Reviewing the Kindle 3 sell out, free book

Before we review what the Kindle 3 being out of stock means let’s look at our free kindle book for Monday -

  1. Forgotten: Seventeen and Homeless by Melody Carlson. It’s about a teenage girl surviving homelessness with the assistance of her friends and faith.

    With MIA parents, overdue rent, and no one to turn to, Adele is forced out of her home. She strives to maintain the pretense of a “normal” life while struggling to finish high school, all the while concealing that she is homeless. But is she strong enough to keep up the act?

    Every teenage girl has a secret. And every teenage girl loves hearing someone else’s secret. But some secrets are big enough to detour, derail, or even destroy a young person’s life. 

There were also 4 business shorts that were free earlier in the morning and are now showing up as not available for US customers. If you’re outside the US you could check whether Who Can You Trust with Your Money? by Bonnie Kirchner is free for you. If it is then some of the books by FT Press ought to be free – just search for ‘FT Press’ and sort by ‘Price: Low to High’.

Reviewing Kindle 3 sell-out – What could it mean?

Amazon was probably planning to sell millions of Kindle 3s. Let’s break down what the Kindle 3 sell-out might mean in that context -

  1. Let’s say it expected to sell 2 million Kindle 3s and Kindle WiFis (total) in the months of August through December and that the holiday quarter was probably expected to account for 1.4 million sales.
  2. That means August and September were expected to generate 300,000 Kindle sales each.
  3. If Amazon is specifying an August 27th Kindle 3 release date it has to ship every order that was made from July 28th to August 27th on August 27th. So it basically has to look at the run rate, extrapolate demand, and figure out if it can ship all orders given what demand is like. 
  4. Since we’re assuming Amazon has 300,000 Kindle 3s to send out on August 27th that means it can handle 10,000 sales per day. An average sales rate over 10,000 means it has to start delaying orders once orders cross 300,000. The Kindle 3 goes out of stock at that point.
  5. If the opening 5 days were really good and Amazon sold something like 100,000 Kindles (perhaps even 150,000) then suddenly it’s thinking - There are not going to be enough Kindles if this continues.

 At this point there are two options -

  1. Let sales continue at that pace and then when sales hit 300,000 shut down sales with a certain delay based on how often they get stock of new Kindles.  
  2. Bring up the delay now and set an expectation that Kindles might get delayed.

These are very different ways of solving the same problem. However, the latter creates very strong buzz. There are 500 papers and blogs writing about Kindle 3 being sold out when, for all we know, it might just be that the rate of Kindles being sold indicates Kindle will sell out before the release date.

Could Kindle 3 have sold more than 300,000 units in 5 days?

There’s always the possibility that Amazon really did sell 300,000 Kindle 3s in 5 days.

  • If you assume there are around 3 to 4 million Kindle owners and even if 10% of them decided to upgrade that’s 300,000 to 400,000 Kindles sold.
  • On the other hand, if you assume 1 to 2 million Kindle owners and around 10% bought a Kindle 3 you get 100,000 to 200,000 sales and the August Kindle 3 stock is probably not all used up.

So we basically get three possibilities -

  1. Amazon planned for half a million Kindles for August and thanks to 300,000 sales from current Kindle owners and 200,000 sales from new, future Kindle owners they sold out.  
  2. Amazon planned for 300,000 Kindles and again due to existing Kindle owners and new owners all the Kindle 3s sold out.  
  3. Amazon is assuming that based on current sales they will sell out of their August stock and figure they might as well use the enticement of ‘Kindle is sold out’ to generate even more sales. Let’s be clear that everyone does this – Nintendo, Apple, everyone. It might not be 100% right but it’s a common practice.

Based on how you view eReaders and the Kindle you’ll be more inclined to believe one over the other.

Can we get a minimum number for Kindle sales in August?

Actually we can make a respectable guess. It’s rather easy -

  1. Amazon must have had some figure in mind. Given the low $139 price of the new Kindle WiFi and the solid features of the Kindle 3 it is likely to be at least 300,000 and probably as much as 700,000.
  2. Even if we assume that Amazon is just using the sales rate to project that Kindle 3 will sell out (and is using that future ‘Kindle 3 sell-out’ to get additional sales) it means it must expect to sell out of its August allocation.
  3. That gives us a nice minimum of 300,000 Kindles sold in August.

Note that there is the possibility that Kindle 3 isn’t selling well – However, all signs indicate that it is, in fact, selling very well.

The likeliest scenario is that Amazon expects to sell out of its first month’s allocation of Kindle 3s and Kindle WiFis before August 27th and wants to leverage that to drive more sales. Remember the announcement of the Kindle sales growth rate tripling. This is very reminiscent of that.

The Kindle 3 selling out before release day (regardless of which particular date the actual sell-out happens) does suggest that Kindle 3 and the $139 Kindle WiFi are doing well enough to sell 300,000 units in August.

2 Responses

  1. I think it is possible that Kindle, with Wi-Fi, could have sold out because there are many people, who live in rural areas, without any good G3 coverage, who have wanted a Kindle and have been waiting for a better access option.
    Also, the $139 price is a good selling point, too.
    I think a lot of people have wanted a Kindle, but have held off buying until it met their access and price.
    There has been a “pent up demand”.

  2. Then there is the pearl display. It is new, other eReader manufacurers are likely fighting for supply for their own launch and this might explain why all preorder models are sold out at the same time.

    Perhaps Amazon knew the would need more but couldn’t get them.

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