Profits soar at bullish Amazon - as iPad lurks

Apparently Amazon's e-reader is flying off the virtual shelves. But will the iPad kill the Kindle?

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Last Updated: 06 Nov 2012

Even before Christmas, IMRG, the trade body for online retailers, was predicting record festive sales for online retailers. And Amazon has certainly delivered: the e-tail titan posted a whopping 71% increase in profits in the last three months of 2009. It attributed these $384m profits to its new expanded range – which includes everything from shoes to its Kindle e-reader. In fact, Amazon founder and chief exec Jeff Bezos was quick to highlight just how well the Kindle had done – although we imagine he might be feeling a bit nervous after Apple released launched its e-book-friendly tablet, the iPad, earlier this week...

What’s certainly true is that this was a stellar performance from the world’s largest online retailer. Attempts to entice customers with free shipping and an ever-increasing range of wares helped Amazon boost sales by 42% to reach $9.5bn (£5.9bn) – far above the top end of analysts’ expectations. It can also thank its newly acquired online shoe retailer, Zappos, which contributed around $200m of revenue during the quarter. Elsewhere, sales of electronics and other general merchandise also posted a 60% gain in sales, while media was up by almost a third. Nice.

But Bezos reserved particular praise for the Kindle, which has been on sale in the US since 2007 but only became available in the UK in October last year. The chief exec refused to be drawn on specific sales figures, but he was keen to stress the e-reader’s growing popularity. ‘Millions of people now own Kindles,’ he said. ‘And Kindle owners read, a lot. When we have both editions, we sell six Kindle books for every 10 physical books.’

Unfortunately for Amazon it isn’t the only company with an eagle eye on the e-reader market: Apple shoved its oar in earlier this week when it finally revealed its new tablet computer, the iPad – along with a new platform called iBooks that will allow users to buy e-books online from various big publishers. Apple head honcho Steve Jobs even alluded to his Kindle-beating aspirations at the launch. ‘Amazon’s done a great job of pioneering this functionality with the Kindle,’ he said. ‘We’re going to stand on their shoulders and go a little further.’

The evidence so far suggests that Amazon needn’t worry just yet. The cheapest iPad will be available for $500, yet Kindle is sold for as little as $259 – a mere snip in comparison.  What’s more, analysts seem to think that the Kindle still has the edge among avid newspaper and book readers, not least because its clever ‘eInk’ is considered to be much easier on the eye than an iPad screen. Bezos will be hoping to goodness that they’re right...


In today's bulletin:

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Profits soar at bullish Amazon - as iPad lurks
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