To nobody's surprise, Amazon.com (Nasdaq: AMZN) has another winner in the third-generation Kindle e-book reader.
The e-tail giant started shipping out Kindle preorders a couple of days ahead of schedule, which indicates that manufacturing is running as smoothly as a bathtub of Greek yoghurt. At the same time, ordering a third-gen Kindle today will get you a device around the middle of September. I'm sure Amazon ordered up generous quantities of its new baby from somebody like (probably) Hon Hai Precision Industry or (probably not) Nam Tai Electronics (NYSE: NTE), but whichever Asian manufacturer is churning these Kindles out can't keep up with demand.
It's great to see someone other than Apple (Nasdaq: AAPL) selling out of a hot item year after year without having a manufacturing problem to blame the shortfall on. Strong demand means a beautiful business, and I only wish that Amazon wouldn't be so tight-lipped about the financial impact of the company's only big-time consumer product. Here's what we know: Sony (NYSE: SNE) sold 300,000 e-book readers between 2007 and 2008; sales of that device are on a tear, tripling year over year these days; and Kindle is the recognized market leader. No matter how you massage these limited data points, we just don't know exactly -- or even roughly -- how many Kindles have been sold. Does Amazon have a billion-dollar business on its hands here, or are we looking at just a couple hundred million a year? There's no way to know.
If you thought the iPad would hurt Kindle sales at all, I think that notion has been busted already. The same goes for a rising tide of competing single-purpose e-book readers from Borders Group (NYSE: BGP), Barnes & Noble (NYSE: BKS), Sony, and others. A three-week lead time on orders in the late summer isn't an overwhelming sellout, but if trends from recent years hold, those order delays should stretch out significantly as we move closer to the holidays.
The time has come for Kindle to truly enter mainstream culture. E-books are generally cheaper than hardbacks or paperbacks, easier to lug around in large quantities, searchable, bookmarkable without dog-earing the pages, and more. And the content is there now, including a large majority of The New York Times' current best-seller list. E-readers in general, and Kindle in particular, have hit the tipping point.
Now please just tell us how important this trend is to you, Amazon. Inquiring investors want to know!
