Amazon Kindle Good News Is Also Bad News

Amazon (AMZN) had what has been interpreted by some as good news: Barnes & Noble (BKS) has already sold out of its Nook e-book reader. Because Barnes & Noble miscalculated and made an insufficient number, some analysts see this as a chance for Amazon to sell more Kindles. However, this is a case where good news is actually bad.

I’d agree that it’s good news for Amazon if people want an e-reader and want to buy a Kindle. However, the deduction that Amazon will profit from the Nook’s unexpected popularity — and that demand has been higher than expected for Sony’s (SNE) model — is premature. Amazon might pick up additional sales, though that depends on whether consumers will be satisfied with any e-reader, or specifically wanted a specific model and are willing to wait. And the Sony announcement was not that there are no more models, but that shipment delays could result from higher demand. I don’t know how many of the Nooks went over the Barnes & Noble web site, but my gut hunch is that most went through the company’s stores. That would leave Sony, with its reader and extensive retail presence, as the heir apparent.

More importantly is the indication of consumer perception and choice. Amazon has been king of the e-book reader mountain since early after introducing its product line. And yet both Barnes & Noble and Sony, at prices either lower than or higher than Amazon’s, apparently have been inordinately successful. So if Amazon picks up additional customers, it will be as at best a second choice. And there is an increasing number of new entries, some of which are pushing feature and design boundaries on the category. All of this spells an increasingly complex and competitive market, and very possibly the end of Amazon’s dominance.

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