Many well-intentioned members of the TeleRead community would disagree with me.
They insist that the use of a statistic showing a tripling of Kindle unit growth rate wasn’t a misleading approach in an Amazon news release (about the benefits of a Kindle price drop to $189 from $259).
I’m confident the meaning of the stat was clear to accountants and other numbers whizzes, including those with whom we’re blessed. Here’s to commenter power! To his credit, TeleRead’s editor changed the headline when the nuances or more-than-nuances emerged.
Still, we’re just one blog. I still worry about the world at large, including ordinary people interested in investing in Amazon stock or consumers wondering about the longevity of the Kindle format.
Now, to the list of misled news organizations, we can add the New York Times. Here’s what staff writer Claire Cain Miller wrote: "Apple says it has sold 3.3 million iPads since introducing it in April. Amazon does not release Kindle sales figures, but says that sales tripled in the month after its last price cut."
Given the mention of the iPad, the “tripled” clearly referred in this case to Kindle hardware (rather than book sales). But Ms. Miller, isn’t that different from the growth rate of hardware sales? A tripling of 0—a hypothetical growth rate—would be 0. That’s an exaggeration, but you get the idea. Bacteria multiply fast; but, as I’ve written, their colonies do not instantly become the size of Alaska. Either directly by reading the news release or through Ms. Miller’s faith in the Los Angeles Times, Bloomberg, the CBC or other news organizations misled by Amazon, she, too, came up with misinformation. Amazon’s defenders can vent all they want about news organizations. But I daresay that reporters as a group are probably smarter about basic business matters than are average investors.
The bottom line is that Amazon needs to release actual sales numbers, just as Apple did (in effect shooting down arguments that the vast Bezos empire would vaporize if this precious information ever reached the public prints). And even if the SEC can’t legally force Amazon to disclosure total sales numbers, it can at least recommend doing so. Same for unit sales numbers and the actual growth of earnings in the one-month period Amazon mentioned. Even if the growth in the month after the price reduction, as opposed to the growth rate, was 40 or 60 percent, that’s a considerable difference from the “three times.” Is such a gap why Amazon won’t give us the full story? I would hope not. But if nothing else, an informal SEC request would set a healthy precedent, which the American stock market badly needs, given the reluctance of investors to invest in it. Who knows? Maybe the law can be changed to require these missing numbers.
No prejudice against the Kindle, by the way, despite Jeff’s prejudice against helpful financial disclosure and the ePub e-book standard. I’ll repeat for the zillionth time: Amazon has many positives, and I’m a steady customer. I’ve just preordered a K3 in the interest of enjoyment as well hands-on insights for TeleRead and elsewhere: I love the idea of a higher-contrast screen. I still hope that Jeff will do standards someday and will aggressively encourage publishers either to drop DRM or use social DRM, so Amazon e-books are more ownable for the long term.
And meanwhile, here’s a message to the New York Times. Start running comments with all news articles, just as TeleRead does with its blog posts. Make it easier for readers to correct you quickly when you’re wrong. Everyone, and I’m easily no exception, messes up at one point or another.
Detail: The exact sentence in the Amazon news release was: "’We’ve reached a tipping point with the new price of Kindle–the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189,’ said Jeff Bezos, Founder and CEO of Amazon.com."
(Posted at 8:26 p.m. EST. Time stamp altered to keep the microphone-related Kindle item closer to the top of this blog.)
David mentions me in the third paragraph of his post and I want to make it very clear that I DO NOT AGREE WITH ANYTHING DAVID SAYS ON THIS ISSUE. I also deplore David’s incessant Amazon bashing. My changing the headline was only done because I quoted the Amazon press release incorrectly in the original headline and I just restored it to the original Amazon text.
No matter how much I may disagree with David, TeleRead is a forum for all points of view and so David’s post is welcome here. Just as long as he doesn’t imply that I agree with him on this issue in any way at all.
Paul, what’s good for Apple ought to be good for Amazon. Corporate disclosure in these cases is helpful to both investors and consumers—as an informal precedent if nothing else. Plenty of people lost plenty of money from the Great Net Bubble because they lacked key information. I was tempted to mention you by name as disagreeing about Amazon and disclosure, but went with “well-intentioned members of the TeleRead community” instead to avoid getting into personalities. I agree that the correction issue is different from the disclosure issue although this is one more example of the trickiness of Amazon’s release. Raw numbers would have been much better. As for Amazon bashing—well, I call ’em as I see ’em. I’ve made clear that the company has many positives and that I am buying a Kindle 3 for enjoyment, too, not just out of duty (both are factors). Meanwhile thanks for letting me have my say in the tradition of TeleRead. What a boring site if we all agreed!
David
Thank you Paul for speaking out.
SEC rules and guidelines are clear: meaningful corporate activity must be disclosed; there is no requirement for specific details of component parts of a business.
Apple absolutely has to report unit sales of Macs, iPhones, iPads because these are very significant portions of revenue. Q2 sales of iPads could easily exceed $2 billion.
