Winfrey creates stir over Kindle
Reader fetching premium online
SAN FRANCISCO - Brian Bird had just received Amazon.com Inc.'s Kindle electronic-book reader from his girlfriend as a gift. That didn't stop him from selling it to someone else.
With the Kindle in short supply and asking prices on the Web at twice the device's $359 retail price, he got his girlfriend's permission and found a buyer on Craigslist willing to pay $500.
"People who want to give it as a holiday gift have to pay a premium to get it in time," said Bird, 27, a salesman for an Internet company in Redwood City, Calif.
Stoked by an Oprah Winfrey endorsement in October, the Kindle quickly sold out. With Christmas a week away, used Kindles are listed on eBay, Craigslist, and Amazon.com's second-hand product site for up to $1,500.
The run on Kindles ambushed Amazon.com, which had expected to have enough for the rest of the year. As the retailer struggles to get more in stock, it's asking buyers to join a three-month waiting list. While the shortage risks alienating shoppers and leaving some sales on the table, the buzz may pay off in 2009.
"It's a great position to be in, given the uncertainty of the economy," said Bryan Eshelman, managing director at Alix Partners LP, a retail consulting firm. "Could they have ended up with more inventory of this, and therefore, more sales in this time period? Sure. But in this economy, I don't fault its strategy."
Amazon.com, the world's largest online retailer, introduced the Kindle in November 2007. The paperback-sized device allows users to download books, magazines, and newspapers, displaying them on a high-resolution screen that's designed to look more like paper. This is the second year Amazon.com has sold out of the product ahead of the holiday season.
This year, the Seattle-based company ran out of Kindles in November, after Winfrey called the device her "favorite new gadget," Amazon.com spokesman Drew Herdener said.
Amazon.com has probably sold 400,000 Kindles in total, said James McQuivey, an analyst at Forrester Research Inc. in Cambridge. Jeffrey Lindsay, an analyst at Sanford C. Bernstein, puts that number higher, at about 450,000. Amazon.com will sell about 500,000 Kindles in 2009, estimates Colin Sebastian, a Lazard Capital Markets analyst.
"That ability to grab a book electronically from wherever you are is very powerful and had generated a lot of word of mouth," said McQuivey, who originally thought the Kindle wouldn't be well received because of its price.
Amazon.com plans to release a new version of the Kindle in 2009. The company also is expanding the amount of material for the Kindle, offering more than 200,000 books, blogs, and publications. Amazon.com added more content this year by buying Audible Inc., a provider of audio books and newspapers. In August, the company agreed to purchase Shelfari, a social-networking site that allows users to share reading lists and book recommendations.
By 2010, Amazon.com may get $1 billion, or 4 percent of revenue, from sales of the Kindle and digital books, Citigroup Inc. analyst Mark Mahaney, a Kindle user, predicted in August. 