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Amazon Kindle eBooks lending library launches in the UK

Amazon Kindle TouchAmazon Kindle owners in the UK can now borrow eBooks, including all seven Harry Potter titles, from the Kindle Owners’ Lending Library, which launches today.
Kindle users can choose from more than 200,000 books to borrow for free. These can be read on Kindle e-ink e-readers and also the Kindle Fire tablet computers.

Amazon has also today announced that its new Kindle Paperwhite, the most advanced e-reader it has ever offered, is coming to Britain this month.

To access the Lending Library, consumers must sign up for an Amazon Prime membership, which costs £49 per year and gives users discounted delivery on products bought from Amazon.

UK Prime members with Kindle devices can now also access thousands of digital books to borrow for free, as frequently as one a month with no due dates.

Alongside JK Rowling‘s Harry Potter books, the library also offers various popular titles across fiction and non-fiction, including Stephen Leather’s The Basement and M.C Beaton’s Agatha Raisin series.

There are also thousands of titles available from the Kindle self-publishing platform, including best-sellers such as Love…From Both Sides by Nick Spalding and As if By Magic by Kerry Wilkinson.

“Owning a Kindle is getting even better. Today, we’re announcing that our newest Prime benefit, built just for Kindle, is coming to UK customers: The Kindle Owners’ Lending Library,” said Jeff Bezos, the founder and chief executive of Amazon.com.

“Prime members will have exclusive access to a huge library of books to read on any Kindle device at no additional cost and with no due dates.

“We’re already seeing the programme’s success in the US for both readers and authors – customers are reading more and authors are reaching a whole new audience while making money in a new way – and we’re excited to bring it to customers in the UK.”

Books can be checked out from the library using a customer’s Kindle device, and users can have one book at a time. The titles are also returned with the device and any notes, highlights or bookmarks are automatically saved should the person re-borrow the book.

Alongside the UK, the Lending Library is coming soon to users in France and German.

Amazon has also started UK pre-orders of the Kindle Paperwhite and confirmed that the product will ship to customers on October 25.

Billed as the “most advanced e-reader ever constructed” by Amazon, the Paperwhite offers 62% more pixels and 25% increased contrast than other Kindles, and comes with a patented built-in front light for reading in all lighting conditions.

The Paperwhite offers up to eight weeks of battery life and is priced from £109 for the WiFi version or £169 for the WiFi and 3G model.

As with other 3G Kindle devices, the premium Paperwhite model involves Amazon paying for the 3G connection so that customers can download content anywhere and anytime in more than 80 countries with no annual contracts.

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Amazon’s new Kindle line-up has eyes on growing e-reader market in the UAE

Dubai:

While all of the attention has been taken up by Apple and Samsung, the Amazon’s Kindle is getting ready to make a splash of its own in the UAE.

The 7-inch Kindle HD is likely to be in stock by the end of this month itself, according to a top official at Jumbo Electronics, which is selling the tablet here. The other models within the expanded Kindle line-up — the Fire HD 8.9-inch in 16GB, 32GB and 64GB with 4G — will be in stores by mid-October.

“Customers with an existing Amazon account can easily access the digital content for their Kindle,” said Vishesh Bhatia, CEO at Jumbo. “New users who have a US postal number can also register and start using the device.

“Once you are registered, it’s a very simple process of choosing the digital content, be it books, newspapers or magazines.”

How does the Amazon Kindle Fire HD compare to the Apple iPad

Having established itself as Apple’s top tablet competitor by going smaller and cheaper, Amazon will now go head to head with the category-defining iPad on its own turf.

Even as Google’s new Nexus 7 challenges the Kindle Fire for dominance in the small-tablet category, Amazon CEO Jeff Bezos on Thursday introduced a new, 8.9-inch Kindle Fire HD.

That pits the new device, which will ship in late November, against a device with which Apple has, thus far, squashed all direct competition. No tablet that has tried to match the iPad feature-for-feature has gained more than a token foothold in the market.

