Tuesday, November 30, 2010

Amazon: Heads I win, tails I win

Investor Place has published a summary of a survey from ChangeWave Research that says that iPad owners as a percentage of all eBook reader owners it surveyed have doubled from 16% in August 2010 to 32% in November, while the percentage saying that it owns Amazon Kindles has declined from 62% to 47% in the same period. The simple way to read this is that the iPad is growing rapidly and stealing overall market share for eBook readers from the Kindle, but it's not the whole story.

It's not surprising that the Kindle's market share is declining overall, and will decline further in 2011 as Android tablets that actually work well as tablets, rather than overgrown smartphones, reach the market. (Given that Amazon is widely rumored to be working on its own Android tablet, that might be a shift it encourages, especially if it makes more money per unit on its tablets than its Kindles.) There's no doubt that the iPad is outselling the Kindle, and every iPad can be used as an eBook reader.

Elsewhere in the survey, ChangeWave asked people who don't already own eBook readers but plan to buy one in the next 90 days which one they prefer. 42% of respondents chose the iPad, while 33% chose the Kindle. It's not great for Amazon, but not disastrous, either. In addition, one question that the survey leaves out is what software iPad owners are using to read eBooks. The chances are that a majority of them are using Amazon's Kindle reader on the iPad as one of their eBook reader applications, if not the primary one.

That's where Amazon wins either way: If a customer purchases a Kindle, they're locked into the Amazon eBook ecosystem, and Amazon makes money on both the hardware and eBooks. Even if a customer purchases an iPad, Amazon still makes money so long as the customer installs the free Kindle reader and purchases eBooks from Amazon. So, just because the Kindle's overall market share is declining, it doesn't necessarily mean that it's bad news for Amazon.
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