Originally published: January 9, 2009
Last updated: January 9, 2009 - 9:44am
Amazon.com's hand-held electronic reading gadget, the Kindle, is selling like hot cakes. It sold out over Christmas. Those available secondhand are going for up to twice the $360 retail price. Assuming the success of the Kindle partly accounts for Amazon's crazy stock price, there may be a way to assess its value. Amazon is trying to copy Apple's stunning success with its elegant iPod and cheap and user-friendly music store. The Kindle is not there yet, but it is getting closer. This year, Amazon is redesigning it, and a student version is also expected, an attempt to snag part of the $5.5 billion annual United States college textbook market. If every existing and new Kindle owner were to buy two $10 books a month, and assuming a 15 percent margin on these sales, total Kindle earnings could top $330 million. The $9 billion Kindle premium would then amount to something like 27 times expected earnings from the gadget. That's lofty, but as anyone who bet against the iPod a few years ago can attest, not necessarily out of this world.
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