So, how do the latest version of the iPad and the Kindle Fire HD stack up? Because only a few people have gotten their hands on the new device, some questions can’t be answered yet. But here’s a look at what we do know so far.

Price

The Fire comes out way ahead on this one, as is to be expected from Amazon, which has targeted customers looking for the basic features of a tablet but not willing to pay Apple’s heftier price tag.

For the cost of the lowest-end iPad (the 16GB, WiFi-only model), a buyer can get a 32GB version of the Fire HD with a 4G LTE connection on an upgraded cellular network. Both devices cost $499.

The 16GB version of the Fire comes in at $299, or $200 less than the comparable iPad.

Size

While Amazon obviously closed the gap significantly, the iPad still has a bigger screen than the Fire.

Apple’s iPad screen measures 9.7 inches diagonally, while the Fire is at 8.9 inches. That’s less than the difference between the screen sizes on the iPhone 4S and the larger Samsung Galaxy S III smartphones. (There’s speculation the iPhone 5 will have a larger screen).

But competition between Apple and Amazon could heat up on another front if rumors that Apple plans to release an “iPad Mini” turn out to be true.

Display

Both tablets feature high-definition screens, although the details vary.

The iPad’s “retina display” featured a total of 3.1 million pixels, with a resolution of 2,048 by 1,536. By contrast, the Fire HD measures 1,920 x 1,200 pixels, with custom features designed to reduce glare and improve color saturation.

Both Apple and Amazon boast that the resolution on their tablet is so sharp that it’s impossible for the human eye to discern individual pixels.

Data plans

Until now, the Kindle Fire has been a WiFi-only device, and some of its new models remain that way. But Bezos announced that the top-end version of the Fire HD is available in 4G.

The plan is offered at an attractive price of $50 a year. But that price gets you 250 MB of data per month — not a lot for a device designed in large part to stream movies and other media.

It was unclear Thursday what the charges will be for going over the allotted data.

The $50 is well under what AT&T and Verizon charge for a year of data on the iPad.

When the first iPad launched, AT&T offered data plans starting at $15 per month, or $180 per year, for 250 megabytes of data.

Currently, Verizon offers a variety of plans, from 1GB of data per month for $20 (or $240 per year) all the way up to a massive 8GB per month for $80 ($960).

AT&T offers a 250MB per month plan (the same as the Fire) for $15, or $180 per year. For $5 more, customers can get up to 2GB per month.

There are obviously lots of permutations of plans customers can seek out for iPads, based on carrier and special offers. It’s safe to say Amazon’s is going to be less expensive, although it offers a minimal amount of data.

Apps

It’s hard to compete with Apple’s App Store.

There are more than 225,000 apps designed specifically for the iPad. Many work to take advantage of its display and screen size. Add the more than a half-million apps that run on mobile devices and you’ve got a lot from which to choose.

Amazon, of course, likes to play up the movies and books that make up its universe of content (and the sale of which make Kindle prices possible). Bezos lumped together more than 22 million movies, TV shows, songs, apps, games, books, audiobooks and magazines available from Amazon’s store.

He showcased a few, nice-looking new apps. But while the Kindle Fire runs a modified version of Google’s Android operating system, it only runs apps available from Amazon. That cuts the number available down to several thousand — more than enough for many users, but nowhere near what the iPad offers.

No Way To Eliminate Ads from Amazon Kindle Fire

The new family of Kindle Fire tabletsare all pretty sweet, especially with the upgraded specs and the availability of the $50 per year 4G LTE data plan. Unfortunately, there could be a rather monumental downside to the new Kindle Fire and Kindle Fire HD: you can’t turn off the ads.

Yes, we already know about the regular ad-supported Amazon Kindle e-reader that lets you save a few bucks over the version that isn’t ad-supported, but it turns out that the full range of Kindle Fire tablets will not have the option for you to opt out of the ads. Even if you buy the range-topping $499 model, you’re going to be stuck with the “Special Offer” promotions on your lock screen.

