Kindle DX getting drowned out by Pre, new iPhone

The good news coming out of the Apple conference is that there is no Kindle Killer, yet. The Apple analyst estimate of a January 2010 release of the 10″ touch-screen iBook/MediaPad now seems pretty likely.

The bad news we’ll cover separately (the bookstore in the Iceberg app). There’s something else that’s worth looking at i.e. How the new iPhone and the Palm Pre release are basically drowning out the Kindle DX release.

Where is the Kindle DX Buzz?

Well, there’s not very much Kindle DX Buzz. A combination of powerful factors -

  1. Releasing around the time of Apple’s conference.
  2. Releasing around the time the Pre launches.
  3. Releasing too soon after Kindle 2. 
  4. Leaving too much of a gap between Kindle DX’s announcement and the release date. 
  5. The Price holding back interest.

Is preventing the Kindle DX from getting much attention.

First, here’s a graph showing comparative buzz (courtesy Google Trends) -

The Kindle DX Release is getting drowned out The Kindle DX Release is getting drowned out

Apple is literally taking over all the headlines (courtesy Google Trends) -

Apple taking up all the headlines today Apple taking up all the headlines today

12 out of the top 50 hot topics are Apple conference related. The lack of Kindle DX interest leads to another important question.

Will a lot of Kindle DXes sell in the first 1-2 months?

Let’s see –  

  1. The Kindle DX isn’t exactly getting a fair chance (as we’ve just seen above).  
  2. The $489 price of the Kindle DX is also scaring off a lot of potential buyers.  
  3. There is little pent up demand because a lot of people have bought Kindle 2s in the last 4 months. Also, there’s still more interest in K2 than in KDX –

    Kindle 2 getting more interest than Kindle DX???

    Kindle 2 getting more interest than Kindle DX???

  4. Back  To School season doesn’t start until July and peaks only in August.

That pretty much means that the Kindle DX is going to see a gradual adoption.

This would mean that it’s not until students see other students actually using a Kindle DX that DX sales pick up. For Amazon, the biggest challenge is thus creating enough buzz during the early July to Labor Day shopping season to kick-start sales BEFORE the shopping season is over.

The first Kindle DX and its current release do ensure two things -

  1. By the time of the BIG Holiday Shopping Season there are some Kindle DXes out there, and perhaps even enough to ignite DX sales.
  2. Kindle DX 2 will be able to build on the experience and feedback of the current DX, and likely will be a bigger success.

Kindle DX selling out, 7-10 day delays

June 18th Update: The Amazon Kindle DX supply and demand seem to have stabilized to the point where there is a constant 1 week delay.  Currently, Kindle DX shows as will be in stock on June 22nd, 2009.  
Around June 5th, it seemed that the Kindle DX was about to sell out and Amazon was indicating that your Kindle DX would ship after a 7-10 day delay -
Kindle DX now ships in 7 to 10 days from order date

Kindle DX now ships in 7 to 10 days from order date

 In case the text is hard to read -

* Pre-orders placed prior to June 5th will begin shipping June 10th.

* New pre-orders will be prioritized on a first come, first served basis.

* Pre-order today and your Kindle DX will ship in approximately 7 to 10 days.

All through the Kindle 2 preorder period and during the Kindle 2 release we never had anything like this. It seems like Amazon underestimated demand for the Kindle DX.

Why is the Kindle DX selling out?

Well, there are some possible reasons that the allegedly ‘too expensive’ Kindle DX is selling out –  

  1. Amazon rushed Kindle DX release date to pre-empt an Apple announcement (at their June 10th conference). So they really weren’t prepared with adequate stock.
  2. The unknown ship date meant very few Kindle DX orders. Amazon produced DXes based on these low numbers which grossly underestimated actual demand.
  3. Kindle DX orders really are super high i.e. Kindle DX is selling a lot.
  4. Conspiracy theorists would say that its an attempt to drum up sales.

My money is on both #1 and #2 being true. There’s no way a $489 ereader would sell out if Amazon had decent levels of stock. There have to be external reasons i.e. Amazon rushing the release date, and Amazon underestimating demand based on low pre-orders.

Could Kindle DX be selling better than Kindle 2?

 Well, look at the signs -

  1. Google Trends shows that there is more interest in the Kindle 2 –
    Kindle 2 Buzz > Kindle DX BuzzKindle 2 Buzz > Kindle DX Buzz
  2. The higher price point obviously puts DX out of reach of a lot of people.  
  3. We looked at Amazon’s ‘Customers who looked at this, bought this’ numbers earlier which clearly indicate that Kindle 2s are selling more than Kindle DXes.

