Amazon Sees Sales Success With Low Cost Kindle

Amazon seems to have made the right call that consumers are willing to put up with some adverts that come with its new low cost e-reader.

Amazon’s ad-supported Kindle device, which comes $25 (£15)cheaper than the WiFi-only unsponsored version at $139 (£85), has taken first position on the online retailer’s list of bestselling electronics. The Kindle 3G retails for $189 (£116).

Amazon itself will likely keep mum on actual Kindle sales numbers – a long-running company habit – but the latest device’s prominent position on the bestseller list suggests that tablets and e-reader software for other devices have done little to cool interest in dedicated devices for displaying e-text.

Kindle Competition

Although the Kindle continues to dominate the e-reader market, it faces competition on a number of fronts.

Ebook applications for the iPad and Google Android have threatened to make tablets and smartphones, by virtue of their multitasking abilities, a more attractive option for consumers. Barnes & Noble’s Nook Color offers a colour alternative (and a broad selection of apps) to Kindle’s grayscale. And Amazon’s own Kindle app for PCs and mobile devices could cannibalise the hunger for a dedicated Kindle device, at least in theory.

Analystics firm In-Stat predicted in September 2010 that e-reader shipments will grow to an annual 35 million units by 2014. “Tablet PC shipments are taking off, fuelled in particular by the Apple iPad introduction. Yet there will still be a revenue opportunity for e-reader suppliers and OEMs since tablet PCs and e-readers target different consumers,” Stephanie Ethier, an analyst with In-Stat, wrote in a research note. “Standalone e-readers will address the needs of avid readers, to whom the reading experience is central. Tablets are better suited for consumers who prefer a stronger multimedia experience and only light reading.”

The prime question confronting the ad-supported Kindle was whether the price was low enough for consumers to tolerate sponsored messages on their e-reader in the same way they do on virtually every other entertainment device. Based on the early sales indications (albeit, provided by Amazon itself), the answer to that question could be a very tentative “Yes.”

Android Rumours

In the interim, rumours also abound that Amazon is considering a leap into the Android tablet market, building a device that would tackle the iPad head-on.

“Amazon could create a compelling Android- or Linux-based tablet offering easy access to Amazon’s storefront (including its forthcoming Android app store) and unique Amazon features like one-click purchasing, Amazon Prime service, and its recommendation engine,” Forrester analyst Sarah Rotman Epps wrote in a March blog posting. “More consumers considering buying a tablet say that they would consider Amazon (24 percent) than Motorola (18 percent).”

Should Amazon build an Android tablet, it could leverage its existing customer base for e-texts and multimedia. But such a device remains vapourware for the moment; the retailer instead seems wholly focused on pushing the Kindle into a crowded ecosystem.