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.