But for Kindles? Even assuming 1 million Kindles in Q2, that’s barely $300 million … on $6.5 billion sales for the quarter. For investor transparency, certainly Amazon needs to talk about the e-book business; but there is no requirement to disclose figures and good competitive reasons not to. The competitors are NOT Apple — they are B&N, Sony, Borders.
There’s not a shred of evidence Amazon misled anyone (who actually read the press release) about what it was saying. Invoking the SEC to force disclosure of such numbers, or change the law to force disclosure of minor sales figures of corporations is misguided.
Alexander, I’m not accusing Amazon of anything beyond lack of full disclosure and clarity. But in themselves, those are worthwhile causes—remember when AOL was considered a solid investment? As I keep saying, what’s good for Apple is good for Amazon. Apple normally is just as secretive as Amazon. Why the devil won’t Jeff Bezos back up his boasts with the raw numbers just as Steve Jobs did with Apple’s report of 3 million iPads sold? Again, no evil claimed—other than the fact that not one but a bunch of media outfits have been misled (NYT included), raising the possibility that investors have been, too. No matter what the current law says, it would be appropriate for the SEC to request voluntary disclosure of the raw numbers.
Thanks,
David
@David: The point to bear in mind is that full disclosure is *not* required for what is still a small part of Amazon’s business. For all its visibility in certain circles, from an investment point of view, it only amounts to a small piece of the pie. The success or failure of the *stock* does not hinge on Kindle. That is what the SEC is concerned about. It is no different than, say, Microsoft’s failure to report sales numbers of Zunes. Lots of people would like to know how much money MS makes or loses on Zune’s 10% market share. (Mostly to make fun of them.) But MS simply reports division level revenues so Zune profits or losses are subsumed behind XBOX profits. Which temselves are barely 5-10% of the corporate take.
AOL, on the other hand, sold just two products; reselling internet access and Ads. One was capital intensive, the other very high volume/all-margin. When Google made off with the bulk of the ad business they lost their profit center and what remained was the internet access cost-center. Time-Warner didn’t do their homework.
The purpose of PR puff pieces is simply to get free advertising from the press. A properly-written one will tell consumers “a lot of people buy our product” and it tells competitors “we’re doing well so any gains you’re looking to make aren’t coming off *my* hide”.
Now, if Amazon were hyping their *stock* or claiming Kindle sales were growing the *company*, then I suspect the SEC might have a reason to question them. But hyping a still-immature product, regardless of visibility, is hardly actionable.
If anything, I think Amazon’s PR Dept probably gave a bonus to the copywriter who came up with that phrase; it’s kept the story alive for a whole week now. That’s good work in a business where Preleases are gone in 60 seconds.
Thanks, Felix. This is why I keep saying “voluntary,” since the law doesn’t necessarily require disclosure. But since Jeff wants to build his business around e-books, the raw numbers are important whether or not a law applies. I know. Jeff is offering the Kindle format on the iPad, etc. But the Kindle hardware itself still matters. If Kindle-format books are outselling paperbacks at Amazon and Jeff is counting on this in the future, it would be helpful for investors to know the actual unit sales numbers for the hardware. Combined with the tricky phrasing whose nuances escaped even the NYT, the absence of the raw numbers added to the confusion.
Best,
David
Speaking as someone who might want to invest strictly in an ereader, knowing what the unit sales of the ereader will effect whether I will purchase a specific model. Since Amazon has refused to release unit sales, I have refused to purchase a Kinlde.
Just my way of refusing to be led into anything. If I can’t know how many they are selling, then I will not trust that the hardware will be supportable into the future.
Just someone who loves to read, AKA a Consumer.
Susie
David,
—- “Why the devil won’t Jeff Bezos back up his boasts with the raw numbers just as Steve Jobs did with Apple’s report of 3 million iPads sold? —-
Boasts? As one who checks stats, I can attest to the extreme interest in the Kindle after they lowered the price. And the interest since the new Kindles is causing even greater spikes. I don’t doubt sales tripled beyond what they were before, which I suspect was a not sky high number.
Why use Steve Jobs as the standard. This is exactly what he wants — for those who who want to see a false battle between the iPad and a ‘killing’ by it of the Kindle.
You’d be comparing figures for a device that is a MULTI-functioned do-all to one that is a niche product for one action primarily – reading. Of course Apple’s would be off the charts relative to a Kindle device in b&w, of no interest to those whose interest is primarily in videos, the Web, games, and graphics.
The equivalent Apple with 3G in it (not free as with Amazon but $25/mo. for a decent amount of web use) is $629 at the lowest storage. But color webbing and video is sexy and fun, while b&w reading is not sexy to too many 🙂
There’ll never be a big market for e-ink reading but I am sure there is a solid small one that has been increasing once people saw how difficult it is to use the iPad to read (with its otherwise beautiful reader) when in daylight with that glossy screen. People who can afford such devices are getting both.
Why would the raw numbers be that important in Amazon’s case where we’re talking about less than 5% of the business? Others have pointed out that Kindle device sales are a very small part of Amazon’s total numbers while Apple’s are a heavy part of theirs. So the effect of the number of sales is much smaller for an investor. Bezos says it’s for strategic reasons and I believe that. B&N was seriously hampered by not knowing (or giving it much credit) and was caught extremely short during Christmas which was a boon for competitors.
