Kindle sales declined?

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From ReadWriteWeb.  More in the article.

Paulo Santos (who is short AMZN) has a great post on Seeking Alpha about the nasty secret hidden in Amazon’s otherwise-strong Q1 earnings. The reason Amazon’s razor-thin margins look just the teensiest bit better is that sales of the break-even Kindle have fallen off a cliff. Is e-ink doomed? We sure hope not.

Amazon never, ever talks about how many Kindles it sells. That’s what lots of tech companies do when their devices aren’t selling. So Santos did the sensible thing and looked for clues lower down the supply chain.

Sure enough, E Ink Holdings, the world’s biggest e-ink display manufacturer – with Amazon as its best customer – just reported its first quarterly loss in more than two years. Here’s chairman Scott Liu,  quoted by the Taipei Times:

‘Our major customer was too optimistic about its sales in the fourth quarter of last year and ordered too much from us. That made the customer order almost nothing from us in the first quarter.’ What went wrong? Santos says the Kindle Fire cannibalized the e-ink Kindle sales. That’s possible, but it’s not proven. The timing is telling, though. Amazon has had to order few if any new e-ink screens since the Fire was introduced. Two great new e-ink Kindles also were introduced at the same time. That doesn’t smell good for the Kindle line.

(Via ReadWriteWeb.)

4 Comments on Kindle sales declined?

  1. It would be a pity to lose the e-ink. I admit I got my Kindle because my phone was getting tired of being my ereader (battery hunger).

  2. Binko Barnes // May 9, 2012 at 1:12 pm //

    E-Ink will not disappear but it will become a niche product. Those of us who truly and deeply love to read are small in number compared to casual readers. I spent my youth with a paperback jammed in my back pocket and my kindle serves the same function. But the vast, vast majority of people will happily move to tablets or smart phones where a little reading can be mixed in with checking Facebook and playing games.

  3. According to a May 4 report in the London Telegraph, “sales of Amazon’s flagship Kindle, the Fire, are reported to have fallen from 4.8 million in the last quarter of 2011 to fewer than 750,000 in 2012″.

    http://www.telegraph.co.uk/technology/amazon/9246174/Kindle-Fire-sales-plunge.html

    This may have something to do with the proliferation of other tablets.

  4. In the near term (i.e., next 1-3 years), I don’t see ePaper technology disappearing. For many people a dedicated e-reader is the right choice. This is particularly true as screens with higher resolution and better durability start reaching the market.

    In the long term though, I think it is hard to avoid convergence with the tablet market. As better screen technologies are developed that provide better battery life, better visibility in bright light (compared to the current non ePaper technologies) and better responsiveness and color (compared to ePaper), the case for dedicated devices will become a lot less strong.

    If manufacturers of dedicated ereaders want to continue to make dedicated ereaders, they need to figure out a way to make ereaders do some things that tablets just can’t. (This is kind of like how DSLR and other interchangable lens cameras still are doing fairly well while compact cameras are dying because of cell phone cameras). There are only two key areas where I can think of them having a chance… 1. essentially eliminate the need to plug in. With their relatively low power, e-readers could be made solar powered. Multi-purpose tablets are always going to use more power and will need to be plugged in (even if you can extend your battery power for a week or more). 2. Price. Manufacturers will have to drive the price down to the point where they might be used as promotional items (imagine authors signing ebook readers and giving them away with the purchase of a novel.).

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