Amazon’s latest Press Release about Kindle Fire and other Kindle sales includes:
- This Headline: Customers purchasing Kindles at rate of more than 1 million per week for 3rd straight week.
- This line: … for the third week in a row, customers are purchasing well over 1 million Kindle devices per week, …
- This: … we’ve already sold millions of units (of Kindle Fire), and we’re building millions more to meet the high demand …
This ‘1 million Kindles sold per week’ data-point is the most revealing information Amazon has ever shared about Kindle sales. Let’s parse it:
- It suggests that Amazon never had a ‘1 million Kindles sold in a week’ week before. Perhaps it did and just didn’t want to talk about it (we’ll see below why that’s unlikely).
- It suggests Kindle Fire sales are not eating into eInk Kindle sales much. Amazon even alludes to this by saying that many people are buying both a Kindle Fire and a Kindle Touch.
- When Amazon says ‘millions of units’ it usually means 1 or 2 million. This suggests over 2 million Kindle Fires have already been sold and another few million are being made.
- One million Kindles a week is most interesting. If we assume sales are split as: 50% for Kindle Fire, 15% for Kindle Touch, 15% for Kindle 3, and 20% for Kindle 4. Then we get: 500K Kindle Fires sold per week, 150K Kindle Touches sold per week, 150K Kindle 3s sold per week, 200K Kindle 4s sold per week.
- Most importantly, it suggests that perhaps Amazon has seen the recent attacks on the Kindle Fire affect sales. Perhaps it is trying to create social proof to ensure that Kindle Fire sales in the two most critical weeks of the year are good. Buy the Kindle Fire – Millions of people a week can’t be wrong.
That last item is the one that’s most interesting. The Creation and Preservation of Social Proof.
Social Proof vs Revealing Too Much
Amazon’s defence for not revealing actual Kindle sales has been that ‘it would reveal too much to the competition’. That’s amusing coming from a publicly traded company that reveals literally everything about its finances every 3 months.
- The real reason is probably that it knew it needed Social Proof. You need to be able to tell people that other people are buying something – so people feel secure in the knowledge that they won’t make a mistake and be left all on their own. You don’t want to be one of the 237 people who bought a $399 eReader and then found it was terrible.
- This ‘human need for Social Proof’ presents a huge problem to Amazon. It can’t exactly get ‘millions of Kindle 1 sales’ when the Kindle is a new experiment. Hence the culture of secrecy and the focus on ‘stock being sold out’ and other such things. No real numbers because telling people they can join the 127,000 people who bought Kindle 1 or the 22,000 people who bought Kindle DX would be the kiss of death. Especially when other devices have tens of millions of users. There is security in numbers – not to mention economies of scale.
- When Kindle sales finally did hit the million mark, Amazon milked it well. Using phrases like ‘millions of Kindles’ Amazon made the most of what it had to work with. Contrast the difference: 1.04 million Kindles sold Vs ‘millions of Kindles sold’. It also ignites another powerful effect – curiosity. Lots of journalists wrote articles estimating Kindle sales. In conclusion – there were very good reasons for Amazon to not reveal that it was selling a moderately impressive number of Kindles.
- Suddenly, Amazon has jumped to ‘1 million Kindles being sold a week’. Surely, this is the most revealing figure of all. First, Amazon claimed that revealing sales figures is a danger – Now, it’s telling us exactly how many Kindles have been sold every week for the last three weeks. How does that make any sense?
- The real reason Amazon is shouting out Kindle sales figures from the rooftops is that people will be making their Christmas gift decisions this week and next. Being reminded that they join the ranks of ‘1 million Kindle buyers a week’ is very reassuring.
Kindle Fire is not affecting iPad sales at all
This is what I think of the assertion that Kindle Fire is not affecting iPad sales at all:
- If there are people who buy the iPad primarily for reading, and we know there are (anecdotally), then it’s a reasonable assumption that there are people who consider an iPad and choose Kindle Fire instead. Perhaps it’s not a huge number – however, it’s larger than zero.
- If there are people who buy the iPad primarily as a toy, and have no idea what actual value it’ll provide, then it’s a reasonable assumption that some of those people will also consider a Kindle Fire. You could argue about the size of the intersection between ‘Interested in iPad’ and ‘Interested in Kindle’ – However, you cannot deny the intersection exists. Nor can you claim that all decisions made in the intersection will result in an iPad sale.
- We can extend this to numerous dimensions – a device to entertain kids, a device for watching movies, a device to use as a glorified coffee table book, a couch partner, etc. For most of those uses, the Kindle Fire worms its way into the equation. Annoying, far too cheap, not sophisticated enough – but very much present.
If there are 1 million things you can use the iPad for, 900,000 of those the Kindle Fire can be used for. This is the key thing that iPad apologists don’t understand. It’s impossible for Kindle Fire to not affect iPad sales in some way.
Would those 500,000 people a week have bought no Tablet
Let’s assume that 50% of the ‘1 million Kindle sales a week’ are Kindle Fires. What would those people have done if Kindle Fire didn’t exist?
- Perhaps 50,000 would have bought an eInk Kindle instead.
- Perhaps 100,000 would have bought a Nook Color or Nook Tablet instead.
- Perhaps 100,000 would have bought a different Android Tablet.
- That still leaves 250,000 people a week. That’s over 1 million people a month.
- We can’t guarantee that those 1 million+ people would have bought an iPad. However, neither can we guarantee that those 1 million+ people would have not bought an iPad.
There’s something fundamentally wrong with the assertion that ‘Kindle Fire will not affect iPad sales at all’. By the very virtue of its existence, the Kindle Fire changes things. It’s one more option. Because it’s just at $199 it might even affect people who would never consider a $199 Tablet – They start wondering whether paying 2.5 times is worth it. It definitely affects people for whom $499 is a stretch. It definitely affects people who can’t afford $199 – which means they are not left coveting a $499 Tablet and that in itself reduces the value of the iPad as a status symbol. Now the 99% have Tablets and the 1% must go back to buying ponies and Chanel.
It’s the War of Perceptions
Different companies fight the War of Perceptions in different ways:
- Apple is strong in iPads so it reveals real sales figures. It is weak in the worldwide PC market so, instead of talking about less than 10% marketshare, it talks about ‘fastest market share growth’ or about iPad+PC combined sales.
- Amazon used to be weak (relatively) in Kindle sales, so it was vague and talked about ‘millions of Kindles sold in 3 blue moons’ and ‘the importance of keeping sales figures private’. Do keep in mind that the smartest people are the best at fooling themselves into believing ridiculous things. Now Kindle sales are strong so Amazon talks about 1 million Kindle sales a week.
The 3 big things ‘1 million Kindles sold a week’ really signifies are:
- Kindle Fire is gathering up customers that would have gone to the iPad and Nook Color.
- Kindles are now selling well enough that Amazon is on the verge of revealing real numbers. Perhaps by end 2012 we will get precise sales figures.
- The Kindle Fire experiment is a success so far. The low-price Tablet market now has multiple successes (Nook Color, Kindle Fire, perhaps Nook Tablet) and will grow and might even become 80% of the Tablet Market. This third item is the most significant – The $499 Tablet is going to be outsold by $200 and $250 Tablets (sooner or later, perhaps sooner than the experts think).
Amazon has conclusively shown that both its argument that ‘Sales Figures have to be hidden’ and Apple’s claim that ‘iPad sales will not be affected by Kindle Fire’ are utter nonsense. It’s all spin and influence and it works very well until your position changes and then its more beneficial for you to spin the story differently.