Jeff Bezos: Why the Kindle Is So Expensive
wired.com
wired.com
Someone might want to tell Steve Jobs; Apple, um, clearly didn’t get anywhere by tying iTunes to the iPod.
Can someone clarify for me, does it sound like Bezos' stance might be that allowing each product to compete in its own market without the advantage of the other will help force it to become a better product? And that ultimately this will be better because each product will have more merit independent of the other?
I can't tell if that's what he thinks or if that's what I think he thinks. Either way, I think I like this way of thinking.
Especially when you consider their margins. Books on the Kindle store have a publisher-set "suggested price," but Amazon retains the right to sell the item at any price point. For each sale, regardless of actual price, the publisher gets 35% of their suggested price.
Imagine publishing an item for $100 on the Kindle store. Amazon can mark it down 25% and still $40 per sale while you only get $35. Not a bad situation for Amazon.
He'd love us to believe that the store and reader are not in some sort of mutually-reinforcing dominant position. But if they really were separate, wouldn't I be able to buy e-books from amazon with a different device? And start my own bookshop for kindle users (maybe paying amazon for traffic to the device)?
You can definitely do the former. You can use your PC to buy Kindle books on Amazon and then read them on your iPhone or iPod touch. (You can't buy them directly on the phone, but who knows whether this decision was made by Amazon or by the Apple App Store guardians.)
As for the latter, you can probably do that too, albeit in a pretty cumbersome way. Native PDF support on Kindle DX will make it much more viable, although the biggest barrier would be limited access to the Kindle's wireless connection.
I suppose one possibility if you were making your own Kindle store would be to have your customers add your site's email address to your Kindle's whitelist of addresses allowed to send documents to your Kindle. This would mean customers would pay an extra $0.15 per MB with each transaction...but now that I think about it this is still way less than Amazon would charge you to sell a book in the Kindle store at Amazon.com....hmmm...I wonder if this may actually be viable?
and dave thomas at pragmatic programmers has been targeting kindles for a couple of months now. you pay him for the file and then it's up to you to get it on your kindle (by cable or by email), but I prefer his formatting over what you get with other technical books at the kindle store. he's put a lot of thought into making code examples readable on the device.
I looked into developing an e-ink reader, but the developing kit is/was around $3500, enough to keep out hobbyists at this moment.
I decided to call up PVI directly (a fun experience since they answered the phone in a foreign language) and they were willing to sell me 6" displays for around $85 in low quantities.
For hobby related projects, the best bet is to use kent display's CHLCD modules which are similar to a LCD but with bistable pixels. The display driver is also integrated so much easier to interface with.
I really respect Bezos but to me he is seeing things from his side not the customers.
The consumer has limited space in his pocket. Why would anyone want to have a Phone and a Kindle with them at the same time.
I can't really see the Kindle appealing to the mass market with that pricing model. I think Amazon's best bet might be offering subscription through smartphones like iPhone and others.
When the iPhone originally came out with the $500 price tag it only appealed to the fan boys. But by cutting the initial price they started appealing to the average Joe.
The thing with the average joe is that they don't do the two year math. They only look at the upfront price. We justified our monthly data plan costs by getting rid of our land line. I think that's why the smartphone makes sense to lots of consumers.
It has succeeded already by most reasonable business measures.
I think this misses the point. A Kindle doesn't even fit in your pocket. The value of a Kindle is not that you take it with you anywhere, but that for many people it's a better way of reading books.
Of course, it's also nice to have the same ability on an airplane, too. And it's nice that the battery doesn't die in an hour like my phone would.
I wouldn't want a Kindle if my phone could magically shape-shift to be the size of a book and if it had unlimited battery life. But in the real world, you have to compromise.
As long as he can build the infrastructure + database of online books, he might realize that his distribution company won't make the best electronic book reader in the world, and open his distribution channel to other manufacturers.
What he's doing is sliding the bubble closer so he can make the market mature faster. The money made/lost at this point is insignificant compared to when the prices of the displays plummet and the market for electronic books really takes off.
