Tuesday, July 29, 2008

New Price Point for Kindle?

I don't have concrete information to offer but this morning, my friend Dave, who offered technical tips and material to Onxo, posed a question to me:  Will Kindle break the $200 barrier?

I initially told him I doubt this is likely.  At it's currently price of $359, I can't decided if it's worth it or not.  I like the input ability and the high-speed data access.  

With Amazon being very tight-lipped about their sales figure for their ereader and the number of books sold, there is no evident that it is selling like hot cakes.  At $400 when it was introduced, it was competing with other consumer electronic devices and game platforms during the 2007 Holiday Season.  

If we see another price drop, no matter what kind of spin Jeff Bezos puts on it, it would immediately confirm what some in the media have speculated:  it isn't doing well.  Two price drops in a year?  I can't remember anything getting two price drops in a year.  If we see the price point of $300, that's a quarter off the original price.  

Now, folks might argue that because of the economy of scale and price drops in components, Amazon is now able to offer the Kindle at a more consumer-friendly price point (Dave, I love to see $200 but...).  I hope these good folks are right.  But if they were, Bezos and allied publishers would be announcing the skyrocketing ebooks sales.  To date, that has not happen.  At the D6 Conference, Bezos said Kindle sold more than 6% of 125K available Kindle titles that is also available on Amazon's regular book store.  It's a good spin.  If not read correctly, one would have thought "wow, 6% of Amazon book sales!"

How can we get to $200?  Well, subscription.  No.  Not like Napster.  I'm not talking about renting the books.  I'm talking about a subscription model akin to Audible.  If you're not familiar with Audible.com, you can buy audiobooks in a book by book basis.

At times, Audible offer a $100 subsidy if you sign up for two ebooks at about $20 a month for a year, that entitles you to two audiobooks a month.  I have done that for two years now and it has helped me subsidize my iPod addiction and saved me $200.  Can this model work for Kindle?  I don't see why not.  For $20 a month for a year, you get a book or newspaper/magazine subscription for a year and the Kindle will cost you $75-$100 less upfront.  For 18 months, you can get two books and a newspaper/magazine subscription every month and you save $100 off a Kindle.  

So, if Amazon stays with at the current price point, we can see the Kindle cost reduced to the $259-$284 range.  Best scenario is Amazon cutting the price from $359 to $300.  Then this is there we see $200-$225 per Kindle.  

New Features?  

What's more important for Kindle is what new features will it have?  Amazon can increase sales if certain wireless apps or features are added.  One of the original complaints against the Kindle was limitation put on it with such a robust wireless access.  I think I speak for all mobile warriors in saying that having more PDA features could go a long way in getting people to take another look at Kindle.  

The question for me is the Kindle book store.  The store is robust enough to easy download of ebooks the reader buys.  Amazon will not change this model beyond books for a while.  If it does and they failed miserably, well, let's not go there.  Perhaps one day, we can a wireless store with offerings beyond just books.
  • Mp3 download.  It isn't a leap from books.  They already have a store.  Having a mobile device tethered (not tied since it is after all DRM-free) to the store a la iTunes/iPod could increase sales of both music and Kindle.  
  • Moving beyond music and books, it may one day offer its own app store.  Do you think when Apple started offering games for the iPods, it was a precursor and laying the groundwork for the future app store?  Amazon falls into the danger of rushing into things and making their online offers here difficult to access and end up turning off users.
There could be other features we may see in the near future.  It would make sense for Amazon to grow the Kindle's ability beyond just reading.  Over time, the ability to participate in discussion groups on the books is a natural evolution for Kindle.  Why waste the wireless connection.  More than that, readers can pose questions and comments about sections of a book or topic within the book they're reading.  

Social apps are allowing interaction will likely help foster sales of books.  I think it's something publishers and authors will go for.

Increasing Kindle Sales Versus Increasing Ebook Sales

In the Audible model I mentioned to reduce the price of Kindle down to $200, there is a fine balance.  Publishers want to sell books and Amazon wants to sell Kindles.  With costs dropping yearly on electonic components, there could be a number that all parties involved can agree upon.  

People do read.  But to spend $359 on a device just to start reading.  No thanks.  But at a subsidized price of $200 Kindle and wireless apps, I would not think twice about ordering one.

Note:  I've only glanced at a Kindle from a distant.  I love to get my hands on one.  Just as there are Powerbook or XO user groups, there are also Kindle user groups.  Consider finding one and go take a look at it.  Play with it if the owner(s) let you and then decide for yourself.  

Here is where you can start - See a Kindle In Your City

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