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Kindle: Big Money if Amazon Gets it Right

Posted by Bob Warfield on November 19, 2007

As you must have heard, Amazon is reinventing the book with an electronic device called the Kindle.  I want one.  Why?  Because a lot of my books are throwaways: cheap paperback novels.  I was at Borders the other night and couldn’t remember all of my current favorite paperback fiction author’s names nor exactly which of their books I’d purchased.  I would love to have Kindle and get it to add value.  Why not a Kindle book of the month club?  I could use a few new authors and Amazon is great at analyzing recommendations based on past preferences.  Why not let Kindle remember which books I already own?  Hopefully it will even understand which wood pulp editions I’ve bought so I don’t duplicate a paperback.

My initial reaction to Kindle was worry about the display quality and usability.  This is where they have a chance to really fall down.  I was impressed to see they’re using some pretty fancy e-ink technology there, but I’ll have to see one.  Eventually, I concluded it doesn’t matter for the kinds of books I’m likely to read with it.  You understand the kind of books I’m talking about here, right?  Spenser for Hire?  Tom Clancy?  Michael Crichton?  These are books that are consumed and discarded.  I often go through one in a single evening.  I tried keeping them, only to discover that I can’t reread them.  I can pick one up I bought many years ago: 10 or 15 years or more for an old Robert Ludlum.  I may get a few pages into it, but suddenly the whole thing pops into my head and I remember it.  These books are disposable to me.  For this kind of reading, the display needs to be contrasty and legible, but there is no color.  I want to be able to see it in bright sunlight by the pool or beach in Hawaii, but I don’t need to render coffee table book-quality photos.

The form factor is ideal for travel too.  We recently took the kids on a Med Cruise, and the stack of books my wife and I dragged along was ridiculous.  We read every single one, wished we had more, and abandoned half of them in the stateroom when the cruise was over.  With Kindle, it’s easy to pick up more books along the way.  They weigh absolutely nothing after all. 

Now I’m wondering if I’ll have to bring my laptop as well based on how much laptop functionality Kindle can provide.  Strangely, nobody is asking whether it can do MP3’s.   Huh?  I can buy CD’s at bookstores.  Might I not want a little music while reading?  Ryan Stewart wants to know why it doesn’t do PDF’s.  Good question.  It will be great to read blogs on Kindle, although wow, the fees for the blogs seem ridiculous.  99 cents to 1.99 a month per blog and I read 171 blogs as of this writing.  Mathew Ingram is right when he says, “Pay to read blogs? WTF?”  The economics make no sense for that, and I’ll have to bring along a laptop or perhaps an iTouch/iPhone for the blogs and MP-3’s. 

E-mail is another thing I might wish Kindle could do, but pretty soon I’ll have a full tablet PC.  Maybe Apple’s rumored device will steal Kindle’s thunder before it ever gets rolling too fast, much as devices like the Nomad MP3 player (I had one and loved it) got crunched by iPod.  This can happen when so many people are calling Kindle UglyBubblegeneration says:

As a product, Kindle’s no great shakes. It doesn’t have the disruptive value proposition that an iPod or iPhone did – in functional, aesthetic, or emotional terms. Yes, the screen is nice. But the storage is weak, and the aesthetics are…awful.

Functional, aesthetic, and emotion terms are important for a sexy potential Christmas gift.  Never underestimate the power of Apple’s Uber-coolness.

The economics of reading blogs on Kindle says a little about why I think this is Big Money if Amazon gets it right.  Consider my beloved paperbacks.  $9.95 a pop.  I’m guessing there may eventually be a premium for novels still in hard cover so as not to dilute those sales.  A brand new copy of Robert Parker’s “Million Dollar Baby” costs (drumroll please) $9.95 plus shipping and handling.  With Kindle, I pay the same money.  But, and this is a big but, Amazon paid very little.  They’re selling bits now, baby.  Just bits and no wood pulp.  Authors get 15% or so.  Publishers will have negotiated with Amazon.  It’ll be interesting to see how those economics play out, but I can’t see why this ends differently than it has for the record industry.  Kindle is disintermediating many aspects of publishing, though certainly not all. 

The bottom line is that Amazon could wind up with a bigger piece of the overall pie for a book sale.  Moreover, they have a mechanism that can much more effectively drive further revenue by signing you up for grander programs.  How about the Spenser for Hire book club?  Amazon will buy every novel Parker publishes and I’ll have it on my Kindle before I even knew it was out.  And what does Kindle do to ordinary bookstores?  How much of their revenue comes from these paperbacks?  Are they relegated to the high end ghetto of coffee table and other such books that aren’t satisfying on Kindle?

Still more questions than answers.  Amazon has a lot of work here to realize the promise, but I want a Kindle!

