Jeff Bezos Finds Wild Success with the Kindle

In the New Establishment last October, we suggested that Amazon founder Jeff Bezos (No. 6) would be credited with inventing the modern bookstore—and the next-generation book—if his Kindle were to take off. Well, take off it has, and it looks like Bezos will continue cashing in on his e-business prowess.
Since its release in November 2007, the Kindle, a wireless device onto which people can download and read electronic books, has sold in great volume, despite its $360 price tag. An endorsement from Oprah (No. 43) last fall led to scarce availability over Christmas, and shoppers have been willing to shell out twice the ticket price for used models. Sales of digital books and magazine subscriptions are also providing a steady revenue stream. So while virtually every other retailer is getting hammered, Amazon is riding high. Fourth-quarter earnings, released two weeks ago, exceeded expectations, and even though Amazon isn’t releasing financial data on the Kindle, CitiGroup analyst Mark Mahaney expects that by 2010 the Kindle could bring in $750 million, or 3 percent of the company’s total revenue.

And in what could be considered akin to achieving the Holy Grail for Bezos, the Kindle is beginning to draw comparisons to the iPod. VF.com attended a packed press conference at New York’s Morgan Library this morning, where Bezos unveiled the Kindle 2. A vast improvement on the old device, which many described as ugly, the second-generation e-reader has been significantly streamlined, and, with a thickness of .36 inches, it’s even thinner than an iPod. A five-way controller has been added to ease use, battery length and memory have been enhanced, and Bezos boasted of an improved display screen that utilizes 16 shades of gray. New features include a text-to-speech option, which you can select to have a book read out loud to you. And if Bezos’ endorsement wasn’t enough, he brought in reinforcements. Stephen King took the stage to read a selection from “Ur,” his new short story available exclusively on the Kindle. With the new version of the device, Bezos says his “top objective was to make the Kindle disappear.” He stressed that he wants to provide the ultimate reading experience—so a person forgets that he’s using it.
Bezos realizes what he has with the Kindle. He aptly summed up the success of it thus far, saying that “we’ve been selling e-books for years, and guess what? It didn’t work, until 14 months ago.” Amazon’s stock price didn’t jump after the press conference, but the stock is trading $5 higher than last Monday, likely due to a week of speculation about this morning’s unveiling. Mahaney estimates that 500,000 devices have been sold already, and this number is sure to multiply with the release of the new model (which will also be priced at $360), which is set to ship on February 24. But just how much that figure grows remains to be seen; one would surmise that if the recession worsens, pushing thousands more out of work, people won’t be using their unemployment checks to snap up Kindles. But they could still spend the checks at Amazon—to buy groceries, kitchen items, clothes, tools, baby supplies, you name it. It seems that Bezos demonstrated a keen vision last July when he said, “We suspect that higher fuel prices may be a relative advantage for us.” So far so good.