Amazon releases a new generation of e-readers every three or four years. Customers love the e-paper displays, since it is easy on the eyes, has long battery life and is the closest you can get to reading on real paper. The Kindle is the most popular e-reader in the world and Amazon is one of the oldest companies, still making them today. It is come to light that the Kindle is unprofitable and has been for a very long time. The person who has been in charge of the Kindle for the past decade has just left the company and retired. A new CEO is in town and does not have the same attachment to books and e-readers that former CEO Jeff Bezos had. I believe within the next few years; Amazon might retire the Kindle altogether.
The first Kindle came out in 2007 and was the first e-reader that generated media attention and sold the most units. Amazon had the market all to themselves in the next few years and then saw competition from the Sony Bookstore, Kobo and Barnes and Noble. Amazon begun to aggressively discount all of the ebooks, so they were available for less, than the competition. When Steve Jobs released the iPad, he wanted to open a bookstore, but noticed that the digital book market, was the wild west. Retailers could take losses on selling them to get market share. Steve jobs contacted the heads of all of the major publishing companies to standardize the price ebooks, so they would be the same price, no matter who you bought them from. This was known has a cartal, and it is illegal. The Justice Department hit the publishers and Apple with multi-million-dollar fines in 2012, however the damage was done. Now, if you buy a book, it is the publisher that determines the price, not the retailer. This was a serious blow against Amazon, who saw their Kindle Book prices increase from $9.99 to $19.99. The price increased occurred in 2013 and continues to this day.
Amazon makes money selling Kindle books, although this business is dwarfed by print sales, such as hardcover and paperbacks. Amazon does not publicly disclose financial data in their book division. However, the only thing we have to go on is digital book sales and print sales in the United States, provided by the Association of American Publishers. Year-to-date eBook revenues were down 6.3% as compared to the first nine months of 2021 for a total of $759.2 million. Whereas year-to-date book sales were down 3.6%, but it generated $6.5 billion for the first nine months of the year. Hardback revenues were down 12.1%, coming in at $2.2 billion; Paperbacks were up 4.6%, with $2.4 billion in revenue; Mass Market was down 20.2% to $143.9 million; and Special Bindings were down 1.6%, with $140.7 million in revenue. You can see, that Amazon makes way more money in print sales, than they do ebook sales.
The Amazon devices division in 2022 currently employs 10,000 people. These are the staff that are in charge of the Alexa, Kindle, Fire TV, Ring, Echo, Amazon Earbuds and Fire Tablet devices. All of these products are unprofitable and lose $5 billion annually in the past few years. Most of these devices are loss leaders because Amazon normally subsidizes the cost to get more market share and sell digital content.
Gregg Zehr worked at Amazon for the past 18 years and was credited as the inventor of the Kindle. He is also considered the de facto founder of Lab126, a secretive hardware group that created other gadgets such as the Echo range of speakers. He spent his entire 18-year Amazon career at the hardware development unit. He was most recently in charge of launching the Astro home robot.
There have been dozens of departures resulting in a big leadership hole at Amazon’s personal devices business. While both the Kindle, Echo and Alexa have become mainstream hits, there have been internal grumblings over the long-term growth potential and financial viability of those devices lately, according to people familiar with the team. Amazon is now laying off thousands of people working in the devices division. This includes staff who work on designing, developing and testing the Kindle, in addition to editorial staff in the books department that put together curated lists.
Jeff Bezos initially started Amazon as an online bookstore and personally packed them up and went to the post office and ship them out. This is a guy that loves books and reading. Launching the Kindle took selling books, in the digital age. Andy Jassy is the new CEO and certainly does not have the love of books, that Bezos had. Zahn, the inventor of the Kindle and the person in charge of all of the designs and improvements over the years, who had been working at Amazon for 18 years, retired in August 2022. Does the Kindle even have any high-level champions at Amazon anymore?
Amazon doesn’t even seem particularly interested in the Kindle anymore. They are heavily invested in the bring your own device category. Whether you have a smartphone or a tablet, there are more things to do then read. Amazon spends billions of dollars in securing the rights to major properties to turn them into episodic series or hire A list actors for Prime Video, which is a huge priority at Amazon. Not to mention Amazon Music, which is also highly profitable. Amazon Fire Tablets doesn’t move the needle in the world of tablets; however, they release new models every nine months and they can let users enjoy movies, music, audiobooks and podcasts, in addition to reading magazines, newspapers and books. Kindles? New models normally come out every three or four years. It is way cheaper to buy a Fire Tablet than a Kindle e-reader.
The Kindle is getting lost in the shuffle. Shifting priorities at Amazon do not include the Kindle. I don’t believe it will be around for very much longer. It had a good run.
Michael Kozlowski has written about audiobooks and e-readers for the past twelve years. Newspapers and websites such as the CBC, CNET, Engadget, Huffington Post and the New York Times have picked up his articles. He Lives in Vancouver, British Columbia, Canada.