Analyst: Amazon’s E-Book Share to Shrink to 35% By 2015

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Timing is everything, they say in comedy. Amazon probably isn’t laughing after reading a financial analyst’s prediction the online bookseller will see its share of the e-book market nosedive to 35 percent by 2015 at a time when revenue for electronic reading is expected to nearly triple. Why? Two words: Apple iPad.

Credit Suisse analyst Spencer Wang expects Amazon’s share of the e-book market to be more than halved by the iPad, falling to 35 percent by 2015, down from 90 percent in 2009. Just as Amazon’s market share for e-books shrinks, revenue from e-books is expected to explode; hitting $775 million by 2015, up from $248 million last year. The skyrocketing demand could also be helped by a number of big-named publishers – Macmillion, HarperCollins and Hachette – using the iPad to force Amazon to drop its $9.99 flat-price on e-books.

Although Wang says Amazon’s North American overall book sales could grow to 28 percent in five years from last year’s 19 percent, the Seattle-based company must expand in other areas, such as music or video. One problem: yes, that pesky Apple, again. Finding a way to expand its digital sales “could be tougher given Apple’s dominance in music and a crowded field in digital delivery of video,” the analyst said.

Wang, who rates Amazon as Neutral, warned investors “the digital transition risk for Amazon’s media business is material” and tempers his enthusiasm for the company.

[Barron's]

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