AMZN?

[ok22]

...

9.  Assuming that sales tax will eventually get charged on amzn sales.  But does it really matter?  Are people or a bulk of people only buying for the 10% (approx. max sales tax across US states) sales tax savings or do other conveniences of online shopping still lead to online gaining share even if price differential is reduced significantly by sales tax advantage going away?

[StubbleJumper]

2.  On Kindle etc., does it really matter if amzn is the winner on kindle hardware?  As long as e-readers grow and one can buy content from amzn for one's e-reader doesn't amzn do ok?

3.  Is there any reason that online shopping won't keep taking share from bricks and mortar?  If online grows are there reasons that amzn wouldn't at least maintain its share?

 

 

WRT buying content, I would observe that e-readers may actually result in lower sales for book vendors (including AMZN) as it is virtually certain that people will just ignore the copyright (I personally know people who are already doing this with Kindle files).  It is quite possible that the book industry will go the same way the music industry has gone after the development of mp3 files and broadband internet.

 

I think you are right that online shopping will keep gaining market share from bricks and mortar.  The implication for AMZN is that they may be able to offset lost book sales by increasing their volume on non-book products.  Time will tell.

 

SJ

[Guest kawikaho]

Sorry, guys, I haven't been able to read the whole thread, but here are some thoughts on the portions I've read:

 

Regardless of color, the Kindle's main advantage is the extremely long life span of the battery and reader.  You can keep the page of a book "opened" on a Kindle forever.  It draws no current from the battery.  The battery turns on when the screen refreshes to another page, or if there are updates.  There are, of course, inherent flaws to this technology, e.g. very low refresh rates (you won't see eye catching 25 fps animation and video here), no color, etc...  But that's a trade off they had to make for something that really replicates paper.  Even that MIT technology someone mentioned before isn't a "competitor" to e-paper.  I believe that technology is essentially OLED, and Sony is actually working on a flexible, flat, paper thin screen based on it.  The reason it's not a competitor is because it STILL DRAWS CURRENT.  And quite alot of it too.  I might as well just lug around another laptop.  And make no mistake, the new Apple tablet device is just another tablet, it's not going to provide electronic ink capabilities with color, high refresh rates, etc...  That would require LCD technology far outside of our time.

 

I'm not saying to short, cause I think that's crazy to short AMZN right now with all the momentum behind this company, but if you're going to short, use options and go in light.  Don't look for a top, because you'll almost never find it.  Start looking for technical breakdowns, and gradually enter the trade by building into the position as the price trends down.  Remember, every short is a trade and not an investment.  :-)  Use put options to limit your risk.  Hope you make out.

[Ballinvarosig Investors]

I'm not going to defend the valuation of AMZN, certainly wouldn't buy it myself.  However, book value is a really misleading number for this kind of company--I'd go so far to say that book value is almost entirely fictional.  This is true for most companies where their value is more in intellectual property, people and brands rather than assets.  Similar to google, if enough of the right people left, the company starts to struggle and essentially goes into runoff.

I agree, but I'm afraid your example actually further backs my point up! The likes of Google and Apple would have far more intangible assets than Amazon, but yet they have price/book multiples of around 6. For a company to have a ratio of 16, I would be looking for the most incredible business ever. I simply don't see that here.

[Ballinvarosig Investors]

I'm not saying to short, cause I think that's crazy to short AMZN right now with all the momentum behind this company, but if you're going to short, use options and go in light.  Don't look for a top, because you'll almost never find it.  Start looking for technical breakdowns, and gradually enter the trade by building into the position as the price trends down.  Remember, every short is a trade and not an investment.  :-)  Use put options to limit your risk.  Hope you make out.

First of all, I have no intention of shorting any stock, let alone Amazon. You could be waiting several years for the market to correct itself and even then, the most you can ever make is 100%.

 

Secondly, I think you guys are all basing your investing decision over criteria that's really irrelevant. I mean seriously, the available colours of the Kindle, the battery life, whether the unit is touch screen or not, etc; generally, anyone who wants an e-book reader will be buying regardless of these factors.

