The Nook Outselling the Kindle? Don't Get Your Hopes Up

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One of the most interesting parlor games in digital publishing world is to figure out exactly how many Kindles Amazon (AMZN) has sold, since the company never lets anyone in on that little secret. Some new data from Digitimes Research doesn't answer that question directly, but does raise a new and more surprising one: is the Kindle being outsold by the nook, from rival retailer Barnes & Noble (BKS)?

According to Digitimes analyst Mingchi Kuo's estimations, manufacturers' e-book reader shipments to Barnes & Noble surpassed those to Amazon, with more specific indications that the nook "accounted for 53% of e-book readers shipped to the US."

Kuo attributes much of that shipping uptick to the newness factor, as the Kindle "has been on the market for some time," without any significant changes since the Kindle 2 arrived way back in February 2009. The nook, however, has been around since last November -- and may have hit its stride only in the last week, thanks to a new firmware update that appears to fix many of the early problems plaguing the device at launch.

Demand or Supply?

But before B&N starts in on a happy dance at beating out its competitor, publishing industry analyst Marion Maneker points out that this particular report has little to do with how many nooks or Kindles have sold and more to do with supply -- namely, that "Nooks are coming through the supply chain at a greater rate than Kindles." Digitimes' report only concerns itself with figures from March, which does not factor in both the nook's newfound presence at Best Buy (BBY) and, as of this weekend, Amazon being available at Target (TGT) outlets. But both Amazon and B&N would have been working hard to fill orders for their respective devices in March, Maneker explains, and that means "it's not too far-fetched that [B&N] would err on the side of making sure there is abundant supply in stores." If that's true, it would also explain the lack of a PR blitz from B&N, since "outselling" the Kindle would seem to warrant such a thing, right?

The other supply factor is that the nook was not widely available in B&N stores until early 2010, which finally allowed browsing customers to hold and handle an e-reader in the same place that sells print editions of books they might want to buy. Amazon, of course, didn't have a physical presence in a store until a couple of days ago and thus did not have to play the game of flooding retail outlets with devices that may not sell for weeks, or even months at a time. Instead the company needs only to produce as many Kindles as demand allows and not much more.

That leads into the larger question of e-reader demand. Digitimes projects that as many as 1.43 million e-readers shipped globally in the first quarter of 2010, a number that will grow to just over 2 million units in Q2 and 11.4 million for the entire year. Any projection ultimately falls into the category of Digital Nostradamus, but however the specific numbers play out, the exponential demand curve is real -- even if standalone e-readers may prove less popular than a multi-function device like Apple's (AAPL) iPad.

Two things are clear: One, Amazon can handle its still-gigantic e-reading market share being eaten into by B&N, Apple and other players, since the "smaller fish in a larger pond" axiom still means plenty of profit for the company. And two, a new edition of the Kindle, expected for later in 2010, won't change the company mentality about releasing actual sales figures. And so long as they don't, B&N won't either, and we're stuck with analyst projections whose calculations may not quite add up to reality.
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