Amazon, Show Me the Kindle Demographics!

Amazon, Show Me the Kindle Demographics!

Summary: Amazon's continued secrecy about device sales and demographics will become an ongoing issue unless the company comes clean about who their core audience really is.

SHARE:
TOPICS: Amazon
67

Amazon's continued secrecy about device sales and demographics will become an ongoing issue unless the company comes clean about who their core audience really is.

Yesterday, Amazon CEO Jeff Bezos told USA Today that he was "stunned" by the volume of Kindle e-book sales. Within the next nine to 12 months, he expects that sales of Kindle e-books will surpass paperback and hardcover sales combined. 140 Kindle e-books are now being sold for every 100 "real" books at Amazon.

That's a major achievement for the online bookseller and retailer. But it doesn't tell us the entire story.

Indeed, the content at Amazon has been flying off the digital shelves. The problem is that the entire story as it is being told by the company doesn't completely add up.

Now, I'm not going to deny Bezos his disclosed ratio of real books to e-books being sold. I'm going to accept them at face value, without question. What I am concerned about as it affects the Kindle hardware platform's viability is WHO is generating those sales figures.

To date, Amazon has never disclosed how many Kindle devices it has sold. And while it has consistently boasted of huge volumes of content sales, it has never disclosed what the demographics are of Kindle users and the content that generates those sales. We don't even know what percentage of iPad users are buying Kindle books versus the device owners.

And there's a whole bunch of other things we don't know, which includes the comparison of gross revenue from hardcovers versus e-books at Amazon, and what the statistical breakdown is between self-published and publishing house material, and what genres of material are doing the best.

However, in my mind, the biggest indicator as to the true health of the Kindle hardware platform would be the total percentage of Kindle devices in the wild which are generating most of the content sales. And we have absolutely no idea what that number is.

From my experience, I know that the Pareto Principle is frequently a factor in not only business problem determination but also one which comes up in economics frequently as well. So I think it is certainly plausible that somewhere around 20 percent of Kindle users are generating 80 percent of the platform's sales.

Why would this determine if the hardware platform has a good prognosis or not? Because if Wall Street and Amazon's investors actually knew this, and understood how dwindling margins on the hardware affect profit, then as a hardware platform Kindle has very little to look forward to no matter how well the content sales business is doing.

Why do I think the Pareto Principle comes into play here? Well, as someone who knows a bunch of bookish people who own Kindles and other eReader devices, I know that they are "super reader" types that can consume upwards of 20 books a month. However I also know that these people are probably in the minority.

Many people who have bought Kindles probably bought it initially for the coolness factor, and lot of them are only occasional or light readers have probably shoved their eReader into a shelf somewhere, such as that of own ZDNet Education Columnist, Chris Dawson's.

We know that America, as a nation, is not really big on recreational reading. Ask any educator or librarian and they'll tell gladly tell you the hard and cold facts about the sad state of recreational reading among Gen X and Gen Y. Most hardcore readers are 40 years old and older. Way older. And even among that group, they are a minority.

If only 1 to 2 million active Kindles are in the wild -- and by virtually every analyst's estimate, there are now easily two times more iPads than 33 months worth of Kindles in just the first three to four months of iPad sales -- then it would be safe to assume that if every single Kindle owner bought one book per quarter, then at least 1.5 million books would be sold every quarter.

That's not a realistic number since we know that there's probably a "core" group of Kindle owners that is generating most of the sales, but humor me for a minute.

If 1.5 million registered Kindles exist in the wild and we apply the Pareto Principle, then 300,000 Kindles are generating 80 percent of the platform's sales. That doesn't look particularly good for a revenue growth model if eventually the margins on the devices falls to zero.

Amazon cannot continue to make money on Kindle if such a small percentage of their users are generating most of the sales. It means as a content distribution model it makes a great deal of sense for them to get their software out to iPads and Android Tablets, but to depend on such a small group of device owners to generate most of their their sales? I dunno.

If I'm wrong -- and I really hope I am in this case -- then we've got nothing to worry about from Kindle as a device platform. If a broad distribution of Kindle owners are really generating huge volumes of sales, and things aren't as lopsided as I am proposing, then Amazon, show us the Kindle demographics. But if the company continues to be secretive about these things, then we can only assume that there is a big reason why they aren't telling us, and we have to assume the worst.

Does the Pareto Principle apply to Kindle e-book sales and is Amazon afraid to reveal its demographics and sales volumes for a reason? Talk Back and Let Me Know.

Topic: Amazon

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

67 comments
Log in or register to join the discussion
  • Why do you care? Does Amazon?

    I've read numerous articles by authors who scream for Kindle sales figures.

    Amazon is a buisness. If the Kindle loses significant money for them, they'll drop it. If not, they'll keep it.

    Frankly, I don't see Amazon giving two shits that you want their Kindle sales figures.
    trickytom2
    • RE: Amazon, Show Me the Kindle Demographics!

      @trickytom2

      I agree - who cares? Two comments:

      When I travel, the bulk of my laptop bag is taken up by my laptop, and one or two books to read on the plane and in the hotel. An iPad doesn't have sufficient computing power to replace my laptop, but a Kindle can replace the book(s). IMO that's not a negative for iPad but it's a definite plus for Kindle.

      I've said for years I would never buy a device that ties me to one merchant, be it iPod, Kindle, Nook, etc. However, between the fact that I can easily read Kindle books on any device, and the newly lowered price of the Kindle, I've changed my thinking and ordered one of the new models. As Tom says, I trust Amazon to make their own business decisions. I think Kindle has reached a point where it's here to stay, but whether or not it's profitable for Amazon doesn't matter to me one way or the other.
      1DaveN
    • It's also a reality that a product which sells great guns

      is bragged up by the company as a success story. Especially a publicly traded company. Because it makes the company more attractive to investors.

