Initial skepticism about Amazon's Kindle is being replaced by euphoria: Citi's Mark Mahaney, who was already bullish on the e-book reader, declares that is indeed going to be Amazon's iPod.
In practical terms, that means that Mahaney has gone back and revisited his original estimates from this spring. He now thinks Amazon (AMZN) will sell 378,000 units this year, double his initial guess. And he thinks instead of being a $750 million business that accounts for 3% of the company's sales next year, the Kindle will be a $1.1 billion business that accounts for 4%.
What's changed? No specific data, Mahaney says, because getting real numbers out of Amazon is impossible, and the supply chain is pretty tightly wrapped, as well.
But he's seen lots of little data points: Better reviews of the device on Amazon, the fact that it remains on top of Amazon's best-seller list, etc. And he's also swayed by TechCrunch's recent report pegging sales of the device so far at 240,000. Take note, J-school seminars -- the following comes from a well-regarded Wall Street analyst:
We acknowledge being “out-sourced” by TechCrunch. But we believe the 240K number was well-sourced and believe reports of 40,000 shipments a month may also be reasonable.
Mahaney's projections are not predicated on Amazon releasing a new version of the device this year. But they are predicated on the Kindle moving 150,000 units in Q4 -- something that's only going to happen if the Kindle becomes a must-have holiday gift. But he figures that's a relatively modest bet, given the success of other gadgets in years past:
And if that pans out, Mahaney argues, the Kindle will be well on its way to becoming a mainstream success. We're eager to see e-books work, so it'd be nice if this happens. But we still think that there's a fundamental difference between the Kindle and the iPod that will slow adoption: iPod users immediately had access to thousands of songs they already owned the minute they synced their machines to their computers. And they could get anything else they wanted for free (if they chose to steal). Kindle users, however, are pretty much forced to pay up to $9.99 each time they want a new title. That's a substantial discount to hardcover prices. But given that they have to lay out that much on top of buying a $350 machine, we think that makes it a different proposition.
That said, here's the way Mahaney is modeling the machine's impact on Amazon's top line for the next few years:
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