Reading into the Kindle's future

Amazon Kindle Voyage.
Source: Amazon.com
Amazon Kindle Voyage.

Happy seventh birthday, Kindle. Amazon's device that revolutionized how consumers read books and generates a lot of money for the e-commerce giant launched on Nov. 19, 2007.

Amazon does not detail unit sales of Kindles. But RBC's Mark Mahaney estimates that the Kindle ecosystem, meaning devices as well content, accounts for about 15 percent of Amazon's total annual revenue. That's more than $11 billion per year.

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"This was an extremely successful pivot," Mahaney said of Amazon's decision to sell e-readers. "They drove the adoption of digital book sales."

In September, Amazon introduced its newest e-reader called the Kindle Voyage. This is the thinnest, brightest Kindle to date. The price is $199.

But the world of e-readers is changing fast. Global sales of e-readers peaked in 2011 at nearly 20 million and will decline steadily over the next few years, according to projections by Jeff Wray, an analyst at Forrester Research.

The problem, said Wray, is that e-readers offer relatively limited functionality, and there isn't much device makers can do to improve the product.

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"E-readers are limited," Wray said. "There is only so much you can do to enhance the reading experience."

More broadly, e-readers now face a lot of competition from smartphones with bigger displays and tablets.

Still, RBC's Mahaney said Amazon is hedged against an e-reader decline to some extent by now offering its line of smartphones and tablets. Amazon's bet is that, in the future, consumers might not be using an e-reader, but they might not be reading a traditional print book, either.