Sales are Up, But Profits are Down at Amazon
Amazon released their quarterly financial statements today, and it looks like the Kindle Fire has been quenched. Or you could actually look at the numbers and realize that most articles that are critical of Amazon are written by bloggers talking through their hat.
Profits might be down, but sales were up significantly. Amazon reported a 44% increase in sales last quarter over the same period last year ($10.88 billion vs $7.56 billion). So they did a couple billion dollars extra business and only had $79 million to show for it, compared with $268 million in Q3 2010.
That’s not a big deal. Amazon could fix the shortfall by raising the price of everything by a penny. Bam. Instant fortune.
They’re also pleased to announce that the Kindle Fire launch was the biggest single sale day ever. "September 28th was the biggest order day ever for Kindle, even bigger than previous holiday peak days," said Jeff Bezos, founder and CEO of Amazon.com. "In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we’re seeing with Kindle Fire pre-orders, we’re increasing capacity and building millions more than we’d already planned."
Sales were up on both the domestic and foreign Amazon websites, including the recently launched Amazon.es and the 2 new Kindle Stores (Germany and France).
There’s one other interesting detail in the sales figures, and it’s something we’ll need to keep an eye on. Do you know how everyone says that the Kindle Fire is a platform to sell content? That has been said all over, and it might be true. But content isn’t what drives Amazon at the moment.
Media sale were up only 24% to $4.15 billion in Q3, while electronics and other general merchandise sales grew 59% to $6.32 billion. Yes, digital content is a small fraction of this total, but that’s my point. Digital content isn’t Amazon’s be-all and end-all that some tech bloggers make it out to be. It’s not the biggest part nor is it growing the fastest, so don’t pin too many expectations on it.
Of course that might change in the future, which is why I’m going to keep an eye on it.