As Sales Surge, Kindle to Make Up 10 Percent of Amazon Revenue by 2012

Amazon seems to be going to strength to strength and it's looking like it's expanding into new areas at an increased rate, but the company is actually just doing what it has always done, working methodically at new opportunities, even if no one else understands them, until it arrives at a point where things just fall into place.

The Kindle lineup is one example. A few years ago when it launched, it seemed like a novelty, ebook readers were not part of mainstream culture and most devices until then catered more to gadget geeks than to avid readers.

The Kindle changed that, not only was the device pretty much the best in class, since it focused on doing just few things but do them well - the Apple approach - rather than being everything to everyone, but the secret was the ecosystem, the Kindle ebook store and the ease with which users could buy new books and have them available on their Kindles.

Even as competition increased, from other ebook reader makers, and from the iPad as well, the Kindle continues to do great and, in fact, is estimated to become a big part of Amazon's business by next year.

Already, Kindle book sales overtake sales of physical books at Amazon. Considering that Amazon started out as an online book store, the transition is even more impressive and symbolic.

The company was willing to risk cannibalizing its own business in order to ensure that it can move forward, but it managed to make the transition in a non-destructive way, very much like Netflix managed to move from DVD rentals to online streaming.

Amazon doesn't break down Kindle sales, so all we've got is estimates, but Citigroup believes that the Kindle division generated $2.5 billion in sales last year, or 7.2 percent of the total.

This year the estimate is $3.8 billion, or 8 percent of total revenue, and in 2012 it should reach $6.1 billion, 9.9 percent of the total. What's more, that's the year when digital book sales overtake revenue from selling the device itself, $3.7 billion versus $2.4 billion.