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Amazon Says Kindle and E-Book Sales Set Records

Amazon.com said Monday that its Kindle e-reader has become the most gifted item in the company's history, but didn't provide specific sales numbers. The company said the Kindle, Apple's 8GB iPod touch, Garmin's nuvi 260W personal navigation device, and the BlackBerry Bold were among the most popular gadgets that customers purchased during the holiday shopping season this year.

The online retail giant also noted that its customers purchased more Kindle e-books than physical books on Christmas Day -- a first for the company. However, not everyone buying e-books from Amazon this holiday season will be reading them on dedicated Kindle devices.

Amazon has unleashed a Kindle app for the iPhone and iPod touch that users in 60 countries can download from Apple's App Store. Moreover, in November the online retailer released a free Kindle for PC application that enables customers to read Kindle books on notebooks, netbooks and desktop PCs.

A Cross-Platform Strategy

The reason for Amazon's adoption of a cross-platform platform strategy is clear. Less than one percent of U.S. consumers read digital content on dedicated e-readers, mobile phones, or netbooks today, noted Forrester Research analyst Sarah Rotman Epps. "Consumers are reading books digitally on multiple devices, and they will continue to do so," she observed in a recent blog.

According to a recent Forrester survey of 4,711 respondents, about three percent of U.S. consumers read e-books on their desktop computers, and two percent read them on their laptops. "Going forward, 19 percent of U.S. consumers say they are interested in reading e-books on their desktop PCs, 14 percent on e-readers, 11 percent on netbooks, and five percent on mobile phones," Rotman Epps added.

Amazon said its cross-platform moves are part of an evolving strategy under which the company also expects to release Kindle apps for BlackBerry smartphones and the Mac. All these platforms will offer the company's Whispersync technology, which saves and synchronizes bookmarks across a customer's devices, Amazon said.

The new strategy makes sense in light of Forrester's projection that e-book sales will top $500 million in 2010. "This is still small compared to the overall book market, but it's growing quickly," Rotman Epps observed.

The potential for selling content that's never been consumed digitally before is huge and helps to explain why Barnes & Noble recently launched its nook e-reader at the aggressive price of $259, Rotman Epps noted. Barnes & Noble's long-term strategy is "to profit not so much off device sales as off of e-book content sales," she explained.

The Challenges Ahead

One of the tough decisions that Amazon now faces is whether to maintain its proprietary e-book delivery platform or switch to an open format that allows books from other sources to be read on the Kindle or devices running Kindle apps. "The vast majority of the evolving digital-publishing ecosystem is rallying behind EPUB, with Amazon the lone wolf in the proprietary wilderness," noted Gartner Vice President Allen Weiner in a recent blog.

Amazon also will need to respond to the release of rival e-readers capable of accessing digital content directly from the web. Spring Design, for example, is poised to launch an e-reader called Alex that will sport a second color screen capable of accessing HTML-based digital content.

Weiner sees the addition of a browser to e-readers as the avenue through which the developer community could eventually become a key player in the e-book marketplace.

"Developers will gravitate toward the platform that offers them scale, room to innovate, and make money," Weiner said. "Waiting in the public shadows, perhaps with the ability to tie the pieces together -- format, device, development, content and sales -- is Apple."