Amazon Takes The Next Step With Kindle

Well, if you haven’t already heard the news, no doubt you’ll hear it VERY soon…

Amazon.com has just launched a new product of their own – something that is (IMO) set to revolutionise their business…

IF. . .

the market runs with it.

So, what is this new product and how will it revolutionise their business?

It’s called Kindle, and it’s an electronic wireless reading device – it looks like this:

Amazon Kindle

So, in short, it’s essentially an electronic book.

Yeh yeh, I can hear you now, all grumbling and bitchin, saying that’s been done to death before and has NEVER taken off, and certainly never replaced paper books.

Well, I think this could be different, and here’s the reasons why:

  • It’s lightweight and compact (not really any bigger than a book – at 10.3 ounces, it’s lighter & thinner than a typical paperback
  • It’s battery powered and can last up to a week on 1 charge (if you’ve got the wireless feature turned off)
  • The screen image quality is excellent, even outdoors and in non-ideal light
  • It can read books, newspapers AND Blogs. There are already over 88,000 available, including 100 of 112 current New York Times Best Sellers.
  • It holds over 200 titles (imagine carrying around 200 books or newspapers!). You can add an SD Memory card to expand its capacity, so that could be literally thousands of titles in 1 small portable device!
  • It’s ultra-simple to use – no cables, computers or the dreaded syncing (think Windows CE PDAs here!) – even my mum could drive one of these!
  • You can email your pictures & MS Word docs to Kindle for viewing at your leisure – handy if you’re on the run
  • Perhaps most importantly, it’s made and backed by Amazon.com – a MASSIVELY successful company with core expertise in the sales & distribution of print media (and a pile of other things these days). They have the money, the resources and the expertise to make this work, as well as the market awareness and popularity.

Now, just based on the above list of features & benefits, you’d think that was a fairly good list of goodies on offer right?

Well, here’s the real killer feature. It’s WIRELESS!

And, here’s how that both benefits you (and me) when you get one:

  • You can download all your ebooks, blog posts, newspapers & magazines via a wireless connection.
  • Unlike WiFi, Kindle utilizes the same high-speed 3G data network (EVDO) as advanced cell phones—so you never have to locate a hotspot.
  • No monthly wireless bills, service plans, or commitments – Amazon.com takes care of the wireless delivery so you can simply click, buy, and read (I’m guessing that’s only available in the USA for now?)
  • If you buy a book, it’s delivered by wireless in less than a minute
  • You can purchase a subscription to your favorite newspaper/s and have them automatically download every day (no paper waste – good for the environment!)
  • More than 250 top blogs can be accessed daily, with updated sent to your kindle via wireless (the examples they give are: BoingBoing, Slashdot, TechCrunch, ESPN’s Bill Simmons, The Onion, Michelle Malkin, and The Huffington Post)
  • It offers you free access to Wikipedia! Now, that could be useful when you need some piece of trivia or fact in a hurry and don’t have easy access to a PC connected to the net!

So, all great features as well, but if you look below the surface, here’s where it gets REALLY interesting.

At the moment, Amazon.com’s business model involves warehousing & shipping a HEAP of physical products that are relatively low-margin (books don’t earn much UNLESS they’re big sellers). There’s a huge overhead in staff, warehousing, computing infrastructure, shipping, etc etc etc.

All these items eat into Amazon’s bottom line, and (lets face it) it took them the best part of 5-10 years to get into the black. Now that they are, they want (and need) to move forward, and what better way of doing that than becoming the distribution point for most of the print media in the world.

When everyone (eventually) has their own Kindle (the price will have to come down first, cos they are selling them at $399 for now – too high to achieve high speed market penetration in my opinion, but I guarantee they’ll drop soon enough), and Amazon has control over the wireless network & e-commerce system that supplies Kindle owners with their content, they will be in a HUGE position of power amongst publishers.

In the same way as Google has almost taken over the online advertising world with their AdWords program, so too could Amazon.com take over the publishing (and distribution) world for books, newspapers, magazines, blog readers and so forth.

The best part, from Amazon’s point of view is that distribution of electronic content is DIRT CHEAP compared to warehousing, packing & shipping books, magazines and anything else in print that they currently sell.

