Photo: Credit Suisse
Amazon’s share of the digital book market will slip from 90% today to 35% by 2015, according to a report from Spencer Wang at Credit Suisse. Spencer thinks Apple, Google and Amazon eventually end up splitting the e-book market.But while Spencer believes this reality has spooked Amazon investors, he himself doesn’t see this market share adjustment causing a great deal of long term pain for Amazon.
Amazon controls approximately 22% of total book sales (19% print, 90% digital). Even as its e-book marketshare slips, its physical book sales will grow, and Spencer projects Amazon will eventually control 33% of all book sales.
Spencer calculates the company’s compounded annual growth rate in the North American book market will be 7.5%.
Nevertheless, Amazon’s stock price has fallen since early December and Spencer thinks some of the pressure on the stock is coming from investors worried about Amazon’s ability to compete with Apple during a transition from physical books to digital.
Amazon's stock is under pressure, as investors worry that Apple's iPad is going to eat the Kindle and digital sales
Some perspective on what's at stake here. Amazon's media business (DVDs, CDs, video games, books) are a little over half of gross revenues
Sizing up Amazon's influence on the physical book market: It has 19% share, bigger than an other single retailer.
Amazon wanted to sell digital books for $9.99 to sell more Kindles, and satisfy consumers. Publishers said no.
Without the pricing advantage, Amazon's share of the e-book market will slip, but its overall book marketshare will grow.
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