 

Maybe I can put my argument more simply. Does anyone here think that Amazon can sell 6 times as many books/e-books that they're currently selling to justify the enormous price that the stock is asking? I'd like to remind you, that since 2001, it has taken 9 years for Amazon to merely double their sales. Also, considering Amazon already have 70% market share, they're going to need Americans to start reading 6 times the number of books that they currently read. Is this really going to happen?

[Ballinvarosig Investors]

Ballinvarosig,

 

Under "Another Schroeder Interview" you wrote: "This veneration of Buffett as some kind of once in a lifetime, God-like Superman is really starting to grate on me. My mentor has compounded returns of 80% over a 12-year period. He didn't do anything different than Buffett either, he lived, breathed and drank investing for 12 years. Now I'm not saying that just anyone can do what Buffet can do, but it's nonsense to suggest only Buffett can do it."

 

A statement like that ought to be backed up.  Why won't you respond to the multiple posters asking the simple question of who compounded at 80% annually for 12 years?  

???

 

Relax man, I only visit this site a few minutes each day, so you can expect me to reply instantaneously to anything that's directed at me.

[Guest kawikaho]

I'm not saying to short, cause I think that's crazy to short AMZN right now with all the momentum behind this company, but if you're going to short, use options and go in light.  Don't look for a top, because you'll almost never find it.  Start looking for technical breakdowns, and gradually enter the trade by building into the position as the price trends down.  Remember, every short is a trade and not an investment.  :-)  Use put options to limit your risk.  Hope you make out.

First of all, I have no intention of shorting any stock, let alone Amazon. You could be waiting several years for the market to correct itself and even then, the most you can ever make is 100%.

 

Secondly, I think you guys are all basing your investing decision over criteria that's really irrelevant. I mean seriously, the available colours of the Kindle, the battery life, whether the unit is touch screen or not, etc; generally, anyone who wants an e-book reader will be buying regardless of these factors.

 

Maybe I can put my argument more simply. Does anyone here think that Amazon can sell 6 times as many books/e-books that they're currently selling to justify the enormous price that the stock is asking? I'd like to remind you, that since 2001, it has taken 9 years for Amazon to merely double their sales. Also, considering Amazon already have 70% market share, they're going to need Americans to start reading 6 times the number of books that they currently read. Is this really going to happen?

 

Wow, who said I was talking to YOU.  You seem to be full of yourself if you think this conversation revolves around you.  I was addressing gokou and uncommon.  I don't even know who you are or where you even came from.  And you're serious about compounding 80% for 12 years?  If that's the case, he sounds like one of the greatest investors or traders I've ever heard of.  That's like over 1000x your capital.  Great, let's see the audited results.

[Guest kawikaho]

And, by the way, you can make a LOT more than 100% shorting.  There are other ways to go short without shorting the common with borrowed equity.  C'mon, I'm sure your mentor must've explained this to you by now.

[uncommonprofits]

Secondly, I think you guys are all basing your investing decision over criteria that's really irrelevant. I mean seriously, the available colours of the Kindle, the battery life, whether the unit is touch screen or not, etc; generally, anyone who wants an e-book reader will be buying regardless of these factors.

 

Perhaps there is some confusion.  I am not talking about the colour of the Kindle.  I am talking about the fact that the display is Black & White .... vs colour. Yes, people are going to buy these gadgets.  In fact I think the projection is for 6 million or so in 2010.   Meanwhile, Apple's iPhones are projected to hit 35-40 million in 2010.... with the estimate growing to 80 million in 2012.  And we are only talking Apple (doesnt include Blackberry, Palm, Nokia, Symbian or any of the new Android based phones).  It also does not include the projection of netbook sales .... which are getting smaller (and will eventually have nicer displays). Sure Kindle has a better reader than anyone else at the moment .... but other device makers dwarf their size.  When (not if) these other device makers have products that are more reader like, are available at a lower price point, and/or can do more -- the Kindle may have some significant challenges.  Magnify these challenges big time if the Kindle is still in Black and White (and the new gadgets are capable of an array of colour making the experience magical like).  

