The world’s discussion boards all have the numbers $489 on them today, and ask the same question ‘ is the Amazon management team sane. Yes this is the second generation Kindle the Kindle DX, which has a bigger screen, the ability to access to the internet, can hold 3,500 books and has access to a choice of 275,000 books over what Amazon calls Whispernet ‘ powered by the Sprint EV-DO wireless data network.
My biggest problem with the Kindle DX launch is balancing three facts, the idea that it will carry 3,500 books and the fact that the last Kindle was launched just a couple of years ago. Not sure about you but if I ever fill it up I’ll never be able to read them all before the device is obsolete. The last fact is that it costs almost $500.
Some discussion boards pointed out that since the iPhone had a Kindle application, their original Kindle has been left gathering dust in the corner and the iPhone never cost them that.
There are two big new business ideas behind the Kindle DX, the fact that it can be used to read books, including textbooks with diagrams for students, and the fact that it is optimised for newspapers and comes with a deal with the New York Times and other prestigious papers.
A promotional pilot means that if you want a subscription to the New York Times and you live outside the delivery area then you can have a discounted Kindle, as long as you buy a subscription. New York Times subscription offers vary but then fall back after three months to about $40 a month, say $480 a year. In which case perhaps about $200 is taken up with printing, paper and the trucks to distribute the papers and the people who deliver them ‘ which of course are not needed for a Kindle delivered newspaper. So perhaps this could lead to a $200 discount to the Kindle DX if you get it with a New York Times subscription, so $289 maybe (the price was never announced at the press launch) but you still have to pay $480 to the New York Times.
Well I live outside the delivery area of the New York Times (in the UK) and I get it the New York Times fine on the internet, and pay zip for it. So that’s going to be a tough sell. It could be that US newspapers, and this will initially be offered by the New York Times, the Washington Post and the Boston Globe, will offer it for less. If they can extend their reach outside their existing delivery area, then presumably they are showing their adverts (which now look a whole lot better on the big screen) to a wider audience and can get more revenues that way. At present the prospect of advertising was discussed as an option at the launch, but none of the demonstrations currently show advertising.
But if advertising is used to underpin the revenues further, then the papers themselves may not need to keep as much of the subscription for themselves and perhaps the $150 price which was mentioned in earlier speculation about the new Kindle as a ‘target’ when subsidized by a newspaper subscription, is within reach. Assuming that the device survives more than a year (not left on train, not dropped in bath etc’) subsequent newspaper subscriptions might all be kept by the newspaper which is still not pay for printing, physical delivery and paper.
In fact because the Kindle DX is attached to a wireless network and that this can support the internet, there is no reason why any Kindle advertising, when it arrives isn’t interactive. The advertiser can fund the Sprint connectivity for people who reply to adverts, with a revenue share going through Amazon as well. We’d be very surprised if this is not the model that is adopted long term by Amazon, also using the Sprint network to delivery new adverts each day.
However there is a natural extension between say a handset version of a newspaper, which although much harder to read, would leave intact other revenue sources such as promotions like flyers and discount coupons. As handsets take on Near Field Communication and can hold discount vouchers and dispense them with a touch. That’s not going to happen to the Kindle. Also the Kindle version of the newspapers (New York Times) does not carry the Crossword, and that’s going to make people cross.
Going back to the price we cannot see a student going out and paying $500 for his or her course books at university. Sure we can see a RICH student doing it, in which case buy the Kindle as well, so that he or she does not have to carry those books around, and also so that they can use text search within the book or look up words in the dictionary ‘ we’re not saying that it’s not cool, but just that it’s not the kind of purchase, at that price, which is a given for a majority, and that leaves room for other book readers to undercut Kindle DX.
The screen is described at being 9.7 inches but the device itself is 10.4 inches by 7.2 and just a third of an inch wide (0.38inches to be precise)
It has a built in PDF reader, and has an auto-rotate capability, if you turn it, the images turns using a motion sensor.
The company boast that it has 107 of the 112 current New York Times Best Sellers as eBooks and on the Amazon web site all the book prices are crossed out and replaced with $9.99. It has new deals with many US and international magazines (the Economist is coming soon) and newspapers plus more than 1,500 blogs available.
The company has always claimed the Kindle reads like printed words on paper because the screen works using a technology called electronic ink and doesn’t use a backlight, eliminating the eyestrain and glare associated with other electronic displays.
Amazon has also cut deals with leading textbook publishers Cengage Learning, Pearson, and Wiley which the company says represent more than 60 percent of the US higher education textbook market. They will begin offering textbooks through the Kindle Store this summer.
Arizona State University, Case Western Reserve University, Princeton University, Reed College, and Darden School of Business at the University of Virginia will launch trial programs to make Kindle DX devices available to students this fall. The schools will distribute hundreds of Kindle DX devices to students spread across a broad range of academic disciplines.
We are a little puzzled whether or not all the connectivity of the device is free throughout its lifetime. You can email PDFs to your Kindle account. Also it has a full browser and supports searching Wikipedia and some web searching (cannot be full but the announcement said it was), and how are you paying for the connectivity for that? No doubt that will come out in due course, but according to the blurb it is all in the price. It says you can wirelessly send, receive, and read personal documents in Microsoft Word and PDF. Again, how are you paying for that sending or is it just capped? You are charged $0.10 per email to the device through your Amazon account but the browser access doesn’t seem to be charged.
All the previous Kindle facilities are also there, a text-to-speech utility which converts words on a page to spoken word, direct access to the Kindle Store, and search capability on your library of purchased content
The DX has 3.3 GB of memory, and it will sync with your old Kindle and Kindle on the iPhone, so you can keep your bookmarks on books you were reading on one, and read them on the other.
All in all this pricing has let in other rivals to Amazon and if a CE manufacturer of some experience had put this technology together, and were selling it online, it could be half the price. We would expect that Amazon will only keep this pricing until it has a genuine rival (also with Whispernet capabilities) and then it will drive down the price point aggressively. iSuppli did a teardown on the previous Kindle and found that there were just $185 in materials and manufacturing, giving the product about a 49% margin and on the same basis we would expect this new one to come out at $245.