Kindle Helps Amazon To Record Third Quarter Results
Just a few days ago Amazon reported a very strong third quarter. Net income was $199 million – 70% better than the same period for last year. Both revenues and profits were better than analyst’s predictions and a good fourth quarter is now foreseen. Share price increased by 27% amid clear expectations that Amazon would become the number one online retail business in the post-recession economy.
One of the important elements in Amazon’s success has undoubtedly been the success of the Amazon Kindle e-book reader. The Kindle, first released in 2007 and now in its second generation, accounts for 60% of the US e-book reader market. After a long wait Amazon has just started shipping the Kindle 2 reader to over one hundred different countries globally. International shipping was combined with a second price drop since the introduction of the Kindle 2 in February of 2009.
This was followed, no more than two weeks later, by a further price reduction and the standardization of a single Kindle 2 reader– the Kindle international version, which now sells for $260. This was seen by many to be a response to the announcement by Barnes and Noble of their own new “Nook” e-book reader (which also sells for $260). Even so, the standardization and focus on the huge international market makes perfect business sense for a number of reasons.
Microsoft, Apple and Sony are all in various stages of development with their new readers. Although the e-book market is fairly new it is changing and growing at phenomenal speed. Considering Amazon’s dominant position thus far, and the fact that the Kindle is their number one selling product, it seems highly unlikely that Amazon will sit back and watch the other manufacturers overtake them (as they did to Sony two years ago).
Amazon is, needless to say, far from being a one trick pony. They saw good growth in Amazon prime memberships – which offer upgraded delivery options for a one off yearly payment. Growth was particularly good in international markets.
A company representative advised that industry analysts should expect Amazon to expand both the portfolio of goods available combined with geographical expansion over time.
Fourth quarter sales for Amazon.com are predicted to be between $8.13 billion and $9.13 billion.
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