Can Amazon produce enough Kindle 3s?

We know that the Kindle 3 is sold out till September 8th. A lot of people are assuming that Amazon will catch up with Kindle 3 and Kindle WiFi demand in early September and things will be fine.

However, there are a few things to take into consideration -

  1. Kindle 3 is significantly better than Kindle 2 (as is Kindle WiFi, if you don’t need the 3G, since it’s identical to Kindle 3 except for the 3G). That makes Kindle 3 and Kindle WiFi very attractive to casual readers, to hardcore readers, and to current Kindle owners. 
  2. Kindle WiFi is just $139 and uses the same eInk screen Kindle 3 does – which means the two devices have to get by on the same source of screens.
  3. Nook 2 and new Sony Readers are probably going to use the same eInk Pearl screen. Even more demand for a screen supplied by one company with limited manufacturing capabilities. To be fair they’ve partnered with LG display and might improve their past years’ trend of running out of displays.
  4. A lot of the Kindle 3’s advantages are ‘seeing/feeling’ things i.e. you have to feel the lightness and you have to see the eInk Pearl screen. A lot of people are going to decide to buy it once they’ve played with it in person.
  5. We haven’t yet hit the buying madness that is October, November, and December.

It’s not out of the question that Kindle 3, and for that matter Nook 2, runs into numerous supply shortages.

A lot more Kindle 3s are going to sell when people see them in person

Let’s start with the screen and the weight/compactness -

  1. The screen has 50% better screen contrast than the Kindle 2 screen plus the graphite casing helps plus Amazon has added tweaks to make fonts sharper. After seeing them side by side let me assure you it’s at least a 50% difference and probably more. People who see the Kindle 3 screen are going to want a Kindle – and at $139 for the Kindle WiFi they are probably going to be able to afford it.
  2. The weight is going to make a huge difference because 8.7 ounces is light as a feather when you compare it against other eReaders at 10 ounces or against the 1.5 pound iPad. Weigh the Kindle 2 first and then weigh the Kindle 3 and it’s an impressive difference – and Kindle 2 was much lighter than Nook and iPad to begin with.

Those are two big Kindle 3 strengths that aren’t apparent until you play with it. People are fixating on the price and the WiFi capability without realizing there are other killer features.

This Kindle 3 killer features post goes over other improvements. Notice how lots of the improvements are things you have to experience to appreciate – 20% faster page turns, 1 month battery life, more compact size, Voice Guide.

The Voice Guide feature reminds us of another thing that might cause Kindle 3 to run into supply problems.

Kindle 3 has a much larger customer base than any other eReader

Here are a few demographics that just got added as potential Kindle 3 buyers due to the Kindle 3’s new features -

  1. Blind readers thanks to the combination of Voice Guide and Text to Speech.
  2. Low vision readers thanks to the above two features, much better screen contrast, and super size fonts.
  3. Children due to the above features and the low $139 price of the Kindle WiFi.
  4. Casual readers due to the low price.
  5. Entire countries due to support for Cyrillic and CJK fonts. We’re talking Russia, China, Japan, and East Europe – it’s a huge amount of readers.
  6. People with weak hands or arthritis in their hands since it’s just 8.7 ounces and all the buttons are at the base.
  7. Children with learning disabilities due to all the features and the low price.
  8. Potentially Schools and Colleges as $139 is very affordable for an eReader.

It’s puzzling that Amazon isn’t pushing Kindle WiFi for children and for educational institutions. However, even without Amazon’s active participation, the Kindle 3 and Kindle WiFi are going to sell a lot to groups that couldn’t afford the $259 Kindle 2 or whose needs weren’t met by it.

Kindle 3 as Christmas Gift – Holiday Season is going to be a real test

At first, this comment on buying Kindle 3 as a Christmas Gift seemed crazy -

I am considering pre-ordering a K3 as a Christmas gift for my wife. I am concerned that if I wait until Nov. they might be sold out until after Christmas.

However, when you think about it, it’s not out of the question that Kindle 3 sells out this Christmas Season. In fact, realized that buying a gift now and giving it early isn’t as crazy as it sounds – just bought my Mom a Kindle WiFi (my parents have WiFi at home).

Kindle 3 and Kindle WiFi are quite likely to run into supply problems by November –  

  1. Kindle 3 and Kindle WiFi use the same screen. Nook 2 and 1 or 2 of the new Sony Readers will probably use the same screen.
  2. A ton more people will be buying Kindle 3 and Kindle WiFi as Christmas Gifts since they are priced much lower ($189 and $139).
  3. The only company making eInk Pearl screens is PVI. It’s not going to scale up its facilities (which have to run all year around) just for the Christmas madness. Besides its partner LG Display is having major problems making enough iPhone 4 screens and enough iPad screens (DigiTimes had reports about it) so PVI can’t exactly ask LG Display to lend it production facilities.

The screen is a very big deal as it comes really close to paper and the screen contrast makes every other eReader screen seem ancient. The fact that there’s just 1 company making the eInk Pearl screen but lots of eReader companies are asking for it makes it highly likely we’ll see shortages.

$139 Kindle WiFis and $189 Kindle 3s will be very popular gifts

The number of people looking to gift the $139 Kindle WiFi or the $189 Kindle 3 will probably be 10 times the number of people who gifted a $259 Kindle 2 last year.

  1. We know that books are popular gifts, that lots of iPods and iPod Touches are bought as gifts, and that parents and grandparents love gifts in the $100 to $200 range. The 2 Kindles fit right in.
  2. At $139 the Kindle WiFi is very close to the magical $100 threshold. It’s even possible that by Christmas competition causes the Kindle WiFi to drop to $99.
  3. At $139 it’s no longer restricted to hardcore readers. Lots of casual readers are going to buy it for themselves or gift it to other casual readers. It’s better than a sweater.

The net result is that a ton of people will be buying Kindle 3 and Kindle WiFi as gifts and there isn’t going to be much stock left. My gut feeling is that the actual demand is going to surprise everyone and overwhelm PVI/eInk’s production capabilities.

Which answers our main question – Amazon is probably not going to be able to keep up with demand for the Kindle 3 and the Kindle WiFi.

6 Responses

  1. Amazon is probably not going to be able to keep up with demand for the Kindle 3 and the Kindle WiFi.
    Sounds reasonable to me. Much better product, and much cheaper.

    Which means we are most likely not going to see $100 for the Kindle WiFi for quite a while.

  2. I totally agree with you on this: “People who see the Kindle 3 screen are going to want a Kindle”. When i watched [link changed] the Kindle video from Stuff Magazine at the Kindle 3 Video page the screen made me more anxious about my, now more than ever, awaited kindle WiFi.

  3. If there truly is going to be a shortage, it seems like a perfect opportunity to pre-order several dozen and sell them at a sizable profit on eBay.

  4. Of course they won’t keep up. They couldn’t keep up with demand of K1 or K2. They are TERRIBLE at managing demand of Kindles. Absolutely terrible. And as you say, K3 is going to fly off the shelf. My sister is buying one for all four of her pre-teen children for Christmas. And I’ve had numerous friends ping me with questions about Kindle because it’s now in their could-buy range.

    Get on the list now. You might get one by Christmas.

  5. I never had the faintest desire to purchase a Kindle. They were insanely expensive. I saw the new price Monday, and I’ve pre-odered the wifi version. The price is low enough that people can impulse buy one without feeling the guilt.

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