Finally, we get confirmation from Mr. Bezos that Kindle sales are in the millions – This was in Amazon’s earnings release and also brought up during Amazon’s Q4, 2009 earnings call.
Amazon had a pretty good quarter as it blew away earnings estimates with a sales jump of 42% and $9.52 billion earnings in Q4, 2009. They also increased operating income in the quarter to $476 million, a 75% increase.
Let’s move on to the Kindle related stuff.
Yes, Virginia – We did sell millions of Kindles
The big Kindle related news (via Yahoo) -
“Millions of people now own Kindles,” said Jeff Bezos, founder and CEO of Amazon.com.
“And Kindle owners read, a lot. When we have both editions, we sell 6 Kindle books for every 10 physical books. This is year-to-date and includes only paid books.”
It’s good to get confirmation from Mr. Bezos that millions of Kindles have been sold and that 37.5% of Amazon book sales are of Kindle Books.
- Every week there’s some new skeptic asking why Amazon won’t release numbers if Kindles are selling well. This is as good a confirmation as any.
- Every single article recently has been claiming that Kindle Book sales are high only because people ‘buy’ free books. 37.5% of book sales at Amazon, excluding free kindle books, is an awesome number.
Is Amazon obsessed with the Kindle?
In the Highlights section of the Press Release the first 5 items are Kindle related items -
Kindle and Kindle DX are available for immediate shipment to over 100 countries …
The U.S. Kindle Store now has more than 410,000 books …
The Company announced that authors and publishers around the world can now use the self-service Kindle Digital Text Platform (DTP) to upload and sell books in English, German and French to customers worldwide in the Kindle Store.
Amazon.com announced a new 70 percent royalty option for Kindle DTP …
The Company introduced Kindle Development Kit, which gives developers access to programming interfaces, tools and documentation to build and upload active content for Kindle.
The Kindle is pretty cool and at the same time you have to wonder why a not yet introduced Kindle App Store gets mentioned before $9 billion+ in revenue.
One interesting piece of news was that Amazon plans to repurchase $2 billion worth of stock.
Coming Back to Millions of Kindles
Best questions from the earnings call -
- Is it over 2 million at least? Amazon said they can’t really add to the ‘millions of Kindles’ quote.
- Will ePub support be added? Amazon said they think using Whispernet to connect different devices is the best approach.
- Why are Kindle Media separated from Kindle Device Team? Amazon said they would not comment on how they’re organized – they said they simply focus on improving customer experience.
- Are deferred revenues in Q4 mostly Kindle revenue? Kindle said that Deferred revenues include Kindle, Prime, and more. They did say that Kindle and Prime were two main contributors to the deferred revenue but did not disclose the break-up.
- International Kindle penetration? Ratio of US and non-US owners? Amazon say it’s available in 130+ countries and then no details.
- 6 kindle books to 10 paper books now – what ratio was it 1 year ago? Amazon said they can’t disclose the details.
- Will Apple continue to support Kindle on iPad? Amazon said yes.
The number of Kindle questions was much, much higher than what it used to be in the past. A year ago it used to be 1 or 2 questions.
eReaders are definitely the flavor of the year.
1.5 million Kindles just in deferred revenue
The last twist was that Amazon breaks Kindle revenue into revenue for the device, for software upgrades, and for wireless connectivity.
- The latter two revenue components are amortized over 2 years while device revenue is booked on delivery.
- Amazon kept saying device revenue is significant.
- There is $500 million worth of deferred Kindle revenue from 2009 that is going to be amortized over 2010 and 2011.
Makes you wonder exactly how many Kindles sold in 2009 - Just the deferred revenue corresponds to over 1.5 million Kindles.
- If half of Kindle revenue was deferred that means 3 million Kindles sold in 2009.
- If 70% of Kindle revenue was deferred that means 2.15 million Kindles were sold.
So Amazon definitely sold more than 2 million Kindles and probably over 2.5 million Kindles.
To add fuel to the fire -
- Deferred revenue for Q4, 2009 was $444 million.
- That’s a lot more than the $162 million in deferred revenue in Q4, 2008.
- When asked, Amazon said that the two bigger items in that deferred revenue were Kindle and AmazonPrime.
- Even if you take Kindle as just half of the difference that’s 470,000 worth of Kindle sales – just in deferred revenue.
Millions of Kindles is definitely right and the figure is almost certainly closer to 3 million than to 1 million.
Filed under: kindle Tagged: | kindle sales, kindle sales estimates
It’s not 37.5% of book sales, it’s 37.5% of book sales in which both versions are available. Every book that isn’t available for kindle is pulled out of that comparison – so it’s going to be a much smaller percentage of overall book sales.
Still, great news to hear the ratio is that high.
Great analysis on estimating the Kindle sales volume!
[...] at the end of the highlights list – Contrast that with the last Amazon earnings call when the first 5 items in the Press Release were Kindle related and Mr. Bezos confirmed that ‘millions of Kindles’ had been [...]