Start Talking, Amazon

Amazon.com (Nasdaq: AMZN  ) has been surprisingly tight-lipped about its e-book reader. Beyond letting the public know that the first batch of Kindles sold out within hours of its November launch, Amazon hasn't been forthcoming when it comes to actual unit sales, pricing strategies, or future incarnations.

Well, start talking, Amazon.

The company has little choice now. CrunchGear, citing an unnamed insider, claims that an updated model will be out come October.

Amazon can't win at this point by staying quiet. Unless it's able to squash the rumor convincingly, you can kiss Kindle sales goodbye over the next three months. Nobody wants to buy a $360 gadget that's about to get an upgrade.

Why do you think Apple (Nasdaq: AAPL  ) likes to keep its new product rollouts on the down low, until it can announce the introductions with a bang and have them ready to go? The 3G iPhone is a rare exception, and Apple paid the price, given the lull in first-generation iPhone sales as consumers waited for the upgraded model.

Amazon can expect the same aversion. Bookworms do a lot of reading, so the rumor mill cranking out autumn release dates for superior Kindles will reach their well-read eyes.

If the gossip chatter rings true, Amazon may as well concede and belly up to the confessional. Give up the skinny on the number of Kindles that have already been sold. Set up a virtual counter to record the preorders for Kindle 2.0, the way that Amazon has pumped up things like Harry Potter books or the Delight-o-meter that once rang up holiday sales. Milk the next three months of hype, deliciously serving up the new features in episodic installments. These are book lovers, you know.

Even if the number of Kindles shipped at this point is low, Amazon is cheating itself by keeping that a secret. Its only real competition is Sony (NYSE: SNE  ) , but even Sony Reader's alliance with Borders (NYSE: BGP  ) hasn't generated the kind of buzz that Amazon has been able to achieve with its edgy gadget.

The Kindle is becoming a viral hit. I've done a bit of traveling this summer, and I've noticed more people toting them around the airport. This is certainly nothing for Amazon to be ashamed of, even if the actual unit sales figures are lackluster.

Amazon is in a sweeter spot. It controls the flow of both product and information. It knows the truth. It can frame the news. It has the luxury to be candid. Thus, Amazon had better not blow it. The silence, at this point, would say it all, and it wouldn't be saying anything pretty.

Other page-turners in the Kindle saga:

Borders Group is a Motley Fool Inside Value selection. Amazon.com and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He owns a Kindle. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On July 17, 2008, at 10:08 AM, mdmays wrote:

    Why is it a surprise that Amazon is going to come out with a new model. Who doesn't come out with a new model each year? Companies whose products weren't successful in the first place.

    Why should Amazon releases all the information about the new Kindle in July and not sell them until October? If they do that today then when they release the Kindle in October the new Kindle will be old news. Also a lot of people don't like to wait for months. The attention span of the average consumer is not that long. And if they do tell you today all the 'skinny' and for some reason don't deliver everything they said they would, what will you be writing about in October?;)

    Amazon may be trying hard to copy Apple but they haven't mastered Apple's discipline with regards to employees leaking information. In any case, how many people buying Kindles are going to be aware of this leak. Probably about the same number who know it will be time for an upgrade around Christmas.

    If there are two models one will be basically the old model with a few changes and a lower price; the other will be about the same price as the present Kindle with more new features/size. That is if they continue to copy Apple.

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