Industry facts

Why Amazon is planning for the long term, and how this is has paid dividends for them

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Image via Flickr creative commons from IntelFreePress

As anyone who’s ever bought books, films or music – and much more besides – online will no doubt be well aware already, Amazon has long since firmly established itself as one of the truly major players in online retail. Its operations span the globe, and the firm continues to generate multi-billion dollar sales every year. In recent years, however, the company has sought to diversify and branch out into new arenas. Of course, it isn’t alone among online firms in doing this – rivals such as eBay have taken similar approaches – but the enduring popularity of Kindle covers goes to show just how successful Amazon’s debut in the technology field has been.

As Wikipedia notes, the first Amazon Kindle e-reader appeared in 2007. This was Amazon’s first foray into the technological market, with the device selling out within five-and-a-half hours of its launch in November 2007. Following its launch day sell-out, the Kindle remained out of stock until April 2008. The Kindle 2 followed in February 2009, featuring a number of upgrades from the first-generation device – it offered 2GB of memory as opposed to the 1.4GB of the original Kindle, and was slimmer than its predecessor. The Kindle DX followed later in 2009, while the fourth-generation Kindle appeared in 2011 to commercial and critical acclaim. The Kindle Touch hit the shelves in 2011, followed by the fifth-generation Kindle in 2012. Amazon also entered the tablet market with the Kindle Fire in 2011, following it up with the Kindle Fire HD in 2012.

Although specific sales figures are difficult to come by, Amazon’s chief executive and founder Jeff Bezos told shareholders in 2010 that “millions” of Kindle units had been sold up to that point. Analyst James McQuivey of Forrester Research estimated in mid-2010 that around four million units had been sold. By that same year, Amazon had established itself as the dominant force in the e-reader market, with a market share of 59 per cent. An estimate from IDC in 2011, meanwhile, put the number of Kindle Fire sales at 4.7 million during the fourth quarter of that year. Pacific Crest estimated that the Kindle Fire had sold six million units during Q4 2012.

Amazon’s arrival in the tablet and e-reader markets wasn’t the only method by which it diversified from its core online retail offering. As an article from Wired.com points out, Amazon also bought up social networking site Goodreads.com in 2013. The website allows users to rate and review books, and so it isn’t hard to see how it could tie in with Amazon’s Kindle range and its online bookstore, both in terms of physical book sales and e-book sales. There have, however, been questions about Amazon’s mounting dominance of physical and e-book retail. The website has entered increasingly into the self-publishing market over recent years, prompting criticism from existing publishers. There have also been concerns that its dominant position lends Amazon an unfair advantage when it comes to determining price. Nevertheless, Amazon is clearly here to stay and it remains to be seen how it will continue to diversify over the next few years.

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