Kindle Pricing, Business Models and Source Code 156
narramissic writes "A trifecta of Kindle-related news surfaced this week, with Jeff Bezos speaking at Wired's 'Disruptive by Design' conference on topics including Kindle pricing and business models. And yesterday, reports blogger Peter Smith, 'there was a flurry of blogging activity yesterday stating that Amazon had released the Kindle source code. Once everyone caught their breath, it became apparent that the files in question were just some open source libraries that Amazon had modified (they're being good open source citizens and releasing mods they've made to open source code — good for them!), not the complete source code.' Now, back to the Kindle pricing: According to a post at Wired, Bezos said Amazon opted to sell the Kindle for 'something akin to the actual cost for hardware,' rather than subsidizing the hardware costs and requiring a monthly subscription or requiring the buyer to purchase a certain number of books per month because 'fees and minimum purchase requirements create friction.' Smith has a different take: 'If I'm buying a Kindle from Amazon that enables me to buy books from Amazon, I'm broadcasting a desire to buy Kindle books. I would welcome some subsidization of the hardware since I'm going to be buying content anyway. No, I really think Amazon priced the Kindle the way they did because they thought they could get away with doing so (and they were right, it would seem).' Meanwhile, over at the New York Times, Bezos said 'that he sees Kindle-the-device and Kindle-the-book-format as two separate business models, and that the Kindle iPhone App won't be the last software reader to appear.'"
Re:they are supporting ebooks on non-Kindles (Score:1, Insightful)
Re:End of print periodical? (Score:4, Insightful)
Subsidized hardware (Score:3, Insightful)
"If I'm buying a Kindle from Amazon that enables me to buy books from Amazon, I'm broadcasting a desire to buy Kindle books. I would welcome some subsidization of the hardware since I'm going to be buying content anyway. No, I really think Amazon priced the Kindle the way they did because they thought they could get away with doing so..."
Why is it only in the tech-gadget industry that people expect manufacturers to sell items for *less than cost*?
Re:Subsidized hardware (Score:5, Insightful)
Why is it only in the tech-gadget industry that people expect manufacturers to sell items for *less than cost*?
I know! People would think you were crazy if you suggested selling a razor at below cost to encourage people to buy them and let you make money from the blades.
Don't subsidise the hardware - subsidise the books (Score:4, Insightful)
The thing that stops me taking the Kindle is the huge upfront cost. I can buy 200 books for the price of one Kindle. Obviously, the Kindle has all sorts of advantages over regular books, but it's quite a steep cost.
I think Amazon should subsidise the books. Make the Kindle come with, say, $200 worth of vouchers redeemable in the Amazon store. Make it $100 worth of general vouchers and $100 worth of 2-for-1 deals. Anything to cut the apparent cost of the hardware.
Digital content has no intrinsic cost, so it's not much of a subsidy on their behalf.
Re:Don't subsidise the hardware - subsidise the bo (Score:3, Insightful)
They do subsidize the books (if by subsidize you mean "sell for less than hardcopy"). I just bought Outliers for Kindle for $9.99; hardcopy is $14.83 from Amazon, or $18.19 from B&N.
Re:Don't subsidise the hardware - subsidise the bo (Score:4, Insightful)
That's not a subsidy. They can't sell digital copies for the same amount as hard copies because their customers know that it costs them significantly less money to produce. They're still selling both the hardware and content at a profit. A subsidy is when you use profits from one product to offset selling another product for a loss (eg Sony sells the PS3 at a loss but makes it up by charging a $10 royalty on every PS3 game made, even if they had no hand in the development/production/distribution of the game).
Re:they are supporting ebooks on non-Kindles (Score:3, Insightful)
I read this as Bezos saying that they'll support Amazon Kindle ebooks on other "mobile" platforms (a la various smartphones, etc), but that they won't support them on anything that is a direct competitor (a la E Ink-based reader devices) to the Kindle. This view is totally consistent with the words he said.
I agree with your interpreation. In Bezos' opinion, the iPhone does not compete with the Kindle, it complements it. In my usage, I've found this to be true. I do MOST of my reading on the Kindle, but I do get in a page or two of a book on the iPhone while in the bathroom. It's entirely possible for the iPhone to offer some competition, but I don't think it's a big concern for them- iPhone only customers are still buying their books, after all.
There's no way a Sony Reader would complement a Kindle in a similar way. They compete, plain and simple.
Re:End of print periodical? (Score:4, Insightful)
Since I purchased my Kindle 2 I have purchased more individual newspapers than I have in the last 5 years. I like the ability to pick up the Wall Street Journal one day and Boston Globe the next. Also during my commute if I see an article in a paper while reading over their shoulder I immediate go to Amazon and buy that days print.
I think Peter Smith has it wrong and Jeff got it right. I purchased the Kindle at this price point because I was not tied down to any contract. I read a lot of books and with the Kindle I now have them all queued up. Not all of the books were purchased from Amazon. The Pragmatic Programmers is a publisher that gets it and other publishers should take note. I went to there site to see if they were going to off ebooks for the Kindle. Little did I know they already do. I logged into my account and that is when I got an alert telling me that the two ebooks I purchased a year ago have updates. Hmmm... Would be cool if I could trade these in for the Kindle version. BLAM A click of the link and the PDF and Kindle versions were ready for me to download. No extra cost. Now if only Manning and a few other publishers would get this.
Re:let we forget (Score:3, Insightful)
If you comply with a common good out of fear of the repercussions of not doing so, is that objectively different than if you comply with a common good out of love of the community? And how does an outside observer accurately know the difference?
Assuming you know someone's motivations is usually a mistake, and certainly arrogant and prejudiced.
Amazon did the right thing. "Why" is ultimately irrelevant.
Re:Subsidized hardware THE DIFFERENCE (Score:3, Insightful)
The difference that makes Kindle distinguishable from your example is that Amazon doesn't manufacture the blades. They are reselling other author's works and need to pay those authors a fair price. This is a significantly different business model from Gillette.
Re:Slashdot (Score:3, Insightful)
It seems unreasonable to me for someone to ask a company to sell their wares at less than it costs to produce it. Amazon could make that choice if there was reasonable competition and they wanted to take the hit to compete (assuming they couldnt be competitive at production cost) but suggesting that amazon take a loss when clearly the market is willing to support production price is just stupid. If you don't want to pay it, feel free not to but dont expect them to cater to you.