Amazon's Kindle is certainly started a fire for consumers in 2008.
According to industry analysts, Amazon's Kindle eBook reader saw sales numbering around 500,000 in 2008. According to All Things Digital, Citigroup analyst Mark Mahaney estimates that the popular device, what he calls the "iPod of the eBook world", saw the 500,000 mark in 2008 sales. That number will supposedly double to 1.27 million in 2009, and then skyrocket to roughly 3.5 million in 2010.
These predicted sales numbers would put the Kindle somewhat on par with the iPod during its first three years of sales in 2002, 2003 and 2004. The adoption rates peak at 132 percent for first year sales (500k for the Kindle, 378k for the iPod), and drop to 80 percent in year three sales (3.5 million for the Kindle, 4.4 million for the iPod).
On the money side of things, the Kindle generated about $153 million in revenue in 2008, which would represent about 0.8 percent of Amazons total revenue on the year. Mahaney predicts that number will jump to over $1.2 billion in 2010, and will account for approximately 4.4 percent of Amazons total revenue. The projected revenue is based on Kindle owners buying one eBook through Amazon every month. Chances are most Kindle users buy (or pirate) more than that.
While Mahaney seems optimistic on the Kindle, he has some sobering advice for Amazon. "The structural challenge facing Amazon is that approximately 50% of its revenue is generated from the sale of books, music, and videos–three product categories that are all in the process of being digitized," said Mahaney. "If Amazon can’t successfully jump the chasm from Internet-ordered/mailman-delivered media products to Internet-ordered/digitally-delivered media products, its financial fundamentals and its stock price will be significantly challenged.” The Kindle is certainly a step in this direction, as is the company's deal with Vizio.
The Citigroup analyst also has some predictions on the next Kindle, which many believe will be revealed next week during an Amazon presser in NYC. Mahaney speculates that the next iteration of the device will be longer, thinner, have an enhanced design (less accidental button pushing), and will hit the $300 mark (the current price is $359). Furthermore, he says the Kindle 2.0 will lack a color screen and touch capability.