Analyst: Amazon Kindle a $1.2B business in 2010

With online retail giant Amazon.com poised to introduce an updated edition of its Kindle portable reader device Monday, Citigroup analyst Mark Mahaney crunched the numbers on the Oprah-endorsed device, and estimates Amazon sold 500,000 units last year based on a filing by Sprint, which operates the Amazon Whispernet wireless delivery system enabling mobile shopping and over-the-air content downloading. Calling the Kindle "the iPod of the Book World," Mahaney also forecasts that the device will become a $1.2 billion business by 2010, assuming Kindle adoption will increase at a pace similar to the growth experienced by Apple's iconic music player and that consumers will purchase at least one e-book download per month.

Mahaney argues Amazon is making significant strides in transforming its business to align with the digital future of media sales. "The structural challenge facing Amazon is that approximately 50 percent of its revenue is generated from the sale of books, music, and videos--three product categories that are all in the process of being digitized," he writes. "If Amazon can't successfully jump the chasm from Internet-ordered/mailman-delivered media products to Internet-ordered/digitally-delivered media products, its financial fundamentals and its stock price will be significantly challenged."

For more on the Kindle forecast:
- read this All Things Digital article

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