For years, mobile carriers have recognized the need to create new plans that revolve around people rather than devices, but it was easy to procrastinate in a world where the idea of consumers owning multiple wireless broadband devices was a far-off future scenario. Indeed, holistic (and flat-rate) service pricing was one of the original ideas behind Xohm, the first incarnation of 4G service from Sprint. But it, like the rest of Xohm, vanished into the clear.
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The arrival of the Kindle at AT&T stores represents more progress in the creeping distribution of Amazon’s popular e-reader. Originally, the Kindle was a 3G-only device powered by Sprint. However, the arrival of Wi-Fi-only competition from Barnes & Noble caused Amazon to respond with its own Wi-Fi-bound Kindle. Since then, far fewer consumers have opted to pay the 3G premium for either device, and Barnes & Noble decided to completely forego a cellular version of its Nook Color “reader’s tablet.” In contrast, category pioneer Sony has fallen behind as its entry-level e-reader, the Pocket Edition, lacks Wi-Fi and relies on PC sideloading.
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I admit to being biased. I work at a company that tracks actual sales results and I spent 10 years at retail. I have always lived and breathed sales results. And while shipments are a great tool (and I worked at a place that tracked those as well), the final verdict of success or failure of an item is sales. If a consumer puts down their hard earned money for a product you can be sure that they saw some spark of value or usefulness to their lives in that device. That is why it is shocking to me that many folks in this industry don’t understand the difference between sales and shipments - and often confuse them in the most basic ways. The latest example is a report this week in DigiTimes and repeated all across the web that the Barnes & Noble Nook out-shipped the Kindle in March. Note I said, and DigiTmes said as well, shipped, not sold. This has caused shock and disbelief throughout the blog community. We will now hear for a few days about how the Kindle is doomed; the iPad is killing it, and various other conspiracy theories.
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Visit Amazon.com’s home page and you’ll learn that the Kindle is the retailer’s best-selling product (even beating out 50″+ rear-projection televisions). That’s not too surprising given the momentum of the category as well as its shipping-friendly dimensions. But the Kindle’s success at Amazon has also been helped by the device being sold exclusively there, whereas Amazon must compete with other retailers for nearly all of its other products.
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One of the open questions surrounding the iPad that has quickly come to the fore in light of the recent Amazon-Macmillan brinksmanship is to what extent the device will jeopardize sales of e-readers. This is particularly true of the market-leading Kindle, upon the metaphorical shoulders of which Steve Jobs said Apple stood.
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The uneasy relationship between digital delivery and physical stores has a steadily improving history. In 2004, as its Virgin Megastores were struggling, parent company Virgin funded Virgin Electronics, which quickly disappeared in 2005 in the shadow of the iPod. (My colleague Stephen Baker is quoted in this CNET-authored obituary.) Nintendo’s Wi-Fi connection took it to the next level, providing connectivity in retail stores for the Nintendo DS, but didn’t provide much differentiation for retailers. And while Apple provides free Wi-Fi in its stores, it instead partnered with Starbucks to offer a customized iTunes store home page that offered lists of recent songs for purchase playing in its coffee shops.
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To butcher the universal application of an old cliché regarding books and their covers, don’t judge an electronic book market’s profitability by its hardware. The industry has been obsessed with guessing the number of Kindles Amazon has sold, but that doesn’t tell the whole story of the device’s success. Since the Kindle is a $300 vending machine for Amazon, it can be a sustainable venture for the e-tailer even if it never cracks the mass market or achieves market share dominance.
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Connected Intelligence | Ross Rubin, Executive Director, NPD Connected Intelligence | 
January 10, 2012 2:43 pm | 
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