06.21
In Uncategorized | Tags: Amazon Kindle, Barnes & Noble NOOK
Barnes & Noble drops the price of the NOOK from $259 to $199 and adds a Wi-Fi only version for $149 – link
Amazon responds by dropping the price of the Kindle to $189 – link
The obvious question is will Amazon release a Wi-Fi only version of the Kindle? I hope so only from a price perspective. Priced at $129, it would finally hit what I consider a mass market price ($99 would be perfect).
Apple started the day by releasing their first major update (1.1) to iBooks so it’s been an interesting and fun day for reading devices.
Mini Rant: If companies want to play the clever capitalization game with their product name, they should be consistent. Amazon: is it Kindle or kindle? Barnes & Noble: is it NOOK or nook? I couldn’t find an instances during my quick look but it wouldn’t surprise me it’s also referred to as Nook too. Apple is consistent with iPod, iPhone, and iPad.
2 Responses.
Kindle pricing has been an interesting subject from the start. Pre-iPad, Amazon’s strategy was simple: Sell enough Kindle books to make it the de facto eBook format, effectively locking others out of the market (aka “win the format war”, like Microsoft did with Win32 apps back in the day). The install base of Kindle users gives Amazon’s business model a “moat” that prevents new entrants from being successful.
To accomplish this, Amazon’s strategy was to purchase the digital distribution rights to books and sell them in Kindle format at a loss — the goal being to sell as many Kindle books as possible before another serious competitor (Apple?) got into the market. More books sold = more “lock in” for Kindle users = harder for those users to switch to an iPad.
(I’m confused as to why Amazon didn’t also sell the Kindle hardware at a dramatic loss for the same reason — that feels like a mistake from the business model perspective.)
Along came Apple — like the iPod, their strategy was to make money on the iPad hardware and let PUBLISHERS set eBook prices in the iTunes Store. This took advantage of some angst on the part of publishers who felt that their Kindle books were being underpriced.
Notice how this sticks Amazon in a really uncomfortable position re: their publishers… the “right thing” from the publishers’ perspective (letting them set their own price, with Apple keeping a flat percentage of the sale) is the “wrong thing” from Amazon’s perspective (locking people into the Kindle format, thereby establishing a long-term “moat” for the Kindle platform). By giving publishers an alternative business model that’s better aligned with their interests, they undermined Amazon’s attempt to win a format war.
I agree with you on pricing of the Kindle. I believe it started out at $359 – way too much. I also doubt the price drop to $259 garnered a significant uptick in sales. The recent adjustment to $189 is getting there but to really hit the mainstream, it needs to be $129 with $99 being ideal.
An aside: the Kindle DX at $489 is a dead-end product. Kindle at $189, Kindle DX at $489, iPad starting at $499… huh?
Regardless of pricing on the Kindle device, Amazon is doing the right thing getting software to read Kindle media on as many operating systems as possible. PC, Mac, iPod/iPhone/iPad, and soon Android. That makes a lot of sense. Get people onto the format, invested in the format, and at some point, they’re likely to pick up a Kindle device. There’s a sunk-cost mentality there. I think Amazon used the smart approach here. Selling Kindle devices is nice, but selling as much Kindle media as possible is the key.
I believe the iPad may turn out to the be the biggest boon to Amazon and the Kindle. They introduced a Kindle app for iPad. It’s consistently been on of the top free apps in the App Store (sitting at #12 right now). I bet Amazon will sell more Kindle books in the first year just from the iPad than they have the entire life of the Kindle product line.
At the moment, if I choose to buy a book digitally, I’m exclusively purchasing it in Kindle format. Sure, I’m locked into the format, but that’s equally true with iBooks. At least with Kindle, Amazon is providing me with the ability to read on almost any device I own.