Amazon Kindle Sales Estimates – Best Case, Worst Case, and Assumptions

Amazon Kindle Sales Estimates Summary Chart

Lets Start off with a Chart.

I’ve noted down the estimates that have created a flurry i.e. TechCrunch’s 240,000 sold by end of July figure, and Mr. Mahaney’s initial and revised estimates – the latter of which precipitated a 9% increase in Amazon’s stock price.

There is also a more detailed chart (click on the thumbnail to bring it up) if you’re interested in looking at the monthly sales numbers –

Figuring out Kindle Sales estimates is, given the limited information released by Amazon, pure guesswork. Its in Amazon’s interest to keep these numbers secret since it adds to the buzz and mystery. Almost as importantly, it keeps competitors unsettled. Rather than guess one number, I thought it makes more sense to come up with a range, based on the facts and some intelligent assumptions.

Here are the main figures I came up with –

  1. In the best case, the Amazon Kindle is on track to sell 570,000 Kindles by end of 2008. This includes the assumption that Kindle V2.0 is released before Christmas Season. I really think Amazon’s public denial of a new Kindle version is to sustain sales of V1.0 and keep competitors guessing. If they mess up and don’t release a Kindle V2.0 (which would be a huge lost opportunity) then the best case estimate is 475,000 kindles sold.
  2. In the worst case, the Amazon Kindle is on track to sell 128,000 Kindles, and 102,00 if they don’t release new versions. My personal opinion is that there is less than 1% probability of Kindle sales figures being anywhere close to this number.

My personal intuition says that Amazon is close to or even exceeding the best case estimates – since i have no facts to back that up I’ll stick to the chart figures instead. Here are some of the facts, datapoints and related assumptions I used to come up with the Kindle Sales Estimates. After that I just used Guesstimating and analysis, and threw out the highest and lowest figures, like olympic diving judges would. My best case and worst case estimates in the chart actually exclude outlier points.

  1. Sold out within 4.5 hours. It’d be reasonable to expect that Amazon had an initial stock of somewhere between 10,000 and 100,000 Kindles.
  2. Delays of 5-6 weeks in December and January. Delays continue until end of April.
  3. Availability of the Kindle on April 21st. It took 6 months to ramp up production to the point where supply met/exceeded demand.
  4. PVI’s (the kindle screen manufacturer) fortunes, figures they’ve given out, and manufacturing increases, and finally their exit from the LCD market to focus on eInk.
  5. Price drop  to $359 on May 27th, 2008.
  6. Rumors of new version, followed by a price discount by Amazon, and denials of any new versions coming out in 2008. Note that while Amazon has claimed that there are no Kindle versions slated for this year, they have confirmed a version of Kindle for students.
  7. Various figures from Google such as 19 million search results for ‘amazon kindle’, 74,000 monthly average searches for ‘amazon kindle’ (from google adwords tool), charts from google trends.
  8. Figures from across the internet, including the size and activity level of official kindle forums, kindle groups, kindle forums and websites across the internet. For these figures and the previous figures I’ve compared the kindle across the board with the iphone and found a ratio of 25:1 i.e. the kindle gets 1/25th the amount of interest that the iphone does.
  9. Keyword based traffic on my blog and social network (both of which are kindle focused). The blog traffic in particular suggests that interest in the Kindle went up by roughly 50% after shipping delays were eliminated. The first price cut had little effect. The new Kindle versions rumours really decimated interest, and it’s only the new Kindle coupon that has led to a return to levels of interest before the new kindle rumours. Note that these are based on keyword traffic trends and not on referral information (revealing that information would get me into trouble with Amazon) and not on overall traffic.

Amazon’s acquisition strategy – taking a note out of Expedia’s book

Here’re some of the acquisitions Expedia (and its subsidiary TripAdvisor) have been making –

  1. August mid – TripAdvisor acquires a majority stake in FlipKey.com, a vacation rentals review site.
  2. July 15th – Venere announced on their blog that Expedia is buying Venere. Venere is a hotels booking site.
  3. July 1st – Online travel network TripAdvisor, an operational subsidiary of the Expedia network, has just announced its acquisition of two other online travel resources, VirtualTourist and OneTime, for undisclosed amounts.
  4. June 30th 2008 – Expedia Buys Majority Of India’s TravelGuru For $17 Million.
  5. Apr 18th – Lost out on Farecast.com to Microsoft.
  6. Mar mid – Expedia buys carrentals.com.