So Kindle 2s are almost certainly selling more than the DX.

Should I get a Kindle DX now?

Perhaps. If you were waiting for a formal Kindle DX review it might make sense to order your Kindle DX now, and then in case reviews are horrid, cancel.  

There’s not enough to go on now to say whether this will be a ‘sold out for 3-4 weeks’ situation or whether the delays will stay at around 7-10 days. I’ll keep you updated on Kindle DX availability.

Kindle DX Sales 27-35% of total Kindle Sales?

Is Amazon inadvertently giving away how the Kindle DX is doing? These ‘recommendation’ screenshots indicate something – just not sure how dependable the figures are.

First take a look at what happens when you look at the Kindle DX, leave and come back to Amazon (you must be logged in) -

Is Amazon telling us that 89% of people who buy something after looking at the DX buy Kindle 2?

Is Amazon telling us that 89% of people who buy something after looking at the DX buy Kindle 2?

This figure clearly is indicating that 89% of people who look at the DX and then make a purchase buy Kindle 2. Which probably means 11% buy the DX.

Note: The Kindle DX and Kindle 2 pages DO NOT show this information (as compared to other product pages which do). However, they probably forgot to exclude figures from recommendations giving us our figures here).

Given that the DX had no known ship date until today, and that it was and is $130 more expensive, it doesn’t seem that far off that 89% of people are buying the Kindle 2 and only 11% are going for the DX.

However, it gets murkier if we look at our recommendation when we visit the Kindle 2 page, leave, and then return to Amazon (while logged in) -

56% of people who look at Kindle 2 buy Kindle DX? Now, I'm confused

59% of people who look at Kindle 2 buy Kindle DX? Now, I'm confused

Clearly, the grass is greener on the other side. People who start off looking at the Kindle 2, buy the Kindle DX 59% of the time (and probably the Kindle 2 the rest of the time).

After considering a lot of possible ways to interpret these 2 data points the way that seems to make the most sense is -

Assume that some people are first looking at the Kindle 2 page, and then buying Kindle 2 41% of the time, and DX 59% of the time. That accounts for the second figure.

Assume that other people are first looking at the Kindle DX page, and then buying Kindle DX 11% of the time, and Kindle 2 89% of the time. That accounts for the first figure.

Assume that existing Kindle 2 owners are accounted in these numbers without us having to make special accomodations for them.

Assume that Kindle 1 sales are so small we can disregard them.

These are some HUGE assumptions to make – However, it does give us something to work with, and leads to

Scenario 1: Equal visits to Kindle 2 and Kindle DX pages.

We do know from Google Trends that ‘kindle 2′ and ‘kindle dx’ get the same amount of search traffic. So lets assume equal number of users start off at the DX and K2 pages. This is basically a best case situation for Kindle DX sales since we do know that Amazon advertises DX on the front page more and that DX gets more press.

In this scenario -

  1. 50% of the time, Kindle DX page first, and users who buy, buy a K2 89% of the time, and a DX 11% of the time.  
  2. 50% of the time, Kindle 2 page first, and users who buy, buy a DX 59% of the time, and a K2 41% of the time.

This gives us Percentage of DX sales = 35%. 

Scenario 2: Visits to Kindle DX page are twice that to Kindle 2 page.

Given the the Kindle DX is featured more often on the front page, and that there’s more buzz, its fair to say that Kindle DX probably gets more initial visitors than the Kindle 2 page. In this scenario -

  1. 66% of the time, Kindle DX page first. Users who buy, 89% buy a Kindle 2 and 11% buy a Kindle DX. 
  2. 34% of the time, Kindle 2 page first. Users who buy, 59% buy a Kindle DX, and 41% buy a Kindle 2.

This gives us Percentage of DX sales = 27%.

Conclusion on Kindle DX Sales

Kindle DX sales are somewhere between 27% to 35% of total Kindle sales (Kindle 2 and DX).

In other words, for every 6 Kindle 2s that are sold, 2 to 3 Kindle DXes are sold.

Also, my gut feeling is that having two choices to choose between makes customers more likely to buy a Kindle i.e. Kindle DX purchases are sales stolen from Sony etc. and not as much of Kindle 2 sales being cannibalized. 