      You can make book on the fact that Kindle sales suck, precisely because Amazon won't tell you what the sales numbers are.
      frgough
  • e-Reader Poll Says it all.

    Give it up Jason. There is a market for dedicated e-Readers.

    Just look at the ZDnet poll by Jason Hiners. 85% of the people polled say there is a place for dedicated e-Readers.
    kyron.gustafson@...
    • RE: Amazon, Show Me the Kindle Demographics!

      @kyron.gustafson@... Yeah, well, New Coke and the Edsel were developed after extensive professional market research said that they'd sell like hotcakes.

      And you're citing an on-line poll with no sample control?

      With that kind of self-selection, i would wager that out of "I want one" people and "Who cares?" people, a higher percentage of the first group voted than did from the latter.
      fairportfan
      • Nice hard facts.

        @fairportfan

        Oh, well, if you "would wager", that's good enough for me, considering that you're not really wagering anything.
        trickytom2
  • Ongoing Issue?

    I think this is your issue, Jason. Nobody else seems to care. Most people pick a device and go about their lives, independent of Amazon's Kindle sales.

    What are you going to do with the data? Present to their Board?

    "If I?m wrong ? and I really hope I am in this case ? then we?ve got nothing to worry about from Kindle as a device platform."

    WTF? Have you been "worrying" about the Kindle? Does it impact your life, somehow?

    Again, if the device is wanted, it will succeed; if not, it will fail. Stop worrying about it.
    trickytom2
    • RE: Amazon, Show Me the Kindle Demographics!

      @trickytom2 It seems like the one who is the most emotionally affected is you, Tom. I'm simply making the same observations that many other analysts have and collected them. A lot of people care about these issues from a pure business perspective, particularly the publishing industry.
      jperlow
      • Perhaps...

        @jperlow

        If you HAD the sales-figures, we would read them, but you're spending time telling us about sales-information you aren't able to get. When you get the sales figures, we'll read them.
        trickytom2
      • Really? The publishing industry cares about hardware sales...

        @jperlow
        and not content sales? I'm somewhat surprised by this.
        ericesque
      • RE: Amazon, Show Me the Kindle Demographics!

        @jperlow

        You still haven't explained why you cared enough to write an article about it.

        I have to agree with some of the other posters: Who cares? It's Amazon's business, not yours.
        aep528
      • I think that . . .

        @jperlow

        in this case it's a valid question for you Jason. You are the one who keeps using the word worry. What's up? Are you having second thoughts about the iPad? Does it bother you that if e-readers take off, that somehow it negates your reasons to get an iPad?

        Don't worry about it, and don't obsess over it. If the market happens, it happens. looking at the new Kindle price, I may just get one (My B-day is on Wednesday . . . :) ). Or a nook, since I've already started translating my library to ePub ('Course, most of it is in .prc already, so you can see my quandry).

        Unless of course the new slates (Android or W7) turn out to be pretty good, then all bets are off . . . .
        JLHenry
      • RE: Amazon, Show Me the Kindle Demographics!

        @jperlow It's e-books, not e-readers that matter. Who cares how many Kindles sell? Even Amazon doesn't care a whole lot, since they're giving away Kindle software for other hardware platforms -- which is as likely to eat into Kindle sales as it is to boost them. It's a sensible strategy, given, as you yourself point out, that margins on hardware tend to fall. However, the potential size of the market for e-books is at least as big as the current size of the market for books, magazines and newspapers put together. How many e-books do Amazon have to sell to make more money out of the content than out of the device? Probably not many. Amazon, I'm sure, would like to be the dominant channel through which electronic books, magazines and newspapers reach readers -- and you have to admit, they're in with a chance. If you're looking for someone to worry about, why not worry about IKEA instead? What's going to happen to sales of their classic Billy bookcase when all this pans out?
        Xenia Onatopp
  • RE: Amazon, Show Me the Kindle Demographics!

    I'm wondering why people like trickytom2 and kyron.gustafson are so worried about this... personally I'd like to know how many of the Kindles Amazon is selling too.
    athynz
    • Not worried...annoyed

      @athynz

      I want' meaningful articlesk, not these "sales figure" articles that seem to have been creeping into ZDnet lately.

      Personally, I could care less if Amazon never sold another unit; I have no attachment to the company, which is why these articles annoy me. If this was an investment-site, I could understand it, but its not.
      trickytom2
      • RE: Amazon, Show Me the Kindle Demographics!

        @trickytom2 I have to admit I'm curious to see how many they have sold - just for shits and grins really... but I do see your point.

        But how many articles here recently have been meaningful and how many have been nothing more than clickbait? This one isn't too bad but there are some that are quite annoying - it's like if the word Apple is in the headline it's almost guaranteed to be clicked and commented on hundreds of times.
        athynz
    • RE: Amazon, Show Me the Kindle Demographics!

      @athynz
      They're not worried. It's the complete opposite.

      Why would you like to know?
      ericesque
    • This is a case of . . .

      @athynz

      How many razors did they sell? Who cares, if their profit is in the blades, and other razors can use their blades . . .
      JLHenry
      • RE: Amazon, Show Me the Kindle Demographics!

        @JLHenry I could care less how many razors they have sold - I would like to know how many Kindles have been sold...
        athynz
      • Are we . . .

        @athynz

        Being particularly dense today? I used what is commonly referred to as an analogy, using Razors to denote kindles, and blades to denote books . . .

        And if THAT was your attempt at sarcasm, well . . . Let's just say that you should keep your day job, 'Kay?
        JLHenry