 

 

Sorry, guys, I haven't been able to read the whole thread, but here are some thoughts on the portions I've read:

 

Regardless of color, the Kindle's main advantage is the extremely long life span of the battery and reader.  You can keep the page of a book "opened" on a Kindle forever.  It draws no current from the battery.  The battery turns on when the screen refreshes to another page, or if there are updates.  There are, of course, inherent flaws to this technology, e.g. very low refresh rates (you won't see eye catching 25 fps animation and video here), no color, etc...  But that's a trade off they had to make for something that really replicates paper.  Even that MIT technology someone mentioned before isn't a "competitor" to e-paper.  I believe that technology is essentially OLED, and Sony is actually working on a flexible, flat, paper thin screen based on it.  The reason it's not a competitor is because it STILL DRAWS CURRENT.  And quite alot of it too.  I might as well just lug around another laptop.  And make no mistake, the new Apple tablet device is just another tablet, it's not going to provide electronic ink capabilities with color, high refresh rates, etc...  That would require LCD technology far outside of our time.

 

You simply don't know what is out there in development (a lot of this is kept pretty top secret).  If E-Ink were such a great technology .... then all the device manufacturers would be licensing it.  With Prime View paying $250 million for this technology ... they obviously beleive in it.  But as far as I know Kindle does not have a stranglehold on this technolgy.  

 

If AMZN were selling razor blades and only a limited few companies were capable of manufacturing the actual razor ... then perhaps the whole Kindle thing makes sense.  But there is a much larger battle going on out there.  It involves the closed platforms of several handset manfuacters (primarily Apple, Blackberry) vs. the Open Handset Alliance's push for Android.  Either way it works out ... the picture is not very rosy for Kindle.  Kindle can make their display as nice as they can .... but if it's not compatible with other devices ... it's evenually going to get the thumbs down from the consumer.  Why?  Because something will come out that at minimum is 'near comparable' in terms of display .... but has a bonus feature of compatibility with other devices.  In fact this compatibility part is already here (not through Kindle though).... the display experience is the only thing lacking at the moment.  [Hence for now, Kindle gets the thumbs up!]

 

Compatibility is just as important as display.  And compatibility will become an even more important issue as this evolves over time.  Here is an excellent presentation of that evolution:

 

http://www.blip.tv/file/2798840

 

 

UCP / DD

[turar]

I think focusing on Kindle alone when discussing AMZN is a bit misleading. Let's not forget about the core business, that's still growing at over 20%, including the international part of it, which is now almost HALF of all business -- amazon.cn, amazon.co.uk, amazon.de, etc, that's growing even faster.  

 

Regarding cannibalization -- yes, media (books, dvds, music) is about half the business, but the other half (electronics, clothes, etc) is growing much faster than media. Third-party business is significant too. On top of that, web services business is in infancy, but I think it will be large. Not to mention "side projects" like Amazon Fresh, Endless/Zappos, etc.

 

Two more important keys: 1) At its core, Amazon is a technology company, not an "online retailer", and 2) Bezos is a truly long-term oriented manager, almost in value-investing style. Having said all that, valuation is too rich for me as well.

 

[uncommonprofits]

 

Some have figured that the challenges to Kindles e-reader are far out in the future ... leaving them time to adapt their own device.  Below is a link to an announcement today regarding the colour thing I have mentioned.  It is real and coming VERY soon (2010) .... be sure to watch the Sports Illustrated Tablet video Demo: 

http://insidetech.monster.com/news/articles/6698-5-top-publishers-create-color-e-reader-format-to-challenge-kindle

 

When people start seeing some of these other options in 2010 ... they might think twice about the Kindle.  The Kindle has two obvious flaws:

#1 - It's Black & White.  Might not seem meaningful for regular old black and white text; however if you buy an ebook -- don't you at least deserve to see the colour cover!  But work your way up the chain -- for a newspaper or something like Sports Illustrated the flaws in the Kindle are serious.

#2 - Closed Platform.  The publishing industry is pushing for Open.  The Android platform is pushing for this on an even broader basis.

 

The best multi-purpose ereader device to this point seems to be these netbooks.  My wife loves the 10" Toshiba I bought for her birthday.  Some people have mentioned Kindles great battery power ... this netbook of my wife's actually gets around 10 hours.  Don't know what the units such as in that video will get for battery useage, nor their price .... but face it, these things just keep getting smaller, thinner, greater clarity and better battery time. 

