SAN FRANCISCO (AdAge.com) -- In its second press event since the launch of the Kindle, Amazon took the wrappings off the second-generation version of its popular electronic reading device today.
The bookseller showed off new features that pundits and blogs had widely expected, but the predictability didn't stop the hype meter from getting revved up. Amazon's relative few press events and its silence on expectations for this latest launch did much to dial up anticipation and fed the frenzy that much more.
Loyalists first in line
Amazon, mindful of the product's loyalists, is letting existing Kindle owners who order by Feb. 10 proceed to the front of the line to receive the new Kindle first. Meanwhile, on Amazon's home page, Kindle took up most of the real estate, with CEO Jeff Bezos extolling the virtues of the new device in a one-page letter.
And to provide something extra for the new Kindle, Amazon said at the launch that author Stephen King will be releasing a novella only available on the e-reader. Amazon also reminded the world that more authors are continually being added to the 230,000 books on Kindle.
"Note the power and promotion of the integrated business model -- the launch of the device is coupled with the distribution of exclusive content," said Scott Anthony, president of Innosight. "Anyone who focuses on the device itself is missing the real story."
Half a million units sold
Amazon isn't budging on Kindle's price tag, $359 a pop, but analysts say if the online bookseller wants to kick up the device's adoption rates, pricing will be key. For the latest precedent, just look at how quickly users raced to the iPhone after Apple lowered the price of the handset to $199 from $599.
Amazon has been mum on Kindle's unit-sales figures, but, calling it the "iPod of the book world," Citi analyst Mark Mahaney estimated that Amazon sold 500,000 Kindles in 2008. He said that's 32% more than the number of iPods Apple sold in the first year. Mr. Mahaney also projected that Kindle-related revenue could reach $1.2 billion by 2010.
Amazon executives have said the number of e-books purchased by Kindle users is 2.7 times the number of physical books they purchased before buying the e-reader, said Sandeep Aggarwal, an analyst at Collins Stewart.
Little mass marketing
Remarkably, Amazon has done little mass marketing to promote the electronic reader. Until today, it had done only one press briefing and issued three other items for the press since Kindle's launch in November 2007. The company would not say whether the device's marketing plans would integrate wider promotional channels. Since Jan. 16, however, Amazon has been on the hunt for a Kindle marketing director, according to a job posting on its website.
That Kindle has received massive hype without the support of traditional promotions speaks to Amazon's influence as the go-to for everything book-related and its ability to develop a mass market in itself. The only place the company has promoted the product aggressively is on its home page, which, of course, amounts to a lot of traffic.
"If you consider Amazon's captive customer base of everyone who buys books from Amazon, then the aggressive marketing they've done on the Amazon.com home page and throughout the site is probably the greatest mass marketing ever devoted to an e-book device," said Mark Coker, founder of Smashwords, a vendor of e-books published by independent authors.
A viral hit
Kindle also owes much of its rise to viral marketing. Oprah's plug in October is now legendary, and given that nothing creates desire and curiosity like scarcity, Amazon has been able to generate immense mileage from Kindle's well-publicized shortage as demand for the e-reader swamped supply over Christmas. Kindle's lift has also come from the immensely popular peer reviews on Amazon. According to Citi, Kindle has been reviewed by more than 7,600 customers, up 89% since the bank's August survey (4,029 reviews) and up 200% since its May survey, covering 2,500 reviews.
But perhaps more than anything, Amazon understands that the ecosystem and user experience trumps everything else. To that end, the bookseller continues to make investments in its e-commerce operations, including inventory search, user interface and price-matching software, Mr. Sandeep said.
"The thing that I find so brilliant about the Kindle is ... that accessing content is idiot-simple," said John Jackson, an analyst at CCS Insight.
Content accessibility key
Mr. Anthony said even though there are better e-readers out there, including Sony's (which is not wireless, unlike the Kindle), ease of use is possibly Kindle's greatest value proposition.
"What's interesting to me is the device itself is actually not very good. It's a clunky, bulky device, but the ability to get the content you want, when you want is astronomically good," Mr. Anthony said.
The Kindle is not without competition, as a slew of vendors unveiled their Kindle-killer hopefuls at the Consumer Electronics Show in January. A formidable challenger to the Kindle could lie in the smartphone space.
The most popular iPhone reader, Stanza, has been downloaded 1.2 million times globally, and there are at least seven more e-readers to choose from in the iPhone App Store. Analysts say Amazon certainly has ambitions along the smartphone trajectory, and the Kindle could be the first salvo, as it marks the company's first step to delivering media wirelessly.
Google, the ubiquitous digital nameplate, is also not to be discounted. Late last week, it launched the Google mobile book-search service, putting more than 1.5 million public-domain books in the service of iPhone and T-Mobile G1 mobile-phone users. The leap that Google can make from this is anyone's guess, but analysts say Google will likely go after the e-reading space.
"There's an intersection of Google and books. It has all the resources and can get up to speed quickly," said David Rothman, publisher of Teleread.org, a blog about the e-reader world, adding that he knows of one person from Random House who has been hired by Google.