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Kindle Sales Were Down This Holiday Season

amazon frownChristmas is the prime gadget buying season in the US, but not everyone is feeling the joy. Based on what Amazon didn’t say in yesterday’s press release, I have a strong feeling that Barnes & Noble wasn’t the only ereader maker who had disappointing sales this holiday season.

Amazon is like pretty much any business. They like to boast about the good news and avoid mentioning the bad. They don’t often get into specific details about things like Kindle hardware sales, but they usually make at least a vague statement of some kind.

For the past 3 years Amazon has posted a press release in late December which boasted about how great Kindle sales were. Each year the statements lauding the Kindle got more and more colorful, with Amazon saying that sales were better and better.

Until this year, when Amazon didn’t say anything. Oh, there was a press release and it did say things like:

Kindle Fire HD, Kindle Fire, Kindle Paperwhite and Kindle hold the top four spots on the Amazon worldwide best seller charts since launch.

But Amazon said that last year and the year before, so it doesn’t mean much. No, the important detail here is what Amazon didn’t say.

They didn’t say that this was the best year ever for hardware sales. A similar statement was in the 2010 and 2011 press release, but not the press release that came out yesterday. In fact, the older press releases led with the boast about sales. Do you recall the million Kindles sold each week claim? That’s what Amazon said last year, but they didn’t say anything like that this year.

I know that this is awfully thin evidence, but don’t you think Amazon would have boasted about sales if they could have? I certainly would have done so.

Assuming I am right, what impact do you think this will have on the ereader market? Could this drop in sales cause Amazon to cut back on developing new hardware? I could see them delaying ereader releases, sure; the adoption rate for ereaders has plateaued here in the US, so it might make sense for Amazon to sell their current models to the rest of the  world rather than spend lots of money finding something new.

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steve December 28, 2012 um 2:26 pm

"They didn’t say that this was the best year ever for hardware sales. A similar statement was in the 2010 and 2011 press release, but not the press release that came out yesterday. In fact, the older press releases led with the boast about sales. Do you recall the million Kindles sold each week claim? That’s what Amazon said last year, but they didn’t say anything like that this year.

I know that this is awfully thin evidence, but don’t you think Amazon would have boasted about sales if they could have? I certainly would have done so."

This seems like a reasonable surmise. If I had to guess the reason, it’s the growth in off label tablets that really cut into Kindle and NOOK HD sales. I’ve been looking at tablets on the bestseller list at Target and Walmart, and it’s always Visual Land and Maylong, Azipen.

If this means anything to me it says that Amazon and B&N pursued the wrong strategy and didn’t realize where the market was going. Instead of upgrading their specs and holding the line on prices, they woudl have been better off bringing costs on their existing devices down and cutting prices to under $100.

Michael Anderson December 28, 2012 um 2:40 pm

That doesn’t make any sense … compiled stats for Christmas, and there were 17.4 million activations of smartphones and tablets, with ~51% tablets – and the top 3 were iPad, iPad Mini and Amazon Kindle Fire (unspecified).

As for the core thrust of the article – what seems clear to me is that you are right, Kindle Fire is chewing up the core Kindle sales, and Amazon doesn’t want to say that because that interferes with the eReader push.

fjtorres December 28, 2012 um 3:07 pm

It may overshadow the ebook story but it boosts the Prime Video story and Amazon has been actively building that up to take on Netflix and Hulu.
So big FIRE sales are a win in a growth area that targets a bigger natural market (TV viewers) than ebooks (readers).
If the sales were brag-worthy, they would be bragging.

Nate Hoffelder December 28, 2012 um 3:16 pm

And besides, last year Amazon announced a single sales boast which included both tablets and ereaders. If they could have bested that claim they would have.

fjtorres December 28, 2012 um 3:30 pm

Almost certainly the decline in eink offset the FIRE increase.
Amazon’s good news (inhouse) is "You should see the other guy."

fjtorres December 28, 2012 um 3:16 pm

I wouldn’t be so sure Kindle FIRE sales are in fact down but I’d agree that they fell short of Amazon’s expectations by at least a bit. (That one day sale on the FireHD8.9 within the return window of the pre-orders suggests they priced it higher than the market prefers. Which suggests a price cut isn’t far off.)

The eink reader sales are very likely down but since they *haven’t* run any deals they were apparently *expecting* lowers sales and aren’t showing any need to reduce inventories just yet. Logistics and inventory management being an Amazon core competence I suspect they planned for more modest sales and should survive the holiday aftermath just fine.

fjtorres December 28, 2012 um 3:27 pm

Oh, about amazon’s future plans?
I would expect more hardware slipstreaming on the eink front: (incrementally) new and improved, mostly in cost reduction and improved front-light uniformity. And incremental software tweaks.
On the FIRE front I would expect cost reductions to get prices down; we probably won’t see much effort to roll in more premium features.
And, of course, they will continue their ongoing international expansion to keep their Kindle hardware volume up (thus maintaining their costs and prices low).

The phone is now looking unavoidable and I *still* think they need to get into the TV Set-top box business, ala Roku. A Prime STB, real cheap. (<$50)

Just keep in mind that content sales are a function of the accumulated installed base not just the new device sales rate, so ebook sales will continue to grow, albeit at a slower pace, even if hardware sales rate do decline dramatically.

One scary thought: this would be exactly the right time for an ebook price war.

Clytie Siddall December 28, 2012 um 10:18 pm

I agree that Amazon should loosen its restrictions on selling to the rest of the world. I live in Australia and I’ve been trying to buy a Kindle Paperwhite WiFi (although my iPad does a great job as an eReader, due to illness my hands have weakened to the point where I have difficulty holding it for more than a few seconds).

