Should Amazon give away The Kindle?
With the release of Amazon’s latest Kindle I was doing a little noodling last night and a thought entered my mind
its $139, why not just give it away, YES, GIVE IT AWAY, so I have been doing a little research and I think it makes perfect sense. With almost $2 billion cash on hand this would be incredibly easy.
Figures bandied about from numerous sources suggest that Amazon have sold almost two million Kindles which are now contributing more bottom line in the last qtr than Amazon’s existing book business, Amazon is selling more Kindle e-books than hardcover books. Amazon founder Jeff Bezos said in a recent interview that he expects to ebooks to pass out paperbacks with 9-12 months.
Obviously this is happening at breakneck speed and needs to spread out even quicker,The market is also waking up now with at least 20 Ebook readers expected to hit the market before Christmas.
I think Amazon have an incredible opportunity so how about this?
The $139 Kindle is free, it still costs $139 but it comes preloaded with that amount in credit. Amazon decide to give away 1 million of these, now they have multiplied their Kindle user base by 50% in a single quarter, if you were to presume that their profit is 20-30% the total cost of the exercise is around $100 million but there is a huge payback in this, with this level of ordering Amazon would surely be able to squeeze their technology providers for another 100-15% so their costs on Kindle reduce across the board.
Amazon could double their Kindle user base over 1 year, begin to dominate the whole market, get 2 million new accounts with the all important credit card details and do this without putting a dent in their cash mountain.
Mad or not, what do you think?
The way you pitch it makes very good sense.
I’d take one… and buy some stuff.
The price of ebooks is offputting to a first time purchaser – but with the credit that’s that hurdle leapt. There’s a good chance a habit will have formed by the time all that credit is spent. Makes sense I think.
Fantastic idea Pat. I’d buy two if that were the case. Similar to the Pre-pay mobile phone model with subsidised handset and free credit already on the device.
I think that’s a fantastic idea. I just bought a Kindle 2 Refurb for $100, and I was rather annoyed to find that the only book it comes with pre-installed is the user manual – no credit for my first book purchase or anything.
And you know what my first course of action was? Try to figure out how to get free content on there. The idea of having to spend even a little bit of money on my first book after just shelling out for the device hurt just a little bit.
Even if they don’t give the total $140 in credit, it’s still a win. Why not 5 free books, or something that doesn’t assign immediate value (5 books, 2 magazines, etc).
I think it’s key that this not be pre-loaded, but something you have to choose from the device itself – somewhat like Nokia’s Comes With Music initiative – give consumers a no-risk way to try out the entire buying process and get comfortable with it. To your point, there about to be a TON of e-readers on the market (not to mention the upcoming Tablet on-slaught that’s going to infringe a bit). Amazon would do well to reign in some of those potential customers before they have a chance to compare things.
I was just thinking of adding a Kindle to my wish list today!
The big challenge for Amazon would be to avoid a lawsuit for “dumping,” as merely defending it could be costly. I think the $139 worth of content bundle could work, but not sure how I’d do it in America.
There would also need to be some clever thinking about the various models on offer (two screen sizes and 3G/wifi in some models, but I’m talking to an expert here). I’m guessing they’d want to not lose too many people willing to fork out for the top range model.
If there is one thing you don’t need to worry about it is Amazon’s business model. Smartest company around IMHO. I had no interest in a kindle at all until I saw that new version and the price point. Makes it a no brainer now. Never having used one I’d like to know if you can “relax” in the same way you do with a good book? Has to be better than the shite pad for reading books anyway, couldn’t manage one page on that thing without my eyes falling out!
I would love to see it myself, Pat. Planning to get the wife one for Christmas
It doesn’t sound like complete madness, I have to say.
I’m still very much resistant to switching to e-books, but that would make me at least give it a try. And I think the price on the Kindle books is still a bit high. That is, considering I’m just buying a bunch of bytes, I would expect the cost to be lower.
@Niall – I just posted my thoughts on the Kindle here (http://www.rickycadden.com/2010/08/my-first-kindle-experience/)
The e-ink display is VASTLY superior to standard displays (LCD, OLED, etc) for long-term reading. It looks about like paper, and since it doesn’t have a backlight, it doesn’t hurt your eyes in the slightest, even with prolonged reading sessions. The only downside is the relatively slow refresh rate (compared to your phone or your computer).
Interesting idea. I’ve been on the edge of migrating to eBooks, and a reader is what’s holding me up.
I think the real future in the kindle is not the hardware, but in the service, and that way the kindle is already free. You can have a kindle app on your iOS device, your android device , plain old laptop, whatever.
Start allowing people to write kindle apps for other platforms, or for compaines to make kindle compatible readers.
It’s an interesting idea, but I’m sure there would be many anti-trust issues with simply giving the device away, sure isn’t that what did for microsoft? even with a price tag and that amount in credit on the device I’d still think there would be some issues.
Also by giving the device away you’re devaluing it and your existing customers and don’t forget the “rubber necks” who will get one because it’s free and chuck it in the corner once the novelty wears off.
All in all I’ve never understood the philosophy of giving products away en-mass, In fact I can’t think of an instance where a physical product has been given away en-mass that has not had a negative impact at some point down the road for the producer, can you?
