Forecast: Kindle to represent 10% of Amazon sales in five years

Projecting that device and content revenues from Amazon.com's Kindle ereader will top $266 million in 2009, beating previous estimates by 13 percent, financial services firm Cowen and Company forecasts that Kindle services will represent 10 percent of the online retail giant's total North American sales in five years, accounting for $2.3 billion in GAAP revenues. According to Cowen and Company, Kindle growth will be driven by low-cost marketing on Amazon's homepage, lower prices for ebooks versus traditional books, declining device prices and potential adoption by educational institutions. "We believe it is unlikely that competitors will be able to make a dent in the iTunes/iPod-like position the Kindle is building in the market," note analysts Jim Friedland and Kevin Kopelman, crediting the breadth of available Kindle titles, over-the-air download functionality via Sprint's 3G network and more extensive product-related content like user and editorial reviews.

Cowen and Company anticipates Kindle unit sales will grow 11 percent to 1.8 million in 2010, increasing the total Kindle user population to 3 million by the end of next year. "We believe that 17 percent of active U.S. Amazon customers and 4 percent of the total U.S. population will own in a Kindle in five years," the report states, adding that Amazon is poised to dominate the European ereader market as well. "We believe the opportunity for the Kindle in Europe is equal to the U.S. opportunity, especially given that a major competitor has yet to emerge overseas. Amazon has yet to secure a pan-European wireless data provider, which is a key hurdle to a Kindle Europe launch. We believe Amazon will launch the Kindle in Europe within the next 18 months."

For more on the Kindle forecast:
- read this Barron's.com article

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