Now that we know Kindle DX shipping date is June 10, and the delivery date is as early as June 11, a lot of the uncertainity around the DX will disappear and we ought to see percentage of DX sales increase. Not that Amazon would let us know ;)

Reviewing Kindle DX’s chances of succeeding

This is mostly a review of the strategy Amazon is using with the Kindle DX and its chance of succeeding. You can read my Kindle DX review (technically a preview) if you’re deciding whether to buy it or not. 

That being said …

Positive Indicators and Things that indicate Kindle DX will succeed

Concrete Signs Kindle DX might succeed

  1. People are actually pre-ordering. We know from what various kindle blog sites are writing and what people are commenting at forums etc. that a decent number of people have actually pre-ordered the Kindle DX.
  2. Although the tone of nearly every kindle dx review at news sites and big blogs is negative, the anti-dx arguments all hinge on price or its inability to cook you breakfast (in addition to being an etextbook reader). Even in the recession there are a lot of people for whom $489 is not a deal breaker.  

Indicators and Hints Kindle DX might succeed

  1. The amount of interest is high and is staying at the level of interest in the Kindle 2 –

    Kindle DX Web Search Volume

    Kindle DX Web Search Volume

  2. A lot of Kindle 2 owners are upset that a new product was released so soon and are trying to exchange – Surely, this means they feel the Kindle DX is worth the higher price.  
  3. Signing up 3 of the major textbook publishers is a coup and indicates that Kindle DX might have very strong content options for students.

Things that do matter

  1. By announcing the price really early Amazon has anchored it i.e. people are not going to be shocked into inaction when it is released.
  2. In addition the lead time lets people get used to the more expensive price, and sets up the Kindle DX to even seem like a bargain if a $50 kindle dx coupon were thrown into the mix down the line.
  3. Being the first company to announce a larger screen eReader available this year gives Amazon a distinct edge.
  4. The current interest and preorders give Amazon data on actual and potential demand and they can set up manufacturing accordingly. This, in my opinion, is the real reason for the ridiculous ‘preorder dx now and we’ll ship it sometime after a few months’ strategy.

Negative Indicators that hint at the Kindle DX not succeeding

Concrete Signs

  1. The most likely customer base i.e. Kindle 2 and Kindle owners, aren’t ready for a new product launch just 3 months after Kindle 2 was announced. Kindle forums and blogs are clearly indicating this.

Indicators

  1. Amazon has moved from displaying Kindle 2 + Kindle DX on its main page to often displaying just the Kindle DX. Surely, this is them drumming up interest.
  2. There are a very small number of newspapers and universities running trials.
  3. There are still no physical kindle retail locations – which is an even bigger factor for the DX given the higher price.

Things that Do Matter

  1. Price – Price is not going to kill the Kindle DX. However, it will rule out some people from ever becoming Kindle DX owners.
  2. Additionally, every kindle dx review saying the price is high (without going into the specifics i.e. the technology is still maturing) creates the perception that dx is overpriced.    
  3. Lack of Availability – A preorder with no ship date means you lose a lot of potential customers (since dx wasn’t available at their moment of impulse purchase). 
  4. Lack of Sustained Impact – Kindle DX saw a huge spike in interest which is now gone. After a few months, when it’s available there will be another spike. This is, however, not as impactful as having two spikes of interest within the same month (which the Kindle 2 announcement and launch facilitated) –

    Kindle 2 getting sustained buzz in Feb 2009

    Kindle 2 getting sustained buzz in Feb 2009

  5. DX cannibalizing Kindle 2 sales, and Kindle 2 cannibalizing Kindle DX sales. Suddenly having two product lines in an emerging market is a strategy that might backfire.
  6. By releasing details early Amazon has exposed their product to competitors who now have the opportunity to release earlier or mold their own products to compete better.

Closing Thoughts

Showing their hand early is a risky move – It does however give Amazon a lot of valuable feedback on actual interest in the DX, how the DX gets reviewed, and what people’s concerns are. Combine this with the fact that they can set their manufacturing targets based on preorders and current buzz and its a good, solid strategy.

Amazon has indicated, and the success of the Kindle 2 makes it likelier, that they intend to have Kindles around for 10 or more years. The Kindle DX becomes the first iteration of their attempt to capture the college textbook market and expand the Kindle family. I feel the DX family of Kindles will be a huge success – perhaps with the current version at a slightly lower price point, perhaps with dx 2. 

Its almost as if Amazon has decided that its better to release quickly, fail if need be, and get enough data to set up the DX line of products to succeed down the line. The other thing I wonder about is the impact the dx is having on kindle 2 sales.

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