Amazon’s Q4 Report Suggests the Kindle, Kindle Fire Have Peaked
I’m sure that you’ve already read the news that Amazon released their year end report today, but did you happen to notice what wasn’t in the press release?
There were a few telling absences from the press release, and if we read between the lines we end up with a few questions Amazon hasn’t answered.
The press release starts out well. The financial news was generally good, with Amazon reporting that net sales were up in 2013:
Net sales increased 22% to $74.45 billion, compared with $61.09 billion in 2012. Excluding the $1.28 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales grew 24% compared with 2012.
Operating income increased 10% to $745 million, compared with $676 million in 2012. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the year on operating income was $29 million.
Net income was $274 million, or $0.59 per diluted share, compared with net loss of $39 million, or $0.09 per diluted share, in 2012.
Analysts weren’t happy, of course, but that’s no surprise.
After the financial news Amazon listed the accomplishments they wanted to highlight. It’s too long to quote here, so I suggest that you go read the press release. While you’re at it, count the number of times the Kindle is mentioned, and then count the mentions of the Kindle Fire.
Did you notice what wasn’t there?
There’s no mention of how many tablets and ereaders Amazon sold, and there’s no mention of how many ebooks they sold, either. Those are telling details, IMO, and they could be saying that Amazon’s hardware efforts and ebook efforts have peaked.
Amazon took the time to mention the new Australian Kindle Store, and they took time to mention Kindle on airplanes, Kindle mayday, Kindle FreeTime, and pretty much every other new Kindle program.
And yet Amazon didn’t mention ebook sales or hardware sales.
I’m sure some of my readers recall that I wrote a very similar post around this time last year. I can’t link to that post because it unfortunately has been eaten by my blog (I cannot find it in the Internet Archive’s Wayback machine, either). As I recall, I commented upon Amazon not mentioning their hardware sales; they mentioned ebook sales in the press release (up 70%), but not hardware, and I concluded that the hardware news was not good (or at least that’s what I think I wrote).
Earlier today I was reminded of that post by a reader who I think wanted to remain anonymous. He reached much the same conclusion I did. Actually, he went several steps further than I dare, and he wrote that
- International expansion is basically at a standstill, both for Amazon as a whole and in particular for Kindle. After a few big launches in Europe and Asia, the roster of countries has remained the same for about a year. So the Kindle ecosystem basically exists in ten countries.
- The Kindle Fire has gone through countless sales.
- Kindle Fire appears to have flopped in mainland Europe. If you look at the rankings sometimes you’ll see it below the top 100!
- In both the UK and US, the Kindle store shows Paperwhite ahead of any Fire model.
- This is anecdotal, but less and less Android developers seem to be making the effort of publishing on the Amazon store.My guess is the Kindle Fire has flopped, and the Paperwhite is doing OK but not booming in sales. Amazon will shove this under the carpet the usual way, i.e. through total silence.
I think he went too far, but I do agree that Amazon is no longer seeing the growth along the lines of what they reported in past years. I would go along with the theory that hardware sales have flattened (IDC estimates back this up), but I am not so sure I would make the same claim about ebook sales.
Yes, Amazon neglected to mention ebook sales, and while that probably means that there was insufficient growth, the relative lack of growth might have a cause other than Amazon’s digital efforts fizzling.
As you might recall, in 2012 there was an ebook sales bubble due to the release of The Hunger Games movie (and 50 Shades). This made the AAP’s stats for 2013 look flat, and Amazon’s sales could be suffering from the same effect.
Of course, the AAP statistics mainly cover the US ebook market, while Amazon sells internationally. But if Amazon wasn’t seeing much in the way of growth of international ebook sales then it might not have been enough to overcome the unimpressive stats for the US ebook market.
This is all speculation, obviously, but before you dismiss it as the ramblings of a madperson I would like to ask you one question.
Why didn’t Amazon use a phrase like "best year ever" to describe their ebook sales?
It’s vague enough that Amazon could have used it to refer to sales that were up by as little as a couple percent and still told the truth (and avoided an SEC investigation). But Amazon didn’t even use a vague phrase, and I would argue that it’s a sign that sales were not up.
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