Recently, I sat down with Ian Freed, an Amazon vice president in charge of the Kindle, to get a sneak peek at the new Kindles and discuss e-books and the Kindle business in general. Naturally, a good portion of the conversation centered on the design and features of Amazon's new e-readers, which you can read about here. But we also chatted about the e-book industry and Amazon's Kindle business in general. Here's a look at some of the more interesting parts of the conversation. Feel free to post your own analysis in the comments section.
CNET: You've been talking a lot lately about the growth rate of Kindle sales. You said it tripled...
Freed: There's actually two triplings. One is the number of e-books sold in the first quarter of 2009 versus the first quarter of 2010. And then the other is after we dropped the price of the Kindle to $189, we saw a tripling of the growth rate year over year [of the device itself].
CNET: How much of the rate of growth on the e-book side is attributable to the iPad and getting your app on these other devices like the iPhone and iPad?
Freed: Excellent question. Some numbers we haven't released before...80 percent of Kindle books we sell are sold to Kindle owners. They may have a Kindle app on a phone or an iPad or Mac or PC, but they at least have a Kindle. So 20 percent do not. I think it's a combination of the health of both businesses. The device business continues to grow with a device [the second-generation Kindle] that's over a year old, and then the content is growing both with the device sales and independently with the apps. We see a lot of customers start with apps and buy a Kindle later.
We see others who've had a Kindle for a year and half and have an Android phone and they've started using the Android phone for Kindle in the last month or so.
CNET: Now that most publishers have shifted to the "agency model" and are setting their own prices, how have the higher prices on many e-books impacted sales?
Freed: Happy to answer that. We have definitely seen a shift. We have data for the last 15 years on books. And since some of the publishers have decided to price their e-book above $9.99, we've definitely seen a shift of customers going to e-books that are $9.99 or less. The good news for them is that the selection of those books is very dramatic. We have about 630,000 books that are not public domain titles and of those 510,000 are sold for $9.99 or less. Of The New York Times best-sellers, 80 of them are $9.99 or less. So customers are voting with their pocketbook... … Read more