John Paczkowski

Recent Posts by John Paczkowski

Kindle Analyst an Honor Student at Strained Credibility Academy

amzn-stories.jpgOK. So maybe Amazon’s Kindle isn’t “the Zune of reading.” Certainly, that’s the impression given by CitiGroup analyst Mark Mahaney’s prediction that the e-book reader will generate three-quarters of a billion dollars for Amazon (AMZN) by 2010. That’s about 1% to 3% of the retailer’s revenue.

“We admit having very limited visibility into the current ramp of the Kindle,” he writes. “And there is the obvious point that Kindle sales could easily cannibalize existing AMZN book sales. But we believe the broader point is that it is not unreasonable to see the Kindle as having a material impact on AMZN’s revenue–low single digits–within two to three years. That may not sound like a lot, but given the company’s current $20 billion revenue run rate, that’s impressive.”

Sure is. If you have hard metrics on which to base such a claim. Sadly, that’s not really the case here. Because Mahaney’s estimate is based on, get this, Kindle’s sales ranking on Amazon’s site and the number of customer reviews it’s been given. From those stats, and Amazon’s apparent difficulty in keeping up with demand for the device, Mahaney figures that 10,000 to 30,000 have been sold in about three months. And then, referencing iPod adoption rates, he extrapolates his figure of $750 million by 2010 from that. Seems a jacktastic stretch of the imagination, doesn’t it?

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work