15 Responses to “Kindle: Big Money if Amazon Gets it Right”

  1. […] unknown wrote an interesting post today onHere’s a quick excerptThe economics of reading blogs on Kindle says a little about why I think this is Big Money if Amazon gets it right. Consider my beloved paperbacks. $9.95 a pop. I’m guessing there may eventually be a premium for novels still in hard … […]

  2. […] Big Money if Amazon Gets it Right smoothspan added an interesting post on Kindle: Big Money if Amazon Gets it RightHere’s a small […]

  3. I buy hundreds of book a year and I don’t want one. Why? 1. I like holding a book. 2. It costs way too much 3. The high price of the e-book. 4. All of the other limits that you mentioned.

  4. lisaamorao said

    Other than the screen size which might be an issue for someone who might require large print, I don’t see the value in Kindle especially when put side by side with the iPhone or even an iPod, which I already use to listen to audio books. With the iPhone SDK coming in a couple of months, I wonder how much longer it would be before the iPhone has the functionality to have a nice text or e-book reader (in addition to the ability to listen to an audio book on your iPod).

    I also don’t understand what is so revolutionary about the Kindle when PDAs have had the e-book reader feature for years. A bigger screen, perhaps, or maybe EVDO to facilitate book downloads? An Amazon version of iTunes, perhaps?

    Also, if rumors are true that this thing will cost around $400 plus the cost of downloads, it’s not an easy proposition to make to the consumer.

    But I agree on your point that it could be a cash cow for Amazon if they do it right. I’m thinking of the model used to increase subscriptions back in the day. Vouchers for an mp3 player of your choice if you subscribe for two years.

  5. Ducker said

    I dont agree with Tom Clancy´s being discardable….then again i might be taking it personal (clancy is the best) but yes….its a nice initiative, hope it works…even though here in Honduras its sometime hard getting cheap paperbacks (I havent read a tom clancy since the bear and the dragon) thats how crappy it is here.

  6. smoothspan said

    Size does matter here, so screen size is a winner versus the iPhone. Now the upcoming iTablet (or whatever it will be called) fixes that, but I’d expect to pay a lot more than $400 for an iTablet. Maybe I’m too pessimistic. OTOH, it will be Uber Cool, because it’s Apple, and Kindle clearly is not really Uber Cool, I’m just hoping it’s Uber Convenient, because that’s how I view it.

    As for $400, which many complain about, come on, where did the iPhone start out? Where did it wind up? You’re getting to be first on your block with a Kindle. You can read the display in bright sunlight according to Scoble.



  7. lisaamorao said

    Spending $400 for a brick that reads e-books isn’t a fair comparison to a device that has a web browser, a maps application, a YouTube player, a nice e-mail client, not to mention all the other Safari-based applications that have been developed for it for reading content and on top of that, it’s a phone, even at the original price tag of $499. And with the iPhone’s current price tag of $399, it’s even a tougher sell.

    Just saying that at $400 it’s gotta do something more than let me read in direct sunlight or let me read in large print.

    Not saying there isn’t a market for the Kindle, just saying that it’s a tough proposition to make. And of course there are those that can use the Kindle. If it came as part of a subscription deal with Amazon I was personally planning on getting one as a present for my grandma because she needs to see stuff on large print.

  8. smoothspan said

    Lisa, there’s a few more freebies here in the Kindle than it seems:

    – Permanent free wireless access with no WiFi connect charges via bundled Sprint EVDO. That ain’t too shabby, and isn’t the case for iTouch/iPhone. Wireless access is costly, and getting it for free is worth some amount of the $400 cost of entry.

    – A real QWERTY keyboard: not to be underestimated for those who’ve gone without. The screen is also much larger than iPhone/iTouch, again, not to be underestimated for reading.

    – There is a web browser on the device. That’s amazing news.

    – You can email a variety of file types to the device and they’ll be converted for reading. Still no PDF, however.

    I don’t know about you, but it’s making more and more sense to me. I may have to be an early adopter by putting it on my Xmas list. Skeptics, please wait for 2.0, which I’m sure will be a lot cooler.



  9. […] on How Do We Say, “I Have N…Peter Kim on How Do We Say, “I Have N…smoothspan on Kindle: Big Money if Amazon G…lisaamorao on Kindle: Big Money if Amazon G…smoothspan on Kindle: Big Money if Amazon […]

  10. […] here for full […]

  11. lisaamorao said

    Amazon charges a “small amount” to convert documents for reading on your Kindle.

  12. […] The Smoothspan blog argues that $400 is a reasonable cost of entry considering there are no wifi connect charges via Spring EVDO which the device comes bundled with. “Not so with the iPhone/Touch,” he added. […]

  13. […] you grab the first chapter of any book free to see if you like it before purchasing.  As I wrote in my original Kindle post, there are lots of ways the buying experience can be enhanced by Kindle.  One of my minor book […]

  14. […] 29, 2008 As I was commuting today, I found myself wondering what had become of the Kindle?  As I’ve written, I love the idea.  I didn’t ultimately pull the trigger over the holiday season, largely […]

  15. Joe said

    The Kindle is actually quite classy; it’s like a convergence of old school and new school technology

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