As apple proved, it's all about the content.
The risk with current pricing model is that once somebody buys a Kindle they have to keep buying the k-books at whatever price they come. Otherwise the device becomes useless. One can only hope Amazon keeps a tab on the k-book prices.
Done so well by Apple and others in consumer electronics space.
Somebody please send a $250 netbook to Bezos, or two for a Kindle's price.
Its still a little cheaper than the iPod Touch was originally, isn't it?
Not to mention, we have no idea what the cost is on a Kindle. Netbooks use commodity components that are widely available from numerous manufacturers. The same is not true of e-ink displays. This is at least partly a factor in the perceived high cost of an ebook reader.
We also don't know what kind of arrangement Amazon has with Sprint. Amazon gives a few cents to Sprint when you purchase something using Whispernet. Maybe Sprint also gets a flat fee every time a Kindle is sold. We simply don't know.
There's also the issue of limited competition in the ebook market right now. There are only a few manufacturers of quality e-ink readers and on top of it all the Kindle is the only game in town if you want to buy ebooks from Amazon. This is relatively new technology and the price will go down. We've seen it before with the components that go into a $250 netbook. This is economics 101.
Pixel Qi's screen will narrow that gap eventually, at the price of being less available and more expensive in the short and medium-term.
- Netbooks are usually based on Atom processors that are cheap when compared to Core2 and other more traditional PC processors but are much more expensive than the cellphone-class ARM processor used in the Kindle
- Netbooks use higher-capacity batteries because Atom processors use more juice than the ARM in the Kindle.
- The Kindle uses far more commoditized components than a netbook does - it uses cellphone-class components while netbooks use PC-class ones.
- Netbooks also have more RAM - the Kindle certainly has less than a gigabyte of RAM - I would risk the Kindle has no more than 128 megs, soldered on the motherboard - which is also cheaper than mounting RAM into a socket.
- The e-ink displays are not new technology - a couple years ago my carrier (in Brazil) offered me a Motorola phone with e-ink display. It was an entry-level "dumbphone" and I did not need one. The only "new" thing in the Kindle DX display is its size and design considerations that follow from it.
A user that wants a thin device doesn't care why the device is thin. Netbooks aren't as thin as a Kindle, period.
I would happily trade a couple millimeters thickness for longer battery life, wi-fi, a hard-drive and network-printer emulation software so I could print my stuff to "paper stacks" on the device. Unfortunately, the absence of such device indicates strongly that those needs are mine only.
I look forward to hacking the Tech Crunch thingie to suit those needs.
Pocket calculators have LCD displays for decades, too. That does not mean that your 22" inch LCD screen has no "new technology" and should be cheap.
And Kindles are not that different from any other e-paper display device bundled with e-readers from many other sources.
The Kindle should be cheap to build
This discussion lacks a price list for all parts. Until then, it's my common sense against yours.
Or better: my biases against your biases.
US$ 60 for the display doesn't look that expensive. At US$ 190 total cost of manufacture for the 2, I would risk the wireless free forever subsidy seems to be a substantial part of the unit cost. Would it be a safe bet to estimate the display of the DX to be around US$ 120?
So, again, I would be happy with a DX that used wi-fi or my own GSM/3G instead of the US-only cellular network. And the bright side is that it could probably be sold for less than the current versions.
The processor is not the expensive part, nor is the ram. The fucking display is the expensive part.
Still, the display has to be very expensive, since every other piece should be really cheap and there are not that many of them anyway. The Kindle has the brains of a cheap smartphone.
Look at all the other vendors of eInk devices. Those devices are also expensive. If they could massively undercut Amazon, they probably would.
And, of course, as long as market share is not a huge concern.
It is also unwise to enter a price war with a competitor with deeper pockets than you.
The Kindle DX has nearly 1-million 16 color pixels. That motorola phone has literally a handful of one-color pixels. Hence the price difference.
I have no idea how they'd implement it, but I suspect you'd pay a monthly fee that "earned" you X number of books. You'd hope they wouldn't let you "forget to buy enough" and thus lose your Kindle service.