Last week Amazon reported excellent third quarter figures. Net income was $ 199 million - 70% up compared to the third quarter of 2008. Both revenues and profits exceeded analyst's predictions and a very strong fourth quarter is now on the cards. Share price rose by 27% amid strong expectation that Amazon would become the dominant online retail business in the post-recession economy.
One of the key factors in Amazon's success has undoubtedly been the success of the Amazon Kindle e-book reader. The Kindle, originally released in 2007 and now in its second generation, accounts for 60% of the US e-book reader market. After a long wait Amazon has started to ship the Kindle 2 reader to more than 100 different countries around the world. International shipping was accompanied by a second price drop since the launch of the Kindle 2 in February of 2009.
This was followed, a mere two weeks later, by a further price drop and a consolidation of a single Kindle 2 reader - the Kindle international version, which now retails for $ 260. This was seen by many as a response to the announcement by Barnes and Noble of their own new "Nook" e-book reader (which also retails for which also retails for $260). Nevertheless, the focus and consolidation on the huge global market makes perfect sense for a variety of business reasons.
Apple, Microsoft, Plastic Logic and Sony all have e-book readers either in development or ready for imminent launch. The e-book market is still nascent, and it is developing and growing rapidly. Amazon have, thus far at least, enjoyed a dominant position - and the Kindle reader is now their best selling product. It does not seem at all probable that they will be inactive whilst other manufacturers overtake them.
Amazon is, of course, far from being a one trick pony. Strong growth in Amazon prime memberships was seen - which offers enhanced delivery options for a one off yearly payment. Growth was particularly strong in international markets.
An Amazon spokesman advised that analysts could expect to see Amazon expand the range of products on offer - probably accompanied by geographical expansion with time.
Sales in the range of $ 8.13 billion to $ 9.13 billion are forecast for the fourth quarter.
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