reat News for AmazonBy Sarah Weinman writing in Daily Finanace
Media reports on Tuesday seized on staggering numbers from Credit Suisse, predicting that Amazon's (AMZN) current 90% share of the e-book market will plummet to 35% over the next five years. At face value, that sounds rather alarming. But look a little closer, and the prediction may really be a cause for celebration -- even for Amazon.
Credit Suisse expects Amazon's share in the e-book market to drop to 72% by the end of this year, due largely to Apple (AAPL) and Google (GOOG). "Near term, we suspect that the iPad and the new eBook agency pricing model, which requires that Amazon increase retail prices to be more consistent with Apple's pricing, will provide Kindle with the most market share headwind," analyst Spencer Wang wrote in the report. "Going forward, we can envision a scenario where Apple, Amazon, and Google eventually split the market."
That's obvious enough, but at the moment, the e-book market is still embryonic. Credit Suisse is conservative in its market estimates, estimating it at just 1% of book sales, projected to grow to 3% by the end of 2010. So while Amazon dominates the e-book and e-reader space, due to Kindle's apparent success (which Amazon hasn't quantified in hard numbers), a huge percentage of a small overall figure still doesn't return as much money as a smaller percentage of a much larger figure.
A Narrower Slice of a Wider Market
E-book sales have brought Amazon from $135 million (per Credit Suisse) to $194 million (from a Lazard Frères report last month). That number could grow above $215 million by year-end and triple to $775 million by 2015. Growth in the e-book market is expected from consumers trying out e-reading on Apple's iPad, buying e-books through Google's upcoming Editions program, spending money on Barnes & Noble's (BKS) Nook (which, after a rocky start, appears to have found its footing), and sticking with the e-readers and smartphones they already use.
Read more at Daily Finance.
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