High Hopes for the Amazon Kindle

Remember your first iPod? Remember the first song you purchased from Apple’s (AAPL) iTunes Store? Remember the 100th song?

I got a chance to check out Amazon’s (AMZN) Kindle this past weekend. It was almost like seeing an iPod for the first time. I couldn’t stop drooling and fawning over all the buttons and controls.

Much has been written about the Kindle already. Some extol its features, like being able to carry lots of books cheaply, having good battery life, and having audiobook integration. Others slam it for it’s poor design and lack of social network (Um, really? You want a social network on an e-book reader? If anything, that’s a P3 feature and shouldn’t be part of a v1 product). It’s interesting to note that many of the Kindle’s original critics have changed their minds after using it for a while.

Rob Tillotson of The Gadgeteer has a deep & thorough review, Daniel Turner of Technology Review offers a good overview of its technical guts, and Mike Elgan of Macworld lists some great tips & tricks of the Kindle. These include how you can surf the web using its basic web browser (called, appropriately, “Basic Web”), download free e-books, get answers from a free human-powered search engine called Kindle NowNow, make the battery last even longer, read RSS feeds for free, etc.

My reaction? I just went out and purchased some AMZN stock. It’s currently floating around the same price it had when the Kindle debuted on Nov. 19, 2007. It closed at 79.18 that day; today, it’s been bouncing between 77.43 and 78.85, down from a high of 84.39 last Monday. But I don’t care about that. I’m long AMZN. I’m betting that the Kindle will be to Amazon what the iPod was to Apple—and we all know how good the iPod was to Apple!

Here’s why I’m long on Amazon:

UPDATED 5/24/2008: I added #9 to this list.

  1. I am exactly the kind of early adopter customer Amazon wants. Although I didn’t rush out to buy a Kindle (and am not going to anytime soon), as soon as the second or third version is released, I will. They’re working on their second version right now, a source in Amazon tells me (and it sounds pretty good!), so it shouldn’t be long before v3 is ready and relatively bug-free. And when I purchase a Kindle, I’m going buy lots of e-books. I’m a voracious reader and am always buying new books. Since Amazon’s strategy is to profit from e-book sales and not Kindle sales (the Kindle is a loss leader), attracting book-hungry customers like me is going to be so money.

  2. I travel often and always carry a book or three with me. That often adds extra weight that, well, just sucks. Since I usually try to travel light, carrying one Kindle versus three books sounds totally awesome. I can see other travelers wanting the same benefits. The business traveler niche could have great potential for Amazon, especially if business users are able to load their business documents onto the Kindle and peruse them during their flights.

  3. I’m a bit of a digital pack-rat. Or just a big a geek, I dunno. I once had over 600 CDs. Then, to live more efficiently and have less material belongings, I burned them all into MP3s. I did the same with my DVDs. All that extra shelf space allowed my book collection to grow like crazy. Now imagine if I could digitize all of my books. How cool would that be. All of the media I’d own would be digital, portable, and easily searchable (told you I’m a big geek). That would be cool.

  4. This is only a v1 product and already it’s gotten a huge positive reaction. Most v1 products suck. The first generation of iPods sucked. But with Apple’s branding & slick design and iTunes’ ease of use & practical prices, it took over the market and surged as each new version was released. Kindle 1.0 was cool, 2.0 and higher can only get better.

  5. A medical student I know took a look at the Kindle and said that if all of his medical textbooks were offered on the Kindle, he’d buy it in a heartbeat. First of all, medical textbooks are huge. HUGE. And medical students have to carry two to four of these heavy things at once. Second, medical textbooks are expensive, especially for starving students. With e-books being cheaper than regular books, a student could easily make up the cost of the Kindle over the course of his/her education. This could be a huge market for them, and the smart folks at Amazon know this.

  6. Amazon has to maintain physical warehouses to store all the books they sell. E-books don’t require expensive warehouses; they just require a database on a server farm somewhere, which is infinitely cheaper. This means Amazon could potentially sell more products (e-books) while not incurring any additional costs. I like them mathematics.