 

Seeing some of these newer technologies coming out in 2010 --- my wife's netbook will obviously be ancient pretty soon... but at least she can re-download her library from the Shortcovers cloud..... with any of the new fancy gadgets (of her choosing) in the future!  Try switching to one of these new fancy gadgets when your library is in closed Kindle format ..... you are going to have a BIG problem.  But those are all problems people won't find out until later .... more immediate is the explosion of colourful devices due out in 2010.  Reflecting on Kindle's inferior B&W nature -- it will be interesting to see if they can somehow sustain their popularity in 2010 and beyond. 

 

ucp / DD

[ERICOPOLY]

 

Some have figured that the challenges to Kindles e-reader are far out in the future ... leaving them time to adapt their own device.  Below is a link to an announcement today regarding the colour thing I have mentioned.  It is real and coming VERY soon (2010) .... be sure to watch the Sports Illustrated Tablet video Demo: 

http://insidetech.monster.com/news/articles/6698-5-top-publishers-create-color-e-reader-format-to-challenge-kindle

 

When people start seeing some of these other options in 2010 ... they might think twice about the Kindle.  The Kindle has two obvious flaws:

#1 - It's Black & White.  Might not seem meaningful for regular old black and white text; however if you buy an ebook -- don't you at least deserve to see the colour cover!  But work your way up the chain -- for a newspaper or something like Sports Illustrated the flaws in the Kindle are serious.

#2 - Closed Platform.  The publishing industry is pushing for Open.  The Android platform is pushing for this on an even broader basis.

 

The best multi-purpose ereader device to this point seems to be these netbooks.  My wife loves the 10" Toshiba I bought for her birthday.  Some people have mentioned Kindles great battery power ... this netbook of my wife's actually gets around 10 hours.   Don't know what the units such as in that video will get for battery useage, nor their price .... but face it, these things just keep getting smaller, thinner, greater clarity and better battery time. 

 

Seeing some of these newer technologies coming out in 2010 --- my wife's netbook will obviously be ancient pretty soon... but at least she can re-download her library from the Shortcovers cloud..... with any of the new fancy gadgets (of her choosing) in the future!  Try switching to one of these new fancy gadgets when your library is in closed Kindle format ..... you are going to have a BIG problem.  But those are all problems people won't find out until later .... more immediate is the explosion of colourful devices due out in 2010.  Reflecting on Kindle's inferior B&W nature -- it will be interesting to see if they can somehow sustain their popularity in 2010 and beyond. 

 

ucp / DD

 

Kindle's are different from netbooks in that you can sit outside at high noon on the beach in full sun and still be able to read the words on the screen.  LCD screens are backlit and wash out in direct sunlight.  To the contrary, you can't read a Kindle in the dark and they BENEFIT from full sunlight -- in this regard they are literally no different from a printed page.  Yes, the battery life is a novelty but that's not what make the Kindle a far superior book substitute.  I have been using my Kindle since March 2008... love it.

 

[uncommonprofits]

Kindle's are different from netbooks in that you can sit outside at high noon on the beach in full sun and still be able to read the words on the screen.  LCD screens are backlit and wash out in direct sunlight.  To the contrary, you can't read a Kindle in the dark and they BENEFIT from full sunlight -- in this regard they are literally no different from a printed page.  Yes, the battery life is a novelty but that's not what make the Kindle a far superior book substitute.  I have been using my Kindle since March 2008... love it.

 

You will have to see how much you love it once these new style of readers come out.   They claim to rival Kindle’s gray “electronic ink.”  I don't think they will be anything like a netbook LCD screen.  These would seem to be entirely new technology.  The problem for your Kindle is 'if' you ever want to switch over to one of these more vibrant displays with full colour capablity .... unfortunately you have to leave your Kindle library behind.

 

The point I was making was with this netbook of my wife's --- we could well be wishing we waited a year or so as the choice would seem about to explode with some very new & interesting stuff.  But at least it's not that big of a deal as far as the content she has bought ... it is all fully transportable.  I can understand your decision buying the Kindle back in March/08 ... but for anyone considering one now .... I would hold off to see what these new technologies are about.  