TripAdvisor also owns airfarewatchdog.com, bookingbuddy.com, cruisecritic.com, holidaywatchdog.com, independenttraveler.com, seatguru.com, smartertravel.com, travel-library.com, and travelpod.com.

Expedia also owns Hotels.com, Hotwire, AllLuxuryHotels, Hoteldiscount, TravelNow, and VacationSpot.

Expedia basically has a really intelligent strategy – find all the websites that people visit to make their travel decisions and then buy them. Avoid google, advertising, and other channels and own the really valuable channels yourself. As John Battelle would say – these are websites that have Traffic of Good Intent – arguably even better than search engines.

Amazon is basically going down the same route now

  1. August 1st – Acquires AbeBooks.com which includes a 40% stake in LibraryThing.com.
  2. August 24th – Acquires Shelfari.com.

It’s not difficult to predict what comes next  –

  1. Some sort of buy in into GoodReads.com which makes up (to the best of my knowledge) the third part of the online book community trifecta.
  2. Perhaps acquisitions of Facebook App driven websites like WeRead (formerly iread & started by an ex-Amazon employee making it a likelier acquisition), and VisualBookShelf (run by LivingSocial). The fact that they owe a lot of their popularity to facebook makes them slightly less attractive.

A very intelligent strategy – buy the sites that people visit when they’re making the purchase decision. If you think of user reviews, ratings, etc. as user driven/generated content, this really highlights that content/experience is king.

And why the recent spike in bookshelf website acquisitions by Amazon – perhaps because of strong rumours that Google is integrating google book search with a google virtual bookshelf feature (they got a patent on May 15th, 2008).

A patent application for a virtual bookshelf program from Google was published last month, and it provides us with a chance to see how Google might integrate its book search, and Google Books Library Project with a personal library feature that allows us to show the books that we’ve read, share reviews with others, and track and find books that we might want to read in the future. [Google’s Virtual Bookshelf Plans? -SEO by the SEA]

Amazon buys Shelfari, makes my life a little too exciting

Update: The Amazon.com acquisition of AbeBooks a while back (Aug 1st), meant that Amazon owns 40% of LibraryThing. Basically, Amazon is doing what Expedia is doing with travel communities i.e. buying up all the book social networking and other significant book web sites. This is a really good strategy to ensure that users choose amazon as the source for their books. Much better than referrals, advertising, etc.

Amazon.com just acquired Shelfari – there’s little doubt that their eventual goal is to enable a social network on the Kindle. Ironically, this totally validates what I’m trying to do with BookSummit i.e. create a social network for Kindle owners. This is the first part of an email I sent the head of Amazon Kindle Community Team on July 18th, 2008 –

I started building out a social network focused primarily on kindle owners and voracious book readers recently. The alpha launch is on July 21st – however, we already have 129 members (in 5 or so days) of which 102 are kindle owners. You can take a look at amazonkindle.ning.com. You’ll have to sign up to take a look inside.

Basically, I feel that a social network focused around Kindle owners presents four very strong value propositions

  1. Its a direct value-add to every Kindle Owner as they get a community along with their Kindle (and it’s free).
  2. For prospective Kindle Owners it presents unbiased honest opinions of people’s Kindle opinions.  Most Kindle users love the Kindle and this provides a great channel for them to express this.
  3. It provides a direct channel for Amazon in general and the Kindle team in particular to get straight feedback from Kindle users.
  4. It provides authors and publishers with the opportunity to see the market for Kindle published books and see what Kindle users are asking for.

I’m pretty sure Amazon was thinking along these lines already. Still – I find it ironic that I didn’t realize that Amazon would become a direct competitor. A part of me is torn because Amazon is one hell of a competitor. However, I already had sites like LibraryThing, Shelfari, GoodReads as potential competitors. Of which I think Shelfari is the least dangerous (perhaps I’m mistaken). Now that Amazon owns it I can only hope they do what Google did with Dodgeball.

I guess I should be happy my vision for booksummit just got validated (to a certain extent). And in a few weeks? a few months? I’ll see a rival Kindle Social Network, with the slight advantage that they’ll probably put their social network on every single Kindle. C’est la vie.