With the impending launch of the iPad, many industry observers might be tempted to write Amazon off. After all, the iPad has color, multimedia capability, and the weight of Apple’s name brand and app store behind it.

But not so fast says Om Malik in this post on GigaOm. Or, rather, so says the J.P. Morgan research note Malik cites.

The J.P. Morgan note points out that e-books could take as much as 25% of the market share away from physical books, rather than the 1% they have today. If that happens, even if Amazon’s share of the e-book market falls from 90% to 30% (and everything else remains equal), Amazon would still make almost 1 billion dollars more money than it did in 2009.

Of course, this does presuppose that the e-book market does increase to 25% of the paper book market, and that Amazon is able to hold onto as much as 30% of it—two factors that are not necessarily assured at this point.

Who knows what will happen over the next few years? Even the analysts are just making guesses.


  1. I love reading Chris’ anti-Amazon remarks, even when put so slyly as here. Amazon will end up with a good deal more than 30% of the ebook market many years down the road. Certainly Apple won’t beat it as few iPad owners will actually be buying and reading books on it.

  2. Are we talking ebook reader hardware or ebook file “sales”?
    Market share of one does not equal market share of the other (just ask Sony or B&N). And while it may be a tad boorish to point out, not everybody that buys Kindle books reads on Kindle, nor do Kindle owners read only on Kindle.
    Throwing iPad into the mix muddies the waters as the iBook store starts out with zero installed base, zero sales, and each iPad sale says nothing about where its owner is going to get their books.
    So, before we get into a tizzy over “Apple sold a million iPads!”
    Lets wait and see how many ebooks iBook sells, okay?

    There are only two certainties here:

    Nobody is going to have 100% market share and no credible is going to have zero percent. Nobody is going to kill anybody, okay?

    Even now, Amazon doesn’t really have 90% share of the ebook market; at most they have an “estimated” 90% share of tracked name retailers for the US market. That is their starting point/high-water mark.
    It could never go anywhere but down as the market grew and matured.

    Just look at the PC business:
    once upon a time, IBM had 100% market share. In 6 years they were down to less than 20% and in 10 they were down to 10%. Today, big players on the world stage would be thrilled with 10%.
    And lets not forget Apple that started out with 50% of the pre-PC desktop computing market and was swept aside in the PC tsunami of the 80’s, leaving them with 10% ten years later, and 3% forever after.
    Its a *very* profitable and loyal 3% but still…
    Fortunes change.
    Sometimes the pioneers live, sometimes they die, and sometimes (like Palm) they muddle through.

    Arguments can be made either way but one thing needs to be clear: whether Amazon prospers or fails is strictly up to Amazon and their choices.

    There is no fate in business.
    No murder, either.
    But there is assisted suicide: just look to Netscape for proof. 🙂

  3. Actually, Amazon stands to make a lot MORE money off ebook sales now, than they did before. Before this ‘agency model’ was foisted on them, Amazon paid authors and publishers to be able to sell the ebooks at below-wholesale prices. Now Amazon will not lose money on those sales, but instead will pull in a nice 30% revenue on every ebook sold. And Amazon is positioning itself to make ebook-buyers pay for the bandwidth of downloading to the Kindle, too.

    Amazon’s next step, if they really want to push on to hegemony in the ebook world, would be to lose money on the hardware, since they won’t be able to lose money on the ebooks. Recent reports had Amazon officials trying to work out some way to GIVE KINDLES AWAY to frequent Amazon customers. But they might also just drop Kindle2 prices to the magic $99 price point, eh? Or go ballistic and price them $49.

    Amazon still has some plays here, and it will be interesting to see where they go.

    — asotir

  4. “…a nice 30% revenue on every ebook sold.”

    Fat chance. No way. Retailer’s margins in will fall dramatically. Still very profitable but over the next few years no way will Amazon or Apple get $4 for a $12 book. Far far low.

  5. So, all the announcements from the publishers, about the Agency model guaranteeing Apple (and other retailers) 30% of $12.99 are now officially fake?
    Wow, you miss one day and suddenly everything changes on you…

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