 

UCP / DD  

[Ballinvarosig Investors]

There's a rather whithering article on Gurufocus about how overpriced Amazon is.

 

EBay + Costco + $4bn = Amazon?

 

In October 2007, Crocs (CROX) shares fetched nearly $70 a share giving the company a market value of $6 billion. This for a company that makes plastic shoes! Nothing against plastic shoes, but $6 billion?

 

I remember looking at other $6 billion companies at the time. One example: Whirlpool (WHR). It had the same market value as Crocs. The largest appliance manufacturer on the planet vs. plastic shoes. In 2007, Whirlpool made over $600 million. Crocs? $168 million. But Crocs was growing! Or not. It's lost money ever since. Compare the market values now!

 

Amazon isn't the fad that Crocs was, but its fans are just as devoted. The logic is the same too. I love the product therefore I love the stock. There is little (if any) regard for underlying fundamentals.

 

The current market value of Amazon is $60 billion. For this "price", an investor could buy eBay (EBAY) with a current market value of $30 billion and Costco (COST) with a value of $26 billion. With the petty cash left over, our retail shopper could pick one of the following from the discount aisle:

 

PetSmart (PETM)

Abercrombie & Fitch (ANF)

Supervalu (SVU)

Netflix (NFLX) - just had to include this one

Dicks Sporting Goods (DKS)

 

Each has a market value of $3 to $4 billion.

 

With Amazon, you get a company with $4 billion in net cash and around $1 billion in free cash flow. And don't forget the growth!

 

With our Amazon-alternative, we'd get at least $6 billion in net cash and about $4 billion a year in free cash flow. This portfolio has growth too. If you're not that committed to retail, just buy Disney (DIS) and throw in Dicks for kicks.

 

The Amazon-alternative offers 50% more cash and $3 billion in additional free cash flow for the same price. Time value of money? Growth? Either way, Amazon will never catch up.

 

While Amazon isn't the next Crocs, market value comparisons can illustrate massive disparities. And they sure are fun.

 

Special thanks to Stephen in CT for contributing to this exercise.

 

Disclosure: Short Amazon.

As my mammy used to say, people know the price of everything; but the value of nothing ;D

[twacowfca]

Why should investors assume that Amazon's free cash flow is free?  They get it by squeezing their suppliers.

As they become less popular, the "free" cash flow will become less free.  Make no mistake -- ALL retailers

eventually become less popular because there are few if any durable moats in that industry.

 

Take away their FCF and what have you got?  It's like DELL, a potential for margins that regress to the mean.,

[omagh]

DELL and AMZN have similarities in their generation of cashflow (i.e. derived from income statement (sales) and balance sheet (negative working capital)).  This business model is successful when driving volume sales as the lowest cost supplier in their market. Volume grows quickly since lower costs draw customers away from competitors as buyers switch to the lowest cost offered.

 

But there's a fundamental difference around the character of their contribution margin (http://en.wikipedia.org/wiki/Contribution_margin).  Dell's core product line of device sales has a strong decline in the price/unit.  Even though they drive sales volume, contribution margin per device sold is shrinking much faster than Amazon.  Where people were spending >$1000 per device just a few years ago and >$1500 a few years before that, now devices are well <$1000 and often <$700.  Even with constant gross margins of 25%, the contribution margin per sale shrinks.  With market growth topping out, one of my sisters who worked in finance at Dell left for pharmaceuticals since the decline was becoming apparent at Dell.

 

AMZN is impacted to a much less degree by shrinking contribution margins, but they are being amply offset by the continued growth in sales volumes.

 

-O

 

Why should investors assume that Amazon's free cash flow is free?  They get it by squeezing their suppliers.

As they become less popular, the "free" cash flow will become less free.  Make no mistake -- ALL retailers

eventually become less popular because there are few if any durable moats in that industry.

