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Is Amazon.com’s (AMZN) Kindle Already Irrelevant?

7 July 2010 2 Comments

Amazon.com (AMZN) has a major uphill battle for the long-term viability of its Kindle product.  With the release of the Apple iPad – a far superior product in my opinion – Amazon is most likely feeling the heat.  Amazon has recently updated its Kindle DX product with a new graphite finish and a price cut down to $379.  Amazon also cut the price of the Kindle to $189 in an attempt to compete effectively on price.

Don’t get me wrong, the Kindle is still a great device for individuals looking for a pure e-reader.  The screen technology makes reading a pleasure on the device.  But, the lack of versatility (no video & limited web browsing) is likely to move most consumers to the iPad.  Apple’s success in its recent products is in that its devices bring together many important functions into a single device (convergence device).  The iPad continues this trend, the Kindle fails to do so.

Just a side note, I’ve already seen more iPads in public in the short months it has been available than I have seen Kindles in public over the last couple years.  Interesting observation?  You be the judge.

In today’s world of limited attention span, 24 hours news cycle and consumer electronics that seem to do everything, the Kindle seems to be already approaching irrelevancy.

As an investor in Amazon.com, this news may or may not be of much importance.  Amazon.com does not break out its Kindle revenues from its overall revenues, so it is likely that the Kindle impact to their bottom line is minimal.  With that said, the Kindle did have a great deal of hype and investors hoped it would bring a separate channel of growth and profitability.  If you’re looking at long-term, investors should be cautious to assume that the Kindle will do much for the stock price moving forward, especially with Amazon.com typically trading at higher P/E ratios already.  If you’re looking for such growth, maybe you should consider investing in the company responsible for potentially killing the Kindle, Apple, Inc. (AAPL).

2 Comments »

  • Laughing_Boy48 said:

    Investors must love the Kindle. They keep kicking the stock up higher and higher. Kindle sales seem to be more relevant to Amazon than the iPad is to Apple as far as investors are concerned.

  • Vincent Johansen said:

    I think the Kindle (and other eReaders) will remain popular – I think there's definitely a niche for a device that does a single thing, yet does it well. Having a lot of functions is great, but can lead to more problems (simple laser printers vs. printer/fax/phone/copier/etc. devices for example).