Some reports today suggest that Kindle Fire sales will cut into sales of Amazon’s other Kindles. For a variety of reasons, though, it’s too early to say that lower-priced color tablets are affecting black and white e-reader sales.
First of all, here are the reports from today:
» Goldman Sachs analyst Heather Bellini “sees non-Fire Kindle shipments in the first quarter down 44 percent sequentially from Q4,” reports Forbes. “She now sees non-Fire Kindle shipments this year of 25 million units, down from [Goldman’s previously projected] 35 million.” (Meanwhile, Goldman Sachs expects Amazon (NSDQ: AMZN) to sell 19.2 million Kindle Fires in 2012.)
» Barclays Capital analyst Anthony J. DiClemente expects Amazon will sell 23.5 million Kindle e-readers and 15.3 million Kindle Fires in 2012. DiClemente writes, “While there is potential for cannibalization on the higher end of the Kindle eReaders as many first time buyers could trade up to the Fire, given tablet users are likely to consume more media-not just e-books-and tend to shop more overall, we view this as a positive outcome. That said, we believe dedicated eReaders and Tablets can continue to coexist as bifurcated markets as each have their benefits-like the non-glare screen of Kindle eReaders-and certainly price points.”
» Finally, the Taiwan-based E Ink Holdings, which provides the screens for black-and-white Kindle e-readers, “reported worse-than-expected sales for December,” according to news site FocusTaiwan. (Link via Publishers Lunch Automat.) “E Ink reported Friday its December consolidated sales totaled NT$1.59 billion, down 55 percent from November and also down 57 percent from a year earlier.” This appears to suggest that fewer people are buying dedicated e-readers now that lower-priced tablets like the Kindle Fire and Nook Tablet are available.
Combine the Barclays and Goldman Sachs estimates with E Ink’s decreased sales–plus Barnes & Noble’s announcement last week that it sold many fewer Nook Simple Touch black-and-white e-readers than it had projected this holiday season–and it may seem as if the future for dedicated e-readers is somewhat bleak. But it’s too early to say that e-ink readers are dying out. Here’s why (beyond the obvious reason that Amazon doesn’t release Kindle sales figures, so Barclays, Goldman and everyone else who guesses about Kindle sales really is just guessing):
» Barclays and Goldman both project e-reader sales to be higher than tablet sales next year; Barclays projects Kindle e-reader sales will remain higher than Kindle Fire sales through 2014. (I don’t have the actual investor note from Goldman so I don’t know what Goldman projects through 2014.)
» We don’t have much information yet on how consumers are using the new lower-priced tablets and we don’t know if the people who buy tablets are the same people who buy dedicated e-readers. Various reports that e-reader users and iPad users are different demographics, but since lower-priced tablet users and iPad users may also be different demographics, the findings from the iPad/e-reader reports don’t necessarily transfer. Many of the reasons a user might prefer an e-reader over a tablet would be the same, though, whether the tablet is an iPad or a Kindle Fire: E-readers are cheaper, smaller and lighter and their screens don’t glare.
» Today Barnes & Noble (NYSE: BKS) announced a new promotion: Users who purchase a one-year subscription to the New York Times (NYSE: NYT) Nook edition get the Nook Simple Touch black-and-white e-reader for free (or a $100 discount on a Nook Color; or, if they subscribe to the Nook edition of People for one year, they get a discounted Nook Tablet). This is just the very beginning of retailers using free devices to sell content, and we are sure to see more promotions like this soon–a free Kindle e-reader for Amazon Prime members, perhaps, or a variety of other scenarios like that. That could lead to a much larger base of e-reader users, even if they didn’t buy the e-readers themselves.