Amazon Kindle Sales Push Profits Up 71% - InformationWeek

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Amazon Kindle Sales Push Profits Up 71%

CEO Jeff Bezos says "millions" are using the Kindle e-reader, and e-book sales are gaining on sales of physical books.

Amazon, which won't say how many Kindles it has sold, claims the electronic-book reader has been purchased by "millions" of people since its release about two years ago.

In releasing fourth quarter financial results Thursday, Amazon Chief Executive Jeff Bezos said the retailer sells six books for the Kindle for every 10 physical books with the same titles. The ratio is year-to-date, and the total number of Kindle books downloaded would be higher, if Amazon counted free books.

"Millions of people now own Kindles," Bezos said in a statement.

For the quarter ended Dec. 31, Amazon reported profit of $384 million, or 85 cents a share, a 71% increase from $225 million, or 52 cents a share, the same period a year ago. Revenue rose 42% to $9.52 billion from $6.7 billion a year ago.

Amazon is forecasting for the first quarter of 2010 revenue between $6.45 billion and $7 billion, or between 32% and 43% higher than the same period in 2009.

Some analysts estimate the Kindle accounts for about 60% of the e-reader market, with the Sony Reader a distant second. In an attempt to hold on to its No. 1 position in the face of increasing competition, Amazon this month introduced a software development kit for independent developers to build applications for the devices.

The applications would be sold through the Kindle Store, using a self-service publishing platform. Amazon is offering developers a revenue split of 30% to Amazon and 70% to the developer.

Opening the Kindle to developers could make the device more competitive against Amazon's latest rival, Apple. The computer maker this week introduced a tablet computer called the iPad, which will include e-reader software. Apple plans to offer e-books through its online store when the device is released in late March.

The iPad has more capabilities than the Kindle, which is focused only on reading digital books, newspapers and magazines. However, the Kindle is less expensive, costing $259 versus the iPad's starting price of $499.

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