Just recently Amazon reported a very strong third quarter. Net income was $199 million – 70% better than the same period for last year. Both revenues and profits were in excess of analyst’s predictions and a good fourth quarter is now foreseen. Share price increased by 27% amid clear expectations that Amazon would develop into the dominant internet retail business in the post-recession economy.
A key factor in Amazon’s success has undoubtedly been the stellar performance of the Amazon Kindle e-book reader. The Kindle, originally released in 2007 and now in its second generation, accounts for 60% of the US e-book reader market. After a long wait Amazon has just started shipping the Kindle 2 reader to over 100 different countries around the world. International shipping was combined with the second price cut since the launch of the Kindle 2 in February this year.
This was followed, no more than two weeks later, by a further price adjustment and a consolidation of a single Kindle 2 reader– the international Kindle, which now retails for $260. This was viewed by many as a reaction to the announcement by Barnes and Noble of their own new “Nook” e-book reader (which also retails for $260). Even so, the consolidation and focus on the large international market is perfectly logical for a number of reasons.
Sony, Microsoft and Apple are all in different stages of development with their new readers. Even allowing for the fact that the e-book market is relatively new it is developing and expanding at incredible speed. Considering Amazon’s domination thus far, and the fact that the Kindle is their number one selling product, it seems highly unlikely that Amazon will rest on their laurels and watch the other manufacturers leapfrog them (as they did to Sony two years ago).
Amazon is, of course, far from being a one trick pony. They enjoyed good growth in Amazon prime memberships – which offer superior delivery options for a single yearly payment. Growth was particularly good in international markets.
A company representative advised that business analysts should expect Amazon to grow both the categories of goods on offer together with geographical expansion over time.
Fourth quarter sales for Amazon.com are forecast to be between $8.13 billion and $9.13 billion.




