Each quarter, many retailers give a report of their total quarterly sales without disclosing their profits. We know, for instance, that Sony has sold about 300,000 units already. Amazon and B&N, however, refuse to play by the numbers game, choosing to keep everyone guessing by being mum about their sales figures.
How many Kindles and Nooks have been sold exactly? No one knows except perhaps the company people.
The Analysts’ Dilemma
Amazon is perhaps the most notorious for hiding their actual eReader unit sales, repeatedly drumming up the success of their Kindle without revealing any solid, graspable sales data.
Never mind the bloggers and the media journalists; it’s the investors and Wall Street analysts who are impatiently scratching their heads. Amazon has repeatedly touted Kindle’s best seller status press release after press release without telling “how many” have actually been sold. Analysts at Bank of America Merril Lynch noted that this is strategy aimed more at generating press buzz for Amazon rather than providing the public with relevant data:
“We continue to be frustrated with the limited unit data points from Amazon in their numerous Kindle press releases.”
From a legal perspective, Amazon and B&N are not obligated to disclose the sales figures of their ereaders – unless they represent a sizeable material portion of the company’s business. In the case of Amazon, Kindle accounts for less than 2% of Amazon’s average quarterly sales. The US Security and Exchange Commission can only obligate the companies if the shareholders complain or if there are irregularities in stock movements.
As Forrester analyst James McQuivey said of Amazon:
“As long as Amazon continues to have the right margins and the right profit numbers at the end of every quarter, they can probably get away with that. But if the Kindle’s streak goes cold and Amazon continues to keep investors in the dark, they could turn on the stock. You may suffer a 10 to 15 to 20 percent correction because the uncertainty factor would be so high… It ensures that if there is bad news, people imagine the worst.”
It’s not just the collective frustration that’s growing. Some are expressing doubts that the bookstore giant is really making the sales that their press releases imply, noting that when companies release fuzzy sales statements, they usually have lackluster performances.
Yet the latter reality doesn’t seem to apply to Amazon. Forester Research estimates that the Amazon Kindle has the lion’s share in the US market. Based on consumer surveys, about 2.5 millions have already been sold. That’s about 55% share of the US market.
Why leave everyone in the dark?
Let’s take Amazon as a prime example.
Many expert analysts regard the Kindle as a sub-plot in the broader story that is Amazon. The real story is in consumer goods, and that’s where Amazon is becoming a key player. Said Charles Wolf, an analyst at Needham & Co, “If investors are buying Amazon because of Kindle they’re making a mistake. It’s not inconsequential, but it’s not a game changer for Amazon.”
What’s the real game changer for Amazon are its e-books. Amazon’s business of selling digital generates an estimated 25% of Amazon’s revenue. According to Forrester, people who have purchased e-reading devices tend to increase their book purchases by 50 percent. With more and more people moving into the digital book format, it is apparent that the Kindle is fast becoming the vehicle for Amazon’s future growth.
With a vulnerable e-market such as the ebook industry, keeping competitors in the dark is exactly what Amazon and Barnes & Nobles want. It is the only way the bookstore giants can protect and maintain their grip on the market.
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