I can buy an iPad Mini here, but I don’t have access to the eInk Kindle Paperwhite. That’s just not smart marketing.

A local site has been importing Paperwhites in small numbers, but is always sold out by the time I notice their email and go there. Periodically I try to buy one on Amazon, only to be told at checkout that I’m not allowed to do so.

This is just like geolims for eBooks: people worldwide are holding out money, but the retailers don’t want it. That’s never made sense to me.

fjtorres December 29, 2012 um 6:03 am

Amazon isn’t restricting Paperwhite sales per-se; they’re just phasing it in, region by region.
They did the same thing with the Kindle Touch last year. It’s one of the ways they manage production and avoid shortages at launch and gluts afterwards. Last year it took til spring before they had the US fully covered and moved the KT global.
This year they’ll likely get the new models out there sooner.

Clytie Siddall December 29, 2012 um 9:57 pm

From the U.S., Amazon may appear to "phase in", but from the POV of the majority of its market (the rest of the world), we are simply phased out. It’s frustrating to be deluged with advertizing and discussion of something (get it now!) which you aren’t allowed to access. As for supplies, if Apple can release the iPad Mini here simultaneously with the U.S., why can’t Amazon logistically do the same?

On the ebook front, I’m thoroughly sick of looking for a title on Amazon, Kobo or Diesel (often one recommended in articles or newsletters), only to be told it is "not available" to the majority of the English-speakers, who live outside the U.S. What on earth is the point of "windowing" ebook releases? It’s not like you run out of copies. (And that’s not even counting B&N and Sony, who won’t sell to us at all.)

fjtorres December 30, 2012 um 6:01 am

The book issue isn’t the retailer’s fault.
Usually it is the author/agent/publisher’s choice.
As for matching Apple’s releases; there is a "slight" difference in scale between Apple’s manufacturing capabilities and Amazon’s. Apple can afford to stockpile 10 million units of anything for a product launch. Amazon is lucky to sell 10 million kindles in a year.
It annoys, I know, but everybody not named Apple works the same way; Sony, Nintendo, Sharp, Samsung, Nokia, etc.
Plenty of asia-only and Europe-only cellphones, just for starters.
Ditto for laptops, tablets, and HDTVs–the Philips 21:9 wide aspect TVs never got to the US, for example.
Simultaneous global releases are actually rare. Even simutaneous multi-region is far from common.

Joe Tailor January 3, 2013 um 11:12 am

Same here, I tried to buy the Kindle paperwhite and have been informed upon checkout that the device could not be shipped to my address in Europe.
Being a native german speaker it is also kind of frustrating not to be able to buy a (any) kindle via the german website if you do not live in Germany. Instead i have been referred to the international website which lets you buy the standard kindle, but no 3G models.
The Wifi coverage hereabouts leaves much to be desired so in order to keep my kindles synchronized 3G is a necessity.
So what if kindle sales are down, as long as you can not have one even if you want to buy one I will not shed a tear.

User December 29, 2012 um 6:25 am

Like the author, I know this is awfully thing evidence. But the Kindle Fires appear to be bombing hard in Spain.

They occupy spots 12 and 13 in the Kindle Store, way behind the e-ink version (Paperwhite still not on sale here). Of course these are not specific sales numbers, but typically the number 1 in any chart outsells the number 12 many times over.

As for the reasons, I honestly have no idea. I mean, people probably don’t find it very useful compared to the phones they already have. But I don’t understand why Amazon performs so much better in the US than in Spain, or why in the US the e-ink version is selling less than the Fires.

In case someone is going to mention the economic situation, let me remind you that everybody you see in the streets has a smartphone, and e-readers are also quite a toy. I also see many iPads. The Fire just seems to lack appeal for Spanish consumers.

PS: the author has mentioned that there could be a tablet bubble. I think it’s only going to happen at the low-end, 7-inch part of the market. Because, well, people already have phones that get bigger and bigger. The upcoming CES will probably be something of an inflexion point, where many of the manufacturers previously pushing tablets will be promoting "phablets" instead.

R. Scot Johns December 29, 2012 um 11:40 am

Hi Nate,

An important bullet point in Amazon’s press released you failed to point out is that "Christmas Day was the biggest day ever for digital downloads…" This is a critical factor, since it’s what Amazon is wanting to achieve even more than device sales, on which they make no money. Content sales is what it’s always been about for them, and where do you suppose all those digital downloads are going? May be onto iPads or Androids with Kindle apps, but most of it is books and movies downloaded directly onto Kindles (new or old). Eventually a saturation point will be reached (and we may be hitting it this year), and Amazon is smart enough to realize this. While others such as Apple will loose a large share of their revenue stream as the tablet bubble plateaus, Amazon will be just fine relying on their ecosystem to keep existing devices stocked with content.

Nate Hoffelder December 29, 2012 um 12:20 pm

Boasts about the content don’t tell us anything hardware sales. There’s no reliable way to connect them, so you’re basically making a wild-assed guess about the effect of one on the other.

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[…] Eu sei que esta é uma prova muito sutil, mas você não acha que a Amazon teria se gabado das vendas se eles pudessem se gabar? Eu certamente teria feito isso. (Nate Hoffelder, The Digital Reader). […]

Linda Cargill January 4, 2013 um 12:57 pm

What you claim about Kindle sales going down is very interesting. For the first time in three years I’ve also noticed my ebook sales going down and I’m an author with lots of books up on Kindle. So maybe that’s indirect evidence of the same phenomenon.

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