  7. If Amazon can execute its Kindle & e-book strategy well, it certainly could go the way Apple’s iPod & iTunes strategy went. According to a Nov. 19, 2007 article from Aaron Pressman of Business Week, “Apple shares (AAPL) stood at $9.51 (adjusted for a split) the day before the launch. I don’t need to tell you where they are today. Ok, I will: $166.” Not a bad return, I’d say.

  8. I’m not the only one who expects great things from Kindle. Citigroup Analyst Mark Mahaney “expects Amazon to generate between $400 million and $750 million in revenue from the Kindle by 2010, or 1% – 3% of Amazon’s total revenue,” writes Michael Arrington of TechCrunch. “If Amazon executes right with its Kindle product and marketing strategy, the iPod analogy for the Kindle won’t be too far stretched,” Mahaney is quoted as saying. Cool!

  9. Part of iPod’s success came from the ease of use of getting more MP3s. Just as the iTunes Store made it very easy to download MP3s, the Kindle Store makes it very easy to download e-books for the Kindle. And even better, the Kindle Store is easier than iTunes because you can directly access it via the Kindle (no need for a computer at all).

I can’t wait for the day I can look back and remember my first Kindle, my first e-book, and my 100th e-book. And also, a great big ROI on AMZN!

Author: Mike Lee

An idealistic realist, humanistic technologist & constant student.

8 thoughts on “High Hopes for the Amazon Kindle”

  1. Nice analysis! I’ve seen the Sony Reader and was impressed by it. Haven’t seen the Amazon Kndle yet but will have to check it out soon. Good luck on your investment!!

  2. Two words: Zip drive. Just because someone is a first mover with a great product doesn’t mean that the product will succeed. My concern with Kindle is that it may be one of those toys that early adopters buy, use for a month, and then disgard. The iPod was successful largely because people wanted to replace their large portable CD players with something that could play more…it wasn’t techies that make the iPod the sensation that it was, it was the non-techies. Even my mom wants an iPod, but when she wants to read, she want a book. There’s something about the tactile relationship between readers and their material that makes it hard to give up. I remember when people predicted that newspapers would go out of circulation when people could get their news online…

    Amazon’s other new services, though, interest me much more. S3 is a great idea that’s already creating all kinds of spinoff services based on it. Essentially, these developers are doing all of the marketing of S3 for Amazon.

  3. The Kindle isn’t the first e-book reader on the market though. Here’s a list of e-book readers & competitors, organized by type and year released:
    http://en.wikipedia.org/wiki/List_of_e-book_readers

    And here’s a good comparison of all the current e-book readers on the market:
    http://wiki.mobileread.com/wiki/E-book_Reader_Matrix

    I suspect iTunes had a large part in the success of iPod – having an MP3 player is useless unless there’s an easy way to get more MP3s. iTunes made it crazy simple to get new content for the iPod.

    With Amazon’s brand & reach, I’m guessing their Kindle Store will have the same power as iTunes. Except that it’s even crazy simpler – you don’t need a computer, you can get more e-books on the Kindle in just a few minutes. That makes it easy for non-techies to use it too.

    And hey, that’s another good reason. I oughta add that to my post. ;-)

  4. I’ll give you that iTunes was important to the adoption of the iPod. But the bigger thing was that people were getting tired of carrying around personal stereo systems that could only hold 16 songs (a CD). These people spanned all demographics. If you had ever used a pair of headphones, then you were ripe for being an iPod user. The market was ripe for an easy-to-use MP3 player.

    Tell me who those people are for Kindle? People who read books like books, not just the text. The divergence between book readers and technology couldn’t possibly be greater. People often read books to escape computers and technology. Plus, considering you can get great books for under $10 nearly anywhere, what would you do? Buy a $400 machine to output text, or buy 40 books? I love tech as much as the next computer geek, but even I would go for the latter.

    Right now I see Kindle, and all e-book readers, as a product without a demand. No product can be successful if only early adopters are interested.

  5. Great points! I started writing out a novel of a reply, but just realized it might be better to make my reply into another post. This is a great topic to debate though!

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