sales rankings, including, for several weeks each, books such as Scott McClellan's White House tell-most, the latest Oprah selection, and books by David Sedaris and Greg Mortensen, among others. As I write this, my piece is ranked #3 behind debut novelist David Wroblewski's 576-page literary thriller The Story of Edgar Sawtelle and an anti-Democrat screed by a scandal-plagued former Republican political consultant.
While I love thinking about the possibility that some day most Kindle owners might buy something that I write and published, the plain fact is that Kindle Store rankings, like main Amazon store sales rankings, are based upon number of units sold. All one has to do is look at the list of the top 25 sellers in the Kindle Store to conclude that, while most Kindle owners are reasonably affluent, they are otherwise a pretty diverse group. They do not skew significantly toward political conservatives, political liberals, Oprah followers, debut fiction readers, either gender, or any other demographic. So, what is the likely Kindle reader penetration rate of the aforementioned e-books? As much as I understand the appeal of bestsellers, I find it very hard to believe that more than 10% of Kindle owners have purchased and downloaded the David Sedaris book, the Wrobleski, the Dick Morris, or the Greg Mortensen. It just wouldn't make sense on its face, unless the readers were somehow able to download a crisp sawbuck along with their e-books.
Here's another way to look at it. Remember how long The Da Vinci Code sat atop the New York Times bestseller list? A year after its 2003 release by Doubleday, there were a little over 6 million copies in print, and I remember thinking to myself in the Spring of 2004 that it would have to fall from the bestseller list soon because, well, doesn't everyone who wants it have it by now? Wrong again, Water Buffalo Breath. During a three-year period it spent nearly 20 different periods, ranging in length from one week to 15 weeks, in the #1 bestseller spot. By 2006 it had spent nearly three years on the bestseller list and sold 60 million copies in 44 nations. My point? It took a long time of continuously occupying the #1 position on the bestseller list for The Da Vinci Code to achieve its ultimate penetration of the total book market, and after a year it had achieved only 10% of that ultimate sales level. While I don't think that the universe of Kindle owners exactly mirrors the universe of all book buyers, there is little reason to think that it would be more monolithic in its selections. And none of the books that have outpaced my little e-book on the Kindle Store bestseller list has anything close to the commercial legs of Dan Brown's book.
So, back to where we started: what does all this tell us about how many Kindles are in circulation? If my title had continuously occupied the #1 position, it would be reasonable to think that it had been purchased by 10 to 12% of Kindle owners, and conceivably a higher percentage if there were any basis for thinking that there had been a big gap between the #1 position and the #2 position. But instead, the Kindle Store sales rankings have been relatively fluid within the top 25 spots, and since I have spent as much time between #5 and #10 as I have spent in the #1-#4 range, 10% penetration is the ceiling. The overall sales penetration of my title among Kindle owners is somewhere between 5 and 10%.
I've sold 21,000 copies of my piece as of July 4, 2008. The installed base of Kindle owners is somewhere between 210,000 and 420,000. All of this is based on extrapolating from my sales figures and combining that information with an analysis of the Kindle Store bestseller list and book bestseller lists in general. I've been in the book business as an author, bookseller or publisher most of the time since 1986 and I do not mind asserting that I have been to night school with respect to what book bestseller lists can communicate.
But it is also worth noting that this analysis squares well with the earlier extrapolation based on the pronouncements of Amazon's Kindle display screen vendor. According to that extrapolation, as of July 1, there would be somewhere between 282,000 and 344,000 Kindles in circulation. Just so. While neither of these analyses can stand alone and be taken as gospel, they were arrived at independently and thus strengthen each other. But whether the current installed base is 20,000 or 300,000, I heartily agree with Joe Wikert's point that the Kindle is not likely to come anywhere near the iPod's installed base. Not, at least, in the next several years.
Why is it important? Obviously, if you are an Amazon shareholder, there could be thousands, or millions, of reasons why the success of the Kindle is important. But for Kindle owners, it is all about the natural symbiosis between platform success and product satisfaction. If the Kindle becomes a mainstream product rather than a novelty item, it should motivate both publishers and programmers to expand the selection of content and features available to Kindle owners.
Whatever the success of the Kindle in its early months, it is successful in spite of the fact that Amazon has yet to deliver much basis for confidence that it is making serious progress toward meeting Bezos' stated vision of Kindle access to "every book ever printed." Although there is surely some significant duplication of titles, the main Amazon store currently lists over 13 million titles for printed books. By comparison, the Kindle Store began last November with about 88,000 book titles and, in seven months since, has grown only to 137,000 books, 346 blogs, 20 newspapers, and 16 magazines. Although Amazon has done reasonably well with bestsellers, the slow pace of the Kindle's catalog growth is a disappointment to current Kindle owners and is bound to be a hindrance to Kindle unit sales.
What would it take for the Kindle to move into a much higher order of sales or rate of adoption?
A lot.
But let's not forger Bezos' passion for the Kindle, and Amazon's customer base of over 40 million, and the company's rather astonishing track record in emphasizing customer experience while transforming marketplace behavior. In the next chapter we will take a look at some of the next-generation enhancements, combined with a possible sea change in mainstream reading behavior, that could boost the Kindle or successor devices into the 10-million-owner range by the middle of the next decade. Fasten your safety belts.
Copyright © 2008, Stephen Windwalker and Harvard Perspectives Press.