This is in stark contrast to an earlier email from Amazon’s support team that stated you would have the option to “unsubscribe” from Special Offers. As it turns out, you can’t. No matter what you do, short of rooting and hacking your Kindle Fire, you’re going to see these “Special Offers” on your lock screen. Granted, they could be seen as a “value added” proposition that lets you know about deals with the Amazon store, but they’re still ads.

I don’t think this will be a deal breaker for most people interested in the Kindle Fire HD, but it could provide them with another reason to consider a different Android tablet altogether.

Wi-Fi performance could be secret weapon for Amazon’s new Kindle Fire tablets

With due respect to my colleague Larry Dignan’s belief that hardware will become irrelevant soon, the roll-out of Amazon’s new Kindle Fire tablets was chock full of specs — pixels-per-inch, gigabytes, and floating point operations, to name a few. While services may indeed be sexier than hardware these days, you can’t just consume all the high-definition media those services provide on just any cheapo slate — or at least consume them in an ideal fashion.

And though everyone’s jaws dropped when Jeff Bezos unveiled the pricing for the 4G Kindle Fire HD’s wireless data plan — 250MB of monthly data delivered via AT&T LTE for a mere $50 per year — that plan won’t do much for you when you want to stream or download the HD movies Amazon built the tablets to display optimally. (See here for what I’m talking about.) Sure, you can pay a lot more to up your monthly data limit — since once you reach your monthly limit, AT&T will shut off your 4G LTE service — but then you’re dealing with ordinary mobile rates (3GB for $30 per month, 5GB for $50 per month), not Amazon’s special deal.

All of this is why one of the most important features unveiled last week — the unsung lynchpin to the Kindle Fire as service provider — may be its enhanced Wi-Fi capabilities. Eyes may have glazed over when Bezos presented the slide touting how the addition of dual antennas and dual-band and MIMO technologies have boosted the Kindle Fire’s Wi-Fi speeds to what Amazon says are 41-percent faster than what the iPad 3 can offer, but zippy downloads and lag-free streaming can enhance the Kindle ecosystem in ways consumers may not expect, but will appreciate on a daily basis. (Of course, that’s assuming those consumers have up-to-date Wi-Fi hardware to make those transfer rates possible.)

Other than pricing, there isn’t a lot that Amazon could offer that would wildly out-spec the competition — version two of the Kindle Fire was about matching the rival’s hardware while keeping prices low. But Wi-Fi performance, perhaps because of its very unsexiness, was the one area where Amazon could solidly trump competitors. It could be argued that a speedy network connection is every bit as important to a tablet’s performance as processor speed or graphics performance when you consider how many apps rely on the Internet to function effectively.

Unfortunately for Amazon, as potentially impressive as the Wi-Fi specs for the new Kindle Fires seem to be, it’s an easy target for competitors to match. The next iPad or Google Nexus tablet could add an extra antenna and MIMO technology, and there goes Amazon’s advantage. Of course, Apple has had years of introducing new features to the iPod, iPhone, and iPad (most recently, Retina Display technology) and watching rivals add them to their offerings, and it seems to be doing OK despite that.

How important do you think fast Wi-Fi performance is to the overall tablet experience? Are the improved Wi-Fi capabilites of the new Kindle Fires a big selling point for you? Let us know in the Talkback section below.

Amazon Readies Kindle Fire Update To Keep Up In Tablets

Amazon.com Inc. (AMZN) is readying an updated Kindle Fire tablet, seeking to revive demand for the 10- month-old device as the market crowds with competing machines from Apple Inc. (AAPL), Microsoft Corp. (MSFT) and Google Inc. (GOOG)

Amazon is holding an event tomorrow in Santa Monica, California, where it is likely to announce the newest versions of its line of Kindle e-readers and the Kindle Fire tablet, according toAnthony DiClemente, an analyst at Barclays Plc. The company said it sold out of the Kindle Fire last week.