 

Take away their FCF and what have you got?  It's like DELL, a potential for margins that regress to the mean.,

[uncommonprofits]

Will AMZN get in on any of this?  IF I were a Kindle owner --- I sure would want access to these extra 1.8 million titles!

http://blog.shortcovers.com/2009/12/14/shortcovers-adds-1-8-million-titles-from-internet-archives/

http://finance.yahoo.com/news/Shortcovers-Adds-18-Million-bw-2553771753.html?x=0&.v=1

 

Why should investors assume that Amazon's free cash flow is free?  They get it by squeezing their suppliers.

As they become less popular, the "free" cash flow will become less free.  Make no mistake -- ALL retailers

eventually become less popular because there are few if any durable moats in that industry.

 

I agree.  This will be more about relationships.  I learned a very long time ago that in doing business, your customers are a lot more than just those you sell products to.  A company’s customers are also it’s suppliers, employees, shareholders, etc.  A top class company will do a great job of balancing out all these customer relationships.  The more one looks into AMZN --- there are some very obvious pitfalls.  AMZN’s approach is ‘their way or the highway’ ...  but publishers have started to stand up to AMZN:

http://m.usatoday.com/Money/1148806/full/;jsessionid=EA918CCBBE0E13874E96C104343D36DB.wap2

 

AMZN might just have some viable competition when it comes to digital books.  Shortcovers understands the importance of relationships and also supports all mobile device formats.  Shortcovers would seem to be establishing a key leading role in working out issues with the publishing industry as to how digital content delivery evolves:  http://www.blip.tv/file/2798840

 

A rebranding of Shortcovers is supposedly underway to something called: KOBO(More details are due out tomorrow).  Heather Reisman has put together one heck of a team – they have done a lot in a very short period of time.

 

UCP / DD

 

[bargainman]

Will AMZN get in on any of this?  IF I were a Kindle owner --- I sure would want access to these extra 1.8 million titles!

http://blog.shortcovers.com/2009/12/14/shortcovers-adds-1-8-million-titles-from-internet-archives/

http://finance.yahoo.com/news/Shortcovers-Adds-18-Million-bw-2553771753.html?x=0&.v=1

 

Why should investors assume that Amazon's free cash flow is free?  They get it by squeezing their suppliers.

As they become less popular, the "free" cash flow will become less free.  Make no mistake -- ALL retailers

eventually become less popular because there are few if any durable moats in that industry.

 

I agree.  This will be more about relationships.  I learned a very long time ago that in doing business, your customers are a lot more than just those you sell products to.   A company’s customers are also it’s suppliers, employees, shareholders, etc.  A top class company will do a great job of balancing out all these customer relationships.  The more one looks into AMZN --- there are some very obvious pitfalls.  AMZN’s approach is ‘their way or the highway’ ...  but publishers have started to stand up to AMZN:

http://m.usatoday.com/Money/1148806/full/;jsessionid=EA918CCBBE0E13874E96C104343D36DB.wap2

 

AMZN might just have some viable competition when it comes to digital books.  Shortcovers understands the importance of relationships and also supports all mobile device formats.  Shortcovers would seem to be establishing a key leading role in working out issues with the publishing industry as to how digital content delivery evolves:  http://www.blip.tv/file/2798840

 

A rebranding of Shortcovers is supposedly underway to something called: KOBO(More details are due out tomorrow).  Heather Reisman has put together one heck of a team – they have done a lot in a very short period of time.

 

UCP / DD

 

 

This kind of reminds me of Apple.  After Apple overpowered the digital download industry and took away all their pricing power, they had a much harder time getting into Video..  Apple TV anyone?  None of the video studios wanted to deal with them.

[uncommonprofits]

http://graphics8.nytimes.com/images/2009/12/15/technology/bits-bordersKobo/articleInline.jpg

 

If AMZN was not taking Shortcovers (now Kobo) seriously by today.  Maybe they will tomorrow:

http://finance.yahoo.com/news/Indigo-Spins-off-Shortcovers-cnw-3866547156.html?x=0&.v=1

http://bits.blogs.nytimes.com/2009/12/15/borders-and-kobo-will-develop-new-e-reader/

 

Cheung Kong (Li-Ka-shing) is one of the new investor's in Kobo.  Indigo retains a majority 58% interest.  I like the name of Cheung Kong's subsidiary:  'Instant Fame'.