What counts quite a bit is the percentage of e-books sold. Christopher Null, a technology writer for Yahoo! News, Technology, writes that of the 1.14 million e-books sold by James Patterson, 867,000 of them were sold for the Kindle platform.
That should be a very good indicator if you’re looking at the effectiveness of the Kindle e-book market.
You mentioned:
— “If Kindle-format books are outselling paperbacks at Amazon and Jeff is counting on this in the future, it would be helpful for investors to know the actual unit sales numbers for the hardware”—
Kindle books were said to be outselling hardcovers at Amazon (and at Amazon only), a much easier feat than outselling paperbacks. Bezos said on the Charlie Rose show that he thinks they’ll outsell paperbacks as well within 2 years, I think. In the meantime he’s made it so Kindle books can be read without owning a Kindle and read on every kind of device type by other vendors.
NYTimes was not actually ‘misled’ they may be putting more emphasis on tripled sales than you feel they should — you’re rightfully worried that Amazon’s wording was vague and ‘tripling’ doesn’t mean much when starting with a low number. Nevertheless, it very well could be tripling after the price change, and most have been aware the Kindle is selling quite well despite the iPad, to much surprise.
Read forums everywhere that are concerned with other things such as knitting, cooking, and you’ll see the Kindle coming up often with many already having them and others eager to get them.
A British columnist in America asked on Twitter if people had ever seen a Kindle in the wild — people don’t bring them out as much because unlike smartphones, they don’t ring and cause people to show them off. But they’re seen quite often even then, now. On a trip I took to Egypt and Jordan in Oct-Nov, there were 10 of us on a Nile cruise and it turns out, though most of us didn’t know one another, that of the 10, 6 HAD Kindles (though weren’t showing them anywhere) and two of the others had tried to buy them in Israel but were unable to get them in time for Egypt. (They’ve since bought them since returning to the States.)
I think that unlike the iPad, it’s not a device one pulls out in public places except on trains or waiting rooms.
Susie,
There’s zero reason for you to get a Kindle. I personally would not go by how many were being sold because that reminds me of the Lemmings story but I do pay attention to actual features and functioning of the unit — the latter being especially important, as feature lists actually tell little.
$189 or $139 for an ereader becomes less of a concern as an ‘investment’ but if one is not drawn to what the device can do, there’s just absolutely no reason to get one.
I’ve seen a few Kindles (and one Nook) in the wild: at a movie theater for pre-movie reading, at a bar, and seated on a bench watching over kids in the mall at a play area (the Nook). And at one point someone brought one out in the public library to show me as he saw my iPad.
Andrys,
For those of us who actually have to save for several months to afford an ereader without massively eroding our ebook purchasing, then the word investment is appropriate.
I have been considering purchasing since the day that the price was dropped to $189, and yet I am still in the process of saving. I know that I will not have the money together, if all goes well, until October or November. That being the case, I will more than likely go with a Nook. Kindle, although very trendy and useful, is being sold by a complany that refuses to let me, the consumer, know much about their device sales. Nook, however is supported by more libraries and also has similiar features to the Kindle. Nook also has the advantage of seeming to be supported more thoroughly by their parent company. At least if I can go by sales reports and support through physical stores.
It mostly comes down to ease of use and trust. Kindle and Amazon aren’t earning either for me right now.
We’re not done with this argument? The only real change here is this was done with more self-discipline, and the fact that the New York Times also has at least one reporter who doesn’t know how to read.
The news report was accurate (as far as we know). It was designed to help Amazon. It theoretically did.
Amazon apparently doesn’t think releasing its sales numbers will help Amazon. So it doesn’t. As much as you want them to, they aren’t.
Pointing to this press release and some people’s inability to read it properly does not mean you can get the SEC to force Amazon to do something you want them to do.
Amazon is playing games with semantics and seems convinced that this confusion is helping it. It seems obvious to me that a company that is succeeding as much as Amazon are claiming they are would not be so determined to be so vague and intentional obtuse. I believe a lot of people share my views.
Journalists have not helped either – even the Teleread article refered to above is headed “Amazon sells 180 ebooks for every 100 pbooks” in direct contradiction of the Amazon press release which refers to hard cover books, not all paper books. I have seen this mistaken claim repeated in many places across the web.
I suspect they are selling far far fewer Kindles than many people think.
When Amazon dropped the price of the Kindle I became interested in purchasing one. The main reason being that I simply do not have enough space for all the books I would love to own and read. I started keeping an eye out for e-readers and Ipads at the hospital I work at. I was hoping to get some actual user opinions. Within a two week period I have seen at least 2 dozen Kindles and about 6 Ipads. I haven’t seen a single Nook or any e-readers by other manufacturers. Judging by what I saw and the conversations I had I’ll be buying a KIndle. As versatile as it might be I just cant justify or afford the $600 pricetag of the Ipad. Oh and FYI you can get a Wi-Fi only Kindle for $139.