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Report: Sprint's Kindle ARPU is just $2 per month
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During its first quarter earnings call, Sprint Nextel touted that sales of the Amazon Kindle e-reader device drove the majority of its 394,000 wholesale additions. That's a strong number, except when you consider that the average revenue per Kindle device is just $2 per month. This is compared to a typical Sprint postpaid subscriber ARPU of $56 per month.
Nielsen analyst Roger Entner predicts that because Kindle is included in Sprint's overall subscriber numbers, the carrier will see pressure on its ARPU numbers going forward. This bad news/good news scenario isn't just going to impact Sprint, however. Most U.S. operators are currently trying to grow their business through embedded wireless devices.
These embedded wireless devices--navigation devices, digital cameras, e-readers and others--are connected to the wireless network but will not garner the same high ARPU as a traditional postpaid customer. As the embedded wireless device model evolves, many operators are considering breaking these numbers out differently so that they don't impact their traditional ARPU measurements. However, the embedded wireless area is still in its infancy and therefore the business models are in flux.
FierceWireless is hosting a virtual event on Embedded Wireless Devices June 9 where we will be discussing this issue and more. Speakers include Glenn Lurie of AT&T, Maurice Thompson of Verizon's Open Development Initiative, John Horn of T-Mobile USA and others. To register for the event, click here.
For more:
- see this blog post
Related Articles:
Amazon: Kindle EV-DO e-book best selling electronic device
Barnes & Noble teaming with Sprint for Kindle rival?
Sprint boasts about Boost while postpaid net adds plummet
Comments
Posted by Jason Kreno | May 27, 2009 - 10:44am
Right, but that's $2 of easy ARPU. 394k*$2=$788k/mo passive income, more or less. Like the Google ads running on this blog, it is money you make without a ton of recurring effort or indirect expenses.
I wonder what the ARPU is for ATT or VZW's embedded devices? A bit tongue in cheek, but I have seen some ATT-embedded laptop's lately. Some with subsidy pricing. Can't imagine their numbers are as strong as Sprint's out of the gate.
Posted by Praneeth | May 27, 2009 - 10:57am
The devices from ATT and VZW with built-in wireless work on the standard mobile broadband data plans from both carriers. i.e. $40+ per month. The new VZW / HP Notebook on the other hand is probably subsidizing about $200 of device cost. But this is not that different from any other data using, subsidized device, iPhone, Blackberry, etc.
The difference here for Sprint is that the data usage to download books is really small. The Kindle doesn't lend itself to media, pictures, videos etc., and the browser is primitive. The capacity of the entire device is 2GB or so. So even if you fill up your entire device in a month you are using so little of the network bandwidth vs. a user on a notebook with mobile broadband, watching a netflix movie and calling on Skype.
My guess is that the many thousands of current Kindle users probably translate into a couple of bandwidth hogging laptop users. So the real metric to use maybe $ per bandwidth used.
Posted by Jason Kreno | May 27, 2009 - 11:12am
Ahh, good point Praneeth. Didn't realize those were standard data plans, which makes a difference. However those plans incur the same direct and indirect support costs for ATT/VZW. I guess there may be more money there in the long run, but if Sprint establishes itself as the wholesale/dumb pipe provider of choice for smaller or more passive devices (e.g. Ford pickups, mobile credit card payment, fixed device applications) that's a good space to be in.
Posted by Timm | May 27, 2009 - 8:37pm
Last I checked ARPU was revenue per user, however a Kindle is a machine. Neilsen is mixing users and machines. Hey what do you expect from analysts.
Posted by willie | May 28, 2009 - 7:48am
Measuring ARPU on the Kindle? The metrics are not evolving with the industry; a device is a device is a device no longer works. And with 4g and basically anything with a MACID that is not tied directly into a subscriber number will have even more of an impact, or force the carriers to develop the technology around the numbers, wag the dog. Time to re-evaluate what a "unit" is. I like the bandwidth idea....
Posted by Ajay | May 29, 2009 - 5:12pm
i also like the bandwidth idea, and while we are at it, why not extend it to voice usage as well....revenue and cost per minutes, per MB, and averages used for each category of customers/devices....
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