In an interview with John Markoff and David Pogue, Steve Jobs explains why he doesn’t think Kindle will do well:
“It doesn’t matter how good or bad the product is, the fact is that people don’t read anymore. Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.”
I don’t know the numbers, but I’m guessing that Steve Jobs is suggesting that 60% of American adults haven’t picked up a book at all in the last year. Could be, but then what’s he really saying here? That Amazon can’t make a business of selling books because too few people read them?
Hmmm.
This is their market after all. My guess is that of Amazon’s customers a large portion read and buy books. So what’s going on here with Kindle is that Amazon is selling a premium product to its customers. Seems as a reasonable upstream approach for them.
Time for some numbers. There are 300+ million people in the US. Of those, I think I’ve read that about 70% are adults. So that’s about 210 million. Now taking Jobs’ 40% number, that gives a market of approximately 80 million adult book readers. From these, let’s say a third are avid enough readers that they’d be interested in a Kindle type device. So now we’re down to 24 million or so. And then let’s figure that 2% of these people each year might actually purchase one–that’s about 500K units a year. At $400 each that’s a couple hundred million a year in revenue. Not bad.
Of course, Amazon can go the other way with this calculation and start with its number of top book purchasers and take a percentage of them to see if it’s a big enough number. To me, I’d take the risk even if it weren’t. But that’s just me.
Loren,
I think you read this wrong…if Jobs is correct (which I doubt), and 40% of the American population read 1 book or less, than that means that 60% of the American population read MORE than one book last year.
60% is an amazing figure, but think about it. People who read books, read books. Those in the 1 book or less category are not Amazon book customers anyway…they’re producing this product for the typical book reader, who tends to find more than one book a year that intrigues him or her. Books are like potato chips…nobody can stop at just one!
Yeah, I wasn’t sure if this is what he meant or not. This would make a Kindle device sound even more useful to people. I tried to take the “lower” case just to see if even it would be worthwhile–which I think it would be.
What’s funny is that a bunch of people are guessing that because Jobs was putting down eBook devices, that this means that Apple is going to get into the game. (He’s done this in the past, with phones, for instance.) This could be. If Apple makes a slightly larger sized iPhone/UMPC device, there probably would be enough screen real-estate for an eBook reading app. With Apple design sense this could be quite interesting. My guess is if this is going to happen that we’ll see something this year as Intel rolls out its miniature Silverthorn processor.