 

UCP / DD

 

PS: Note the colour theme. $99 ereaders are coming soon.  Kobobooks.com has a catalog of 2 million + titles .... 1.8 million which are FREE!  

 

http://graphics8.nytimes.com/images/2009/12/15/technology/bits-Borders/blogSpan.jpg

 

[Eric50]

Quite an old video (2004) but provides a good background on online retailing and its competitive advantages. The speaker is a former SVP at amzn and quite brilliant.

 

Enjoy

 

http://www.uwtv.org/programs/displayevent.aspx?rID=2005

[uncommonprofits]

More rumours about Apple's ereader/tablet.  Interesting article here -- Apple's iSlate: The Kindle Killer:

http://www.huffingtonpost.com/js-mcdougall/apples-islate-the-kindle_b_407516.html

 

I'm not sure if the Apple iSlate will be the do-all, end-all for ereading devices --- but this quote points out some obvious flaws in the Kindle strategy (some of which has been brought up before on this thread):

By releasing an e-reader so hopelessly tied to the paper, Amazon gave Apple an opening to provide something better. If the latest swirl of rumors is true and Apple plans to release a tablet computer, or iSlate, early next year, you can bet your life it will put the Kindle to shame when it comes to digital content delivery. Any e-ink device simply will not be able to compete. I'm not going to reveal any names, but I have it on very good authority, for example, that--unlike the Kindle--the new Apple tablet will, indeed, have a color screen. Might it also ... play video?!

 

The bottom line is ebooks have barely entered the first inning.  I saw an ereader in Costco the other day for $179 cndn.  LG announced an ereader last week.  So too did iRex (the spun off arm of Dutch Royal Philips) through distribution with Best Buy.   And this is in addition to all the previous announcements from other device manufacturers (including many previously unheard of Asian entrants) -- ereading devices will be exploding on to store shelves throughout 2010.  This war is only beginning.  Kindle's strategy was to win the war (and somehow not cannibalize themselves).  Kobo's strategy is to sell the bullets to Kindle's competition (and that list keeps growing).

 

Just as Kindle's flawed device strategy has allowed an opening for Apple's iSlate (and others) .... AMZN also has a big hole in their content delivery platform by being closed platform and publisher unfreindly.   This has allowed Kobo to quickly move up the ranks with their open platform, any device strategy .... and their close relationship with publishers in how ebooks evolve.  AMZN seems to have placed themselves outside the boardrooms where these industry transformation decisions take place.

 

UCP / DD

[Guest kawikaho]

No offense, dude, but just short them if you're that convinced.  Put your money where your mouth is and do it. 

[uncommonprofits]

No offense, dude, but just short them if you're that convinced.  Put your money where your mouth is and do it. 

 

I would never advocate shorting AMZN (or any stock for that matter).  But given the choice of two jockeys: Heather Reisman or Jeff Bezos? I do put my money where my mouth is: on Reisman! 

[Guest kawikaho]

Sorry about that.  I just re-read what I wrote and it sounded brusque.  I did not mean for it to come across that way--was really tired when I responded. 

 

Anyways, in light of what you wrote, I would counter argue that MP3 players were a saturated market when Apple's Ipods came out.  Till this day, I'm not sure how Apple pulled it off in a crowded market, and still managed to pull ahead even with Microsoft setting its target with Zune.  I believe Ipod vs. Zune was won due to entrenchment, and Ipod vs the earlier MP3 players was won due to design features, iTunes, and Apple's brand name.  We'll see how it plays out with Kindle vs. all.  No amount of analysis is going to determine the winner. 

[jjlin]

http://www.pcworld.com/article/185508/amazon_kindle_is_most_gifted_item_ever.html

 

It also mentions that for the first time ever more e-books were sold than paper books on Christmas day.

 

However, it's impossible to get the exact breakout. Even internally they keep those figures locked down *tight*.

 

Also, imho the single biggest advantage to the Kindle is the ubiquitous cellular network connection, plus the direct tie in to Amazon's catalog. Other readers/devices might be better on a feature-by-feature comparison, but that's missing the point, like all the analyses of mobile devices vs iPhone that fail to consider the immense advantage conferred by the immense installed base of iTunes and the iTunes ecosystem.