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To Save the Kindle, Should Amazon Make it Free?

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Amazon’s Kindle has a major problem on its hands. Simply put, the new iPad is a far superior device – the Kindle can’t possibly hope to compete on a feature to feature basis. Amazon has already dropped the price of the Kindle to $189 in the face of increased competition from other e-readers and the iPad (and coming imitators), which is quite a bit less than the $399 it cost when it was first launched. But Dennis Kneale of CNBC thinks that Amazon should cut the price of the Kindle even more – to nothing.

Amazon’s strength has always been in distribution and customer service, not hardware. That’s how it became the largest online retailer. By giving the Kindle away for free, Amazon can shift the focus back to what it does best: content retailing. Just as cell phone carriers give phones away for free to in order to lock customers into lucrative long-term contracts, a free Kindle would attract an absolutely enormous market of potential content purchasers and give Amazon an unshakable grip on the e-book market. Content, rather than hardware, is where the real profit potential is for Amazon.

I definitely agree with Kneale’s logic here, going free may be the only way for Amazon to save the Kindle. Granted, Amazon could get much the same effect by pricing the Kindle in a much lower range, say sub-$40 perhaps, while allowing it to maintain some semblance of a profit margin. But free, being the more drastic action, would generate far more marketing buzz. How else can the Kindle be expected to succeed in the midst of the iPad?

Why Amazon Should Give Away Kindle Free

From the moment the splashy elegance of the iPad first adorned the de rigueur giant video wall behind the Orwellian figure of Steve Jobs a few months ago, you just knew the Kindle was dead.

You can see it regularly on that most democratic of institutions, the New York City subway. An assiduously bookish young guy sits there with his Kindle, a hipster talisman less than a year ago. Soon as some slinky, black-clad tech temptress sits near him with her iPad, he’s suddenly so dated. He dare not even speak to her.

Amazon cut its Kindle price 27 percent yesterday, to $189 from $259. Barnes & Noble cut its same-price Nook reader to $199. And in the immortal words of Wallace Shawn’s irrepressible mensch on TV’s “Gossip Girl”: “It’s not enough!” Amazon should cut Kindle pricing even more: to zero.

That’s right—Jeff Bezos should give away the Kindle free of charge, to spur more sales of higher-profit online books.

via Why Amazon Should Give Away Kindle Free – CNBC. Posted by Dennis Kneale.

  • Barry Engel

    Kindle and IPad are not fair competitors. Kindle is very good at what it does, a book reader, free wireless downloads, book-size and works outdoors. Yes with the IPad you can read books but I can also on a laptop (and watch movies and get email). I wouldnt bring an IPad or my laptop to the beach – something I have done with my Kindle dozens of times.

    My understanding is that Amazon runs the 2 businesses independently with their own P&L – Kindle device and Kindle store. There is value in the Kindle device. I can see undercutting Sony and the Nook but it is not an IPad competitor.

    • Cameron Allen

      I certainly agree that the iPad is not a fair competitor to the Kindle, but I seem them as competitors nonetheless. Although they have been designed for different purposes (the Kindle as a focused e-reader and the iPad as much more versatile device), I believe that many consumers will still cross-shop the two – a battle that the iPad will win more times than not.

      My point here is that Amazon consider should positioning the Kindle far far lower, totally circumventing this competition and attracting an immense amount of new customers to the burgeoning and potentially much more profitable e-book market. Amazon could then maybe lock in these customers with some sort of “book club”-like contract, requiring them to buy a certain amount of content from them per month, getting the company focus back to its core strength of distributing books and other such content, rather than expensive hardware.

      Perhaps to make such an idea more feasible, Amazon could develop a cheaper, lower-feature derivative of the Kindle that is much less expensive to produce – a “paperback” Kindle, if you will. Giving away the current $189 device would be undeniably difficult for Amazon to palette. Either way, though, I think aiming lower would be a better position than the Kindle finds itself in now.

      Appreciate the thoughts and thanks for the feedback!

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