The Big and Small Pictures

Liz Gunnison at Portfolio dusts off a "what's the Kindle good for?" piece that, except for the figures on Kindle sales so far (240,000 sold, about $100 million in revenue), could have been written when it launched. But it still seems to make several glaring mistakes when looking at the fundamentals.

For example:

The game in question is reading, after all—not exactly a growth industry, as Simon & Schuster and Random House will tell you....

It's not difficult to imagine that, thanks to its aggressive Kindle marketing push (such as prime advertising space in the middle of Amazon's homepage), those 240,000 units represent a good portion of the total market for the device out there...

Then there's the question of financial means. Only the top 18 percent of households make $100,000 or more, which seems like a reasonable cutoff for figuring out who would spend $359 (down from $399) during a recession on a highly discretionary device, even given a love for reading...

Count out the technophobes and Luddites, a demographic for which e-readers like the Kindle tragically self-select. The 2007 A.P.-Ipsos survey showed that the heaviest readers are female and over 50, while conversely, tech users skew young and male...

To top it off, one can imagine a single device (and Amazon account) being used by an entire household. And we're talking only about those that choose a Kindle, of course, rather than a competing device such as Sony's portable reader...

So, all things considered, how many Kindles does that work out to? Two million? One million? Five hundred thousand?

1) The market for reading is not now nor has it ever been identical to the market for trade book publishing. A device whose primary purpose is reading and viewing documents of many different kinds has a very broad content field to work with, as Gunnison well knows. She's about to talk about newspapers and magazines in a second, and textbooks later on. The fact that the Kindle already allows you to read text and PDF documents of many different kinds, play music, etc., shows you that the "e-book reader" to come will do more than display books on its screen.

2) Certainly, 240,000 represents a "good portion" (half?) of the total market for the device out there -- in its current configuration and at this price point. Not everyone is an early adopter. How many people bought VCRs or DVD players in the first eight months they were out? Also, wait until 1) back to school and 2) Christmas.

3) Dude, $100,000/more is the cutoff? Have you seen who buys an iPhone? Are you forgetting about those college students with discretionary income that you mention in about a minute?

4) If you're a total technophobe -- say, if you're John McCain -- you're not an Amazon customer anyways. You buy used and new paperbacks from your favorite store that you've been going to for years. An electronic bookseller is most likely never going to reach you.

5) Throughout the essay, Gunnison "forgets" that Amazon isn't only making money off of sales from the Kindle; it's making a big chunk from the content for the Kindle. So it doesn't matter whether one person in the family buys a device if everyone in the family is buying books. Most families only buy one refrigerator, one microwave, one toaster, but they buy food to go in them for everyone.

You sell the razor, and then you sell the blades. When push comes to shove, nobody else was blazing a path out there with e-book readers that Amazon could then get in on. It had to get out in that market in a big way in order to create an ecosystem where it could sell that content at all. And just like Apple was able to create a strongest MP3 player because it wasn't an electronics company but made great software, Amazon was able to make the strongest e-book reader because it wasn't an electronics company but knew how to sell books.

I say "forgets" because with all of this stuff, Gunnison "remembers" that the fundamentals for the Kindle actually look much better, because Amazon makes a ton of money from selling books, and college kids read a lot and buy gadgets. She then gets to sound like a genius for saying "one way Amazon could make it better is..."

The thing is, there's a germ of a decent argument there. If you're going to expand the market for reading, you have to think about reading itself in an expanded field. If you're going to change the way that people buy, read, and store media, you have to make that more attractive for the early adopters/cool hunters who start generational trends. It means that you need a full-throttled document viewer, something small and portable and versatile, capable of displaying most of the kinds of electronic content we can now view on a computer screen, and possibly driving whatever will come next.