For the First Time, the $B-Word is Used to Describe E-Book Future

Jeff Segal and Rob Cox, blogging on the breakingviews website, crunched some breathtaking numbers in an effort to project a valuation for Amazon’s Kindle. They projected clear into the stratosphere (or “blue sky”, as quixotic speculations are often referred to), suggesting that billions of dollars is by no means an unrealistic number.

You can trace their thinking on the breakingviews.com blog, but in essence they calculated that out of Amazon’s $24 billion market capitalization, “$9 billion of value is apparently unaccounted for. Could that be the ‘Kindle premium’?”

Segal and Cox assume that Kindle sales will expand as exponentially as iPods have done, which means sale of over two million Kindles in 2009. They further assume that Kindle owners would then buy two $10 books every month. These are assumptions that Don Quixote himself would shake his head over. If only we loved books a fraction as much as we love music!

But then Segal and Cox drop an intriguing number and the laughter stops. Pointing out that Amazon is developing a student version of the Kindle, they wonder if that could be “an attempt to snag part of the $5.5 billion annual United States college textbook market.” Now you’re talking, gentlemen. The student market is ripe for the E-Book Revolution, and a ten-digit revenue projection is completely in the realm of possibility.

But – there’s another whopper of an assumption here, namely that is that Kindle is the only dog in the hunt. Knowing that a lot of big, well heeled companies – Apple for instance – are developing tablet-sized readers for the educational market, Amazon will have to produce a killer gadget to realize the kind of profits being bandied about.

For that reason I wouldn’t be too quick to propose putting Jeff Bezos’s picture on the billion dollar bill. But it certainly quickens the heartbeat to hear the B-word kicked around.

RC

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