Last year’s holiday shoppers helped vault Amazon’s share of the market to 17 percent in the December period, according to research firm IDC. Demand for the Kindle Fire has since stalled — the device’s first-quarter share slipped to 4 percent. To stay relevant in tablets, Amazon needs to tap consumers’ desire for streaming movies and video games they can’t find elsewhere, said Edward Williams, an analyst at BMO Capital Markets.

“There’s a big opportunity for Amazon to design digital content that specifically exploits the Kindle Fire,” Williams, who is based in New York, said in an interview. “People who own the Kindle Fire are probably watching content that was repurposed for it. Apple has done a phenomenal job at this. There’s room for another player in the market, and Amazon has a good chance, but we’re definitely dealing with version one right now.”

New Entrants

In June, both Microsoft and Google announced their own tablets, pushing into a market that may reach $66.4 billion this year, according to research firm DisplaySearch. And Apple plans to debut a smaller, cheaper iPad by year-end, two people with knowledge of the plans said in July.

Google, which makes the Android software that runs the Kindle Fire, is entering the running with the Nexus 7, a tablet that is thinner, lighter and has better screen resolution than the current Kindle Fire for the same $199 price. Both have 8 gigabytes of storage and a 7-inch display, though Google buyers have the option to upgrade to 16 gigabytes for $249.

The Nexus 7 also boasts Bluetooth connectivity, GPS and a camera — features Amazon’s tablet now lacks.

Microsoft’s device, the Surface, has a 10.6-inch display and also is slimmer than the Fire. It will run on Microsoft’s revamped Windows operating system and has a cover that serves as a full keyboard with a track pad. Microsoft hasn’t yet announced the Surface’s price.

“There’s still room for improvement” in the Kindle Fire, Williams said.

Digital Content

Amazon started selling the Kindle Fire in November, seeking to extend its success in e-readers into the fast-growing tablet market, where shipments may almost double to 116 million units this year, Gartner estimates. Still, its entry came at a cost to profitability — Amazon spends $139.80 to make each Kindle Fire, according to IHS.

Chief Executive Officer Jeff Bezos is pushing sales of digital content — movies, books, music and other media — on the device to make up for the low price. To gain that loyalty and woo buyers, the company needs to ensure users become addicted to a digital experience they can only get at Amazon. Games may be an easy way to do that, Williams said.

Amazon has “the books, they’ve got the videos, they’ve got the music, but where they’re still lacking is on the game side of it,” Williams said. “I think that’s probably an area that can get a little more focus on the next-generation device.”

Social Games

Amazon announced GameCircle in July, which gives developers the ability to make games more social by adding leader boards and a way to track trophies and achievements. The ability to make more sophisticated games may draw more app makers to Amazon’s device. For every $1 generated for developers in Apple’s iTunes App Store, they earn 89 cents in Amazon’s and 23 cents in Google’s, according to Flurry, a provider of app- analytics software.

Amazon, based in Seattle, said in August that exclusive Kindle books have been purchased, downloaded or borrowed from the company’s virtual lending library more than 100 million times. Amazon doesn’t give revenue figures for purchases on the tablet. The company’s sales of all digital media last year reached $17.8 million and accounted for 37 percent of revenue, datacompiled by Bloomberg show.

To sweeten the selection of movies and TV shows available on the Fire, the company has been striking agreements with content providers. Amazon reached a deal with pay-television channel Epix this week to offer films such as “The Hunger Games” through its instant video service.

New Features

At tomorrow’s event, Amazon may announce more than one tablet and offer the option to upgrade memory for a higher price, Barclays’s DiClemente said in a note to clients this week. The company may also add a built-in camera and let users connect to the Web through a cellular network. Right now, the device can only access the Internet through a wireless connection.

