When will Kindles become free?

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

When will the value of ebook content exceed the value of an e-reader?

When will the value of ebook content exceed the value of an e-reader?

When you hear the term “loss leader” you think of grocery stores and discount warehouse chains. You don’t think about technology or publishing. Until now. Amazon recently announced price cuts on its Kindle Fire Tablets. The lowest priced model was slashed 10% to $159.

Amazon states production efficiencies are the reason for the price cut. “We’ve been able to increase our production volumes and decrease our costs,” said Amazon Kindle vice president Dave Limp. But is this all about “passing the savings on to customers” or are they using a discounted price to breathe a bit of life into a product that hasn’t been fully embraced by consumers?

Why would someone buy a Kindle Fire when they could purchase a more full-featured tablet from Apple, Samsung, or Microsoft? No one who’s considering a table purchase would also buy a Kindle Fire just to read books. If you buy an iPad, you can download the Kindle software for free and the iPad turns into a Kindle for free. It doesn’t work the other way around, a Kindle could never run iPad apps, Apple’s proprietary software (and corporate strategy) won’t allow it.

Consumers who think about their hardware purchases this way (do I want an e-reader, a tablet, or both?) are probably more likely to spring for a tablet with an Android, MacOS, or Windows OS if they can possibly afford it.

Those who are looking for a device to do nothing other than read books are probably going to choose a lower-priced e-reader, not the colorful, multi-featured Fire.

So, the way I see it, that puts the Kindle Fire in a very narrow niche—within a very competitive market. Squeezed this way, from above and below, the Kindle Fire seems to have a very small potential audience. Does this recent reduction in price of the Kindle fire have something to do with its position in light of the competition?

Amazon is surely aware of the Kindle Fire’s awkward place in the lineup of today’s tablets.  But perhaps the company is totally okay with the fact that little more than a year after its debut, the Kindle Fire has become a loss leader. Loss leaders play an important role in helping retailers make money.

Perhaps the  real value is not in the Kindle Fire hardware, but in the e-reader’s role as a vehicle for getting customers to shell out dollars for other things—ebooks, movies, games. Amazon is probably counting on making money on the content, not the hardware.

Surely Amazon has compiled statistics on the average amount of sales generated by the average ownership of a Kindle Fire—how high is this figure? Are there “frequent readers” whose consumption of content is so high it makes sense for Amazon to give them an e-reader for free … the way frequent gamblers get free rooms and drinks at casinos?

At some point, the value of potential content purchases will exceed the amount it costs for Amazon to produce their e-readers. At that point, will the company to give away their e-readers free? If owning an e-reader leads to enough digital content purchases, in this environment of competition from more full-featured tablets from Apple, Microsoft, and Samsung, Amazon may find that giving away their Kindles for free is a smart business move.

Photo of books via Shutterstock.

12 thoughts on “When will Kindles become free?

  1. David Niall Wilson

    The thing that drives a community of Kindle Fire users (and keeps it viable, I think) is simplicity of connection to the Amazon account, and the extra things you can get with your Amazon Prime account. Sure, you can put a Kindle App on your iPad, but you can’t shop from it. You have to buy the books, then get them from your cloud. More-than-one-click. Also Prime members get free video content that plays well on the Fire, and can borrow books … all possible in the “apps” on other devices, but all with more steps involved. Many people are pretty well devoted to the simplicity of Amazon shopping, and the Fire plays into that, while giving them all the basic apps you need a tablet for. E-mail works fine, browsing works fine…Angry Birds are in the house… The people who need a more powerful tablet are a different group entirely, I think…and honestly, anyone needing to do real work needs a computer.

    Reply
  2. Andrys

    Why would anyone buy a Kindle when there are full-featured tablets like Apple’s $500 one or the $900 Microsoft Surface Pro?

    Factors include what features people are looking for. David makes good points about ease of accessibility to the media mentioned.

    Others:
    1. A microHDMI port out to an HDTV (the Apple doesn’t have this) and people have used it to watch their Kindle tablet videos (even Prime Instant) on hotel HDTVs that way.

    2. A stereo set of speakers that are placed on on each end when watching movies or TV show videos and with Dolby Stereo for unusual spatial qualities and automated frequency emphasis depending on whether it’s speech or music.
    The iPad as two small speakers almost side by side on one short end – no stereo effect during movies unless you put on headphones or use external speakers

    3. Amazon allows apps from \unknown sources\ (Non-Amazon app stores) and Kindle Fire users can download, direct to the tablet, the popular Dolphin browser which supports the older Adobe Flash Reader still available that can be used despite Adobe’s dropped support for mobile devices using the later Android 4.x systems.

    Because of this, Kindle Fire users can watch free network TV full-episodes like ABC’s entire primetime programs (and some daytime shows) when they missed an episode, as the network TV websites still use Flash for that, and Apple will not do Flash at all, depending on sites to use HTML5.

    4. The 7\ size is proving very popular and Amazon’s has Retina-type high resolution while Apple’s iPad mini has lower, standard resolution but costs more.

    5. It’s like deciding not to bill for purchase of an economy car (giving them away instead) when an advertised-full-featured car is available ( and when the fuller-featured car does not have some high-valued features that the more expensive car does have).

    6. There are now many Android app stores, including 1mobile, which carries over 200,000 apps, which are directly downloadable and usable for Kindle Fire devices.

    Reply
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  6. Steve McIlree

    I believe the real reason most people purchase a Kindle or a Nook is they believe they are getting a full featured tablet. That is how they are marketed, and the popular media does nothing to dispel the misconception. While anyone who reads tech media knows the advantaged of buying an unfenced tablet, the majority of consumers willing buy into B&N and Amazon’s lies. I buy and read ebooks from a number of different sources and read them all on my open Android tablet and my rooted NOOK. In addition, I have made many purchases of items other than ebooks from Amazon and other online merchants with my tablets and fail to understand how it could have been any easier if I had used a Kindle. Using the $500 iPad as an example of price point as an argument for buying a limited Kindle or NOOK is ignoring reality. The Nexus 7 is priced very competitively with both the closed choices and is the single device which will probably get the updates to the newest version of Android first.

    Reply
  7. David H

    I use my Kindle for a bout half my reading, but never shop on it if I have a choice. I disagree with previous David about the ease of shopping. Whatever few clicks you save by using the device are more than offset by better screen and faster access afforded by a laptop or a pad.

    Reply
  8. Zarren Mykhail Kuzma

    It seems like many of the features on the Kindle Fire noted by several of my fellow commenters above are geared toward Amazon power users or people who tend to look to Amazon for the majority of their purchases. The trouble is that this model doesn’t encourage a great deal of growth for the Kindle market. Indeed, it makes shopping easier for people who are already frequent Amazon customers, but when it comes to versatility and power, the iPad and Nexus cannot be beat. So, for someone like me, who shops all over the place, the Kindle Fire isn’t very attractive. (In fact, Amazon might be better off dropping \Kindle\ from the title because the brand recognition links it to an ereader rather than a tablet.)

    But, yes, I agree that the bread and butter for Kindle is the content that it sells. After all, Kindle devices are already sold a loss. It would definitely seem to me that the limit for the price of an ereader tends to $0.

    Reply
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