Kindle: Hostage To Its Own Fame

Amazon (NASAQ: AMZN) announced that it would begin to sell its Kindle digital  book reader in some Target (NYSE: TGT) stores. The news was viewed as a big “win” for Amazon, which has been besieged by publishers who believe it charges too little that it sells electronic books and the perception that Kindle  sales will be badly damaged by the launch of the Apple (NASDAQ: AAPL) iPad.

The Target news really does not mean much. Almost no one who reads books regularly is unaware of the Kindle and Amazon’s online book store.

Some of the new readers are not at all well-known. Among those are the Barnes & Noble (NYSE: BKS) Nook and Sony (NYSE: SNE) eReader. Both of these and any attempts by PC companies to turn their laptops into digital book viewers have been unsuccessful, at least compared to the Kindle, which experts believe has sold over three million units since its launch in March 2009.

The broad awareness of the Kindle and the fact that it can be purchased on Amazon.com makes whatever bricks-and-mortar deals it does of very little use in improving units sales. Its $249 price point is well below that of the least expensive iPad which retails for $499. The fight that the Kindle must fight is based on its features compared to the iPad which is essentially a tablet computer shaped like a large iPhone.  Consumer research firms have also reported that many people will not buy any e-readers at their current prices.

Apple has sold more than 500,000 iPads, viewed as the Kindle’s only real competitor, so far and the product is such a success that Apple has a backlog of orders and has had to delay the launch of the product outside the US.

The Kindle will not gain new sales by better or more costly marketing. It cannot improve an image and brand which are already well-established. The product will need to stand on its own because win or lose the Kindle is too famous to gain sales by tapping new markets.

Douglas A. McIntyre