Wednesday, January 9, 2008

A Cheaper Device Is Only Part of the Formula

Brier Dudley writes a tech blog for The Seattle Times and he made this recent post about his trip to the CES show in Las Vegas. The post features a picture of what is apparently an upcoming e-book device from Sungale, a Chinese manufacturer. Brier points out that Sungale is known for their cheap DVD players and that this e-book device is likely to be very inexpensive as well.

I like the idea of more e-book device competition, but cheaper hardware is only one part of the optimal formula. Sure, I'd love to see the Kindle for $200 and I tend to think it won't be a mass market success until it gets below $100 (more on that in a moment), but the eventual leader in this space will have two other key attributes: breadth of content and outstanding service.

The list of titles available for the Kindle will grow by leaps and bound in the coming months. I have no doubt Amazon will put as many titles into this format as they can; they're the king of title breadth/depth in the print world, so why wouldn't they be on the same track for the e-book world? And when it comes to service, Amazon is very, very hard to beat. I still think that's the primary reason why Kindle remains out of stock: Amazon wants to test their systems with a limited number of devices in circulation before they open it up for a larger audience. They realize they'll probably only have one chance to get this right and a network glitch would forever stigmatize the Kindle, so I applaud their efforts to limit distribution (for now). When it comes to content breadth and outstanding service it's hard to go wrong with Amazon. (Btw, I don't work for Amazon...I'm just a huge believer in their operation.)

Back to the sub-$100 opportunity... The underlying technology is always going to dictate how low Amazon can price the Kindle. As long as there's only one e-ink technology provider we're probably faced with higher manufacturing costs than anyone would like to see. But, there's nothing stopping Amazon from adopting a razor/blade approach to Kindle and giving customers a discount on the device as long as they commit to a minimum number of book purchases in the future. It would require some careful negotiations with publishers, of course, but it could be done. Supply and demand will ultimately dictate this though. As long as Amazon is out of stock or at least exceeding their sales expectations, there's no incentive for them to get creative on hardware pricing.

2 comments:

Daddy7 said...

Does anyone besides me think that the Kindle can play an important part in lowering the barriers to achieve higher literacy levels among schoolchildren in the US? (And eventually in third world countries if the wireless capability is expanded globally) Think of it: school kids with access to a virtually unlimited array of textbooks, classic literature, magazines and assorted other educational resources, all without adding an ounce of weight to their already overburdened backpacks! Yes, the current price point is a major deterrent but as the law of declining technology prices kicks in, volume discounts, etc, it may be within the reach of many students. For those in need, a foundation that subsidizes the cost could extend the reach to anyone, regardless of income bracket. (see Kindlesforkids.net).
The two major obstacles to reaching this goal are the current (early adopter)price point, and the lack of e-textbooks.
If these hurdles can be overcome, then I think we're on our way to addressing the declining literacy levels among teenagers in America. Maye this is just a pipe dream...

Anonymous said...

I don't think access to books is the problem. I think an inability to read is the problem. Kindles everywhere in the school system is not a solution for illiteracy. Our libraries are free and still there are not very many kids in the libraries that I have visited. It is a shame that people have high school diplomas who are functionally illiterate. It seems we didn't want to traumatize the kids by flunking them, so we granted them a lifetime trauma instead.