An updated and aggressively priced tablet “could be very attractive to the lower end of the market, and may help to stave off some share gains from the Google Nexus 7 and a possible iPad mini entrant,” DiClemente wrote, noting that the original Kindle e-reader cost about $400, compared with a $79 price point for the cheapest version today.

Loyal Members

To drive purchases of the Kindle Fire as well as movies, music and other content, Amazon can further leverage its millions of users with registered credit-card numbers, a one- click payment option and loyal Prime members, who pay $79 a year for free shipping and free access to some movies and videos — advantages Google doesn’t have, said Atul Bagga, an analyst at Lazard Capital Markets in San Francisco.

The company may have sold about 7 million Kindle Fires since the device’s release in November and will control 10 percent of the worldwide tablet market by 2016, Bagga estimates. Digital sales on the device will help boost an operating margin that narrowed to 1.79 percent last year, lower than 96 percent of companies in the Standard & Poor’s 500 Index, data compiled by Bloomberg show.

“Digital media — selling apps, selling music, selling games — that’s a high-margin business,” Bagga said. “These things position Amazon as a very strong contender in the digital media space. I wouldn’t be surprised to see some meaningful changes to the Fire.”

Amazon Primed For A Big Drop As Growth Slows

Amazon.com, Inc. (AMZN) has recently been testing the $250 level (a new all-time high). With the company projected to earn less than $1/share in 2012, Amazon has understandably been targeted by numerous bears as a monster short opportunity. However, investors shorting the stock have not been rewarded thus far. While the stock pulled back last fall, it has since recouped those losses, and the 5-year chart is impressive.

The problem for shorts is that many investors are convinced that earnings volatility is the result of heavy investments in the business that are bound to pay off eventually. Negative earnings surprises and guide-downs have done nothing to tame the stock’s outperformance. The issue is that if revenue growth is projected to continue unabated, bullish investors can simply pencil in a 5% (or even 10%) margin for the “mature” period five years or more down the road.

However, when investors see a revenue slowdown for a growth stock, a haircut is almost automatic. We saw it last year with Netflix, Inc. (NFLX). We saw it this year with Chipotle Mexican Grill, Inc. (CMG). Shorts had been saying for months (and even years) that the stocks were overvalued relative to their earnings potential, but poor revenue played a bigger role than poor earnings in taking down the stocks.

Amazon is heavily reliant upon revenue growth to maintain its share price. The company trades at a Price to Sales ratio slightly over 2. This is more or less unheard of for a mass-market retailer. If you look at some of Amazon’s main competitors, Wal-Mart Stores‘ (WMT) P/S ratio is 0.53, while Target Corporation’s (TGT) P/S ratio is 0.59. Struggling retailers have even lower P/S ratios: Best Buy‘s (BBY) sits at 0.12, while Barnes & Noble (BKS) has a P/S of only 0.10.

Over the long term, it is unrealistic to expect Amazon to command a better P/S ratio than Wal-Mart and Target, two highly efficient and successful retailers. In order to grow sales enough to justify its current share price, Amazon needs to maintain its current 30% revenue growth rate for at least the next five years. However, as I discuss below, several impediments will put the brakes on Amazon’s revenue growth as soon as next quarter.

Sales tax: I can’t emphasize the sales tax issue enough. I believe that Amazon’s ability to avoid charging sales tax in most of the U.S. has been one of the biggest drivers of its growth over the past decade. With state and local sales taxes rising in much of the country recently, tax avoidance gives Amazon as much as a 10% advantage over bricks-and-mortar competitors. There may be some consumers who don’t think about tax when deciding whether to buy from Amazon or from another retailer, but the vast majority of Amazon’s customers are very aware of the tax savings they are receiving.

However, Amazon has been charging sales tax for orders shipped to Texas since July 1. Since September 1, Amazon has been collecting sales tax in Pennsylvania. Moreover, on September 15, Amazon (and other out-of-state merchants) will have to start collecting “use tax” in California. These three states join Kansas, Kentucky, New York, North Dakota, and Washington as states where Amazon collects tax. This more than triples the population from which Amazon must collect tax, from less than 35 million to roughly 110 million.