Nice thought provoking article. I’m wondering could Apple not do the same with the iphone as well. Telecom companies have been doing this for years and it seems to work.
I’d be happy with actually getting one for $139.
When you order one from the US store (seeing as we’re in Ireland and are unable to order from the UK store) the basic model ends up being €160, including tax/vat/shipping. It totally put me off buying one.
Very annoying.
Despite the gratuitous use of a “death of…” Tim Ferriss makes a related point in his latest blog post, entitled “How Authors Really Make Money: the Rebirth of Seth Godin and the Death of Traditional Publishing” –
“If you have a Kindle, as I do, how many books did you buy in the first week or two? How many unread books do you have on your Kindle? Unlike with print books, you don’t have to look at a stack of unread material like undone homework. Ergo, you purchase more digital books than you would ever purchase in print. If Amazon is selling 180 Kindle books for every 100 print books, I wouldn’t be surprised if 10-20 people are responsible for the former, whereas 80-100 people are responsible for the latter. This reflects that Kindle owners are buying more books per capita, not that paper purchasers are buying fewer.”
Makes sense. I’ve already spent more than $139 on ebooks from Amazon.
As for the “shite pad” it must be different for different people because I use the Kindle app for iPad and haven’t felt any strain yet. Used a Sony ebook reader and it is nice outdoors. Not great for when and where I do most of my novel reading; in bed at night while the fiancée sleeps next to me with the lights off.
Am tempted to get a cheap Kindle device though. Nice to have my already purchased books transferred to it and available when my daughter is hogging my iPad.
I think at $139 amazon think they are giving it away.
I agree with a few of the posts. Very very cheap but not a full give away is about right. A no brainer price point. ‘Free’ isn’t valued.
I have the new one on order,
I realised i was the perfect ebook consumer. Read loads. live in a foreign country. Have waited weeks for ‘must read’ books with post becoming more and more unreliable. Seem to have to pick up even the smallest packages thses days.
@Neilc just be aware that the Kindle store is not global. There is at least a US and UK (including ROI) store and the contents are different. There have been a couple of US books I have not been able to buy. Though If you can get a US Amazon account then I think you’ll be able to buy from the US Kindle store delivered to a kindle device in, say, Outer Mongolia.
Hey Paul. I spotted that. I hooked up my US account to get US prices on tech/academic texts. Surprisingly They had no problem posting electronics to EU with proper chargers etc.
Interesting idea Pat! Certainly the only way I’d consider buying one. I average 5-7 paper novels a week and can’t imagine liking an e-book reader. Would have to be extremely enticing to get me to consider.
Interesting, innovative idea Pat – nice, out-of-the-box thinking.
I’m currently waiting on the new Kindle to arrive and managed to get a US one, which is a much better deal (as already highlighted) than the UK one. I’m running out of space for books so I’m a perfect customer and looking forward to my new toy
I have to echo what Niall said earlier, they’re an incredibly intelligent company. Having interviewed with them, it’s impossible not be impressed, very clever folk. Their interviewing process is very challenging (I did 10 interviews) and despite being unsuccessful, it was a great learning experience. They have an interesting concept of the ‘bar-raiser’, which is worth reading about.
@Deborah 5-7 a week? You’ll love an eBook reader. Keeps your place reliably between multiple books at once, all 5/7 books will fit in your bag no problem, make notes, highlight favourite passages, one-tap dictionary word look-up, you can buy a new book anywhere anytime, no popping out to the shops or waiting for the delivery man.
And I also prefer that you can rest it on your knees and the binding doesn’t flip the book shut. No more bending spines to keep books open.
@Paul – See that all sounds nice in theory, but to me there’s nothing like the smell of a new book and the sense of nostalgia as you turn the pages of an old classic. Part of the joy of reading for me is actually holding that book and turning each crisp page. :/
@Deborah’s profile might be the key here.
the margin on an ebook sale must be higher than paper.
if they have someone ordering that frequently then it may be worth while to give away the reader to get loyalty to their site for high worth customer.
a ‘gold’ member get the reader for free.
‘gold’ threshold can move to be practically giving it away.
I do believe they need to widen the gap between ebooks and paper as there is a perception they are taking a higher margin.
I also think we may be the 3rd phase early adopters in a well thought out strategy to eventually give it away to the masses.
@Deborah I was with you on the nostalgia being my breaking point until I thought about my shift from cds to mp3s. it wasn’t as painful as i thought, the connivance wins, and it isn’t exclusive for all…. i still love to record store shop and buy still some cds.
@Neil – Good analogy there with the music, hadn’t really thought of that, although CDs would never hold the same thrill for me. I always saw them as an inconvenience with all that packaging and then the kids would undoubtedly scratch them!
BUT… you’ve made me think. I might ask my Dad to borrow his kindle for a week or two and see what I think.
@deborah I do still love the smell and feel of books and I still have shelves of them. I didn’t think I’d enjoy eBooks but after the third one or so I realised the convenience and content mattered more than the paper.
And eBooks are a hit with my 2 year old. They come with *slightly* interactive elements and beautiful illustrations. And she can’t tear the pages out of the book as I’m trying to read to her…
The Technium had an article along similar lines; http://www.kk.org/thetechnium/archives/2011/02/free_kindle_thi.php
And I agree. Make it free and they’ll make it back on book sales.