Amazon is the Gillette of e-readers; give out the reader as close to free as possible, and then take a 30% cut selling them books. So, I’ve always thought that one of their definite goals is reducing the cost of the Kindle as close to free as possible.
The price history of the Kindle supports this theory:
Kindle 1 – November 19, 2007 – $399
Kindle 2 – February 10, 2009 – $359
Kindle 2 – July 8, 2009 – $299
Kindle 2 – October 7, 2009 – $259
Kindle 2 Intl – June 21, 2010 – $189
Kindle 3 Wifi – July 28, 2010 – $139
Kindle 3 Wifi w/Ads – May 3, 2011 – $114
Sourced from Wikipedia
If you chart the Kindle price over time, you get a fairly plausible R2 value of .93, and a relatively linear path towards $0:
My personal theory is that the Kindle will be free for Amazon PRIME members around Christmas season this year, and that by the summer of 2012, it will be generally free in its lowest-priced version. Amazon will hedge out the hardware cost in various ways (ads, PRIME membership, contract requiring the customer to buy XYZ number of books), but ultimately their goal is to deliver kindles into the hands of book-hungry consumers.
The newly announced $114 ad-supported Kindle version is just the latest step in this direction. For the minor inconvenience of advertising screensavers (the Kindle power down / lock screen) and a small advertisement in the kindle bottom bar, you shave $25 off the price–a significant discount! Personally, I have been disappointed with the kindle screensaver pictures that come with the device by default, and wouldn’t mind at all to have tasteful ads when I turn it off.
Here’s what it will look like, from FastCompany:
The way that Amazon is selling this is that you, as a customer, will receive unique “special offers” directly on your kindle, such as discounted gift cards from Amazon/Audible, coupons for MP3s, and other promotions. Either way, we’re looking forward to cheaper kindles. More commercial integration means reduced consumer cost–what’s not to like? We hope also that Amazon can kill the agency publisher model too, and price ebooks at fair value using a dynamic marketplace system.
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