Amazon’s management has argued in response that the company has seen strong growth in the markets where it already collects taxes. These are mostly international markets at this point. But the international markets are much less mature, as Amazon got its start in the U.S. They are thus likely to have higher growth rates regardless of tax issues. California, Texas, and Pennsylvania represent about 15% of Amazon sales (my own estimate based on population), and if the imposition of sales tax slows growth there, it will prove a significant headwind for the company as a whole.

Running out of Bullets: Amazon has been growing sales by about 40% annually over the past two years. That growth is expected to slow to 30% this year. Even that estimate relies on a strong Q4 performance. But as I have discussed elsewhere, I have become increasingly bearish on the retail sector as a whole. (Amazon.com has one advantage, insofar as consumers are likely to do more online shopping in a high gas price environment. Still, I don’t think this compensates for the broader risk of macroeconomic weakness.)

More to the point, Amazon has relied heavily on adding new product lines to drive revenue growth. I don’t entirely agree with my Seeking Alpha colleague Paulo Santos, who has pointed to this as one sign of mismanagement at Amazon.com. Wal-Mart has done just fine over the years as a seller of just about everything. However, I don’t think Amazon has many remaining opportunities to add additional multi-billion dollar product lines. Last year’s introduction of the Kindle Fire was successful, and many news outlets have suggested that a smartphone could be coming soon. However, the smartphone market would be much harder for Amazon to penetrate. Whereas Amazon essentially created the low-cost tablet market, consumers already have lots of options for “free” smartphones with a new 2-year contract. Without the ability to compete on price, Amazon will have trouble making a compelling value proposition vis-a-vis strong competitors like Apple (AAPL) and Samsung (SSNLF.PK).

Kindle Fire Shift: The successful Kindle Fire debuted last year in Q4. It’s an open secret that Amazon will be revealing the new Kindle Fire this Thursday, and the new device is expected to go on sale immediately in the light of Amazon’s announcement that the old Kindle Fire is sold out. This could result in a significant revenue shift from Q4 to Q3 this year. Estimates for Kindle Fire Sales in Q411 are in the 4-5 million range. That translates to as much as $1 billion in revenue.

With an earlier release date this year, a strong launch could give Q3 a revenue boost of perhaps $500 million (there was no Kindle Fire at this time last year). But the company would then be facing a tough comp figure for Q4 without the benefits of launching a new device. If this timetable was baked into Amazon’s Q3 revenue forecast (likely), but not analysts’ Q4 revenue estimates (also likely), this factor alone could negatively impact Amazon’s Q4 revenue by 2-3% or more.

Beyond the effects of the calendar shift, Kindle Fire sales will also come under pressure this year from the introduction of stronger competitors. Google‘s (GOOG) Nexus 7 has seen impressive demand over the past two months, and has been highly rated by most reviewers. It offers more features than the original Kindle Fire, at the same price point. Moreover, most industry-watchers expect Apple to introduce a lower-priced “iPad Mini” this fall; it will likely be a huge hit (at the expense of Amazon and Google). Amazon may be able to compensate partially by selling the new Kindle Fire overseas, whereas the original was a U.S.-only product. Nevertheless, I expect Q4 Kindle Fire sales to be lower year-over-year. (We may never know, since Amazon has never released official sales figures for the Fire.)

Conclusion: I think a negative revenue surprise could be looming in the near future for Amazon (when it issues Q4 guidance next month). The combination of increased sales tax collection and weaker Kindle Fire sales in particular could decrease revenue growth to 20-25% year-over-year, well below what the market currently expects. This makes Amazon a promising short opportunity at today’s levels. If shares rally further after Thursday’s Kindle launch event, that could also provide a good entry-point for investors looking to short the stock.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in AMZN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.