The Internet Marketing world already totally understands that model – that’s why ebooks are so darn popular in the IM market place. Low-cost to product, low-low-low cost to store & distribute.

There’s not too many companies in this world today who are in a better position to make this work than Amazon.com – they’re already the acknowledged world leaders in online sales of books, plus they have made a huge dent in the online sales of many physical products (electronics, software, toys, clothes, jewellry, etc etc etc), so this was a logical first step for them to take in the new economy that is changing the world as we know it.

Imagine a world where every major newspaper in your country was sold & delivered electronically by Amazon?

Imagine where every major book publisher now sold most of their title electronically via Amazon (boy, this adds a whole new dimension to Chris Anderson’s Long Tail theory…)?

Imagine a world where most bloggers are now read (like the newspaper & magazine of old) on a portable reading device (yes, I know we can do that now, but I’m talking MAIN STREAM – where just about everybody can easily do this)?

And, behind the scenes, Amazon earns a sizable portion of the profits because THEY sell the content and THEY distribute content.

It’s a brilliant move for them…IF they can pull it off.

At the moment, I see a few potential roadblocks.

1) Price of the reader, and

2) Availability of their wireless network to many worldwide population centres.

I think, so far as the reader goes, it will quickly & steadily drop in price, until it’s one day either free with a subscription to a service (kind of like the mobile phone plans that we’re all used to. $x/month for 12/18/24 months, and we’ll throw in a free phone AND free calls/Text, etc) OR it will be dirt cheap (under $20-$30) BECAUSE it’s totally in Amazon’s best interests to get one of these little guys into the hands of as MANY people as possible!

The more people who own a Kindle, the more potential market they can reach with their products, and (obviously) the more profits they make from individual item sales & subscription sales. Plus, I predict that one day soon, you will be able to buy ANYTHING off Amazon’s site via a Kindle (or a future model). Makes total business sense to me. Heck, if I was Jeff Bezos, I’d damn well do it!

As for the wireless network issue…well, it’s really just a matter of time until Amazon comes up with deals with wireless carriers in each country they want to get into, and then it won’t be an issue. For now, it will likely be a problem if you live outside the USA (I sure wouldn’t buy one, living in isolated lil ol Australia :) ), but eventually they’ll reach market penetration such that they will go crazy.

Remember how slow the mobile phone was to take off, but once it hit critical mass, it went crazy. Heck, even school kids have their own mobile now – when I was a kid, they hadn’t even been invented!

I think that perhaps there is one other (lesser) issue that MIGHT cause a problem or two, and that’s the school of thought that paper is best. I know my little brother would NEVER consider using something like this – he LOVES his books, but at the end of the day, most people can & will see the obvious benefits of having such a tool, and eventually we ALL will have this, or something like this. It’s only a matter of time!

Ok, so now for some predictions:

You’ll be able to buy one of these guys on a payment plan, like a mobile phone (yes, mentioned above)

Bigger print content publishers will start bundling them with their products if the profit margin allows it (think of the New York Times or the Wall Street Journal as a yearly subscription – get a Kindle for free! Get sales gimmick).

In light of the above prediction, Amazon will be pushing hard to get content producers and publishers to offer bundle deals to get the Kindle out there.

I can see where the Kindle could be potentially turned into a portable text device (ala SMS texting) – it has a keyboard and wireless access, so it’s not a big leap to imagine people writing messages and sending them to other Kindle users AND to email via the net.

I can also see the potential for downloading audio & video content onto a device like this. There’s a whole other market for Amazon to push into. Want to watch an episode of your favourite tv show? Just purchase it from Amazon for a low cost, download it to your kindle, and you’re off & running with it. Mind you, the screen will need to go to colour first, but it’s still a viable option.

I’m sure we’ll see a future model with a webcam built in, which means all sorts of other interesting options & functionality for the users (that might be when Amazon starts charging for access to their wireless network – when you want to pump significant data out of your device and onto their network!)

This device also has the very real potential to drive down the prices of paid content (books, newspapers, etc) due to it all becoming electronic & being distributed electronically. Of course, there’s no guarantee authors will earn more royalties, and publishers will have to change their business model fast or be swept away by the upcoming publishing revolution (a topic for another day), but at all times, Amazon will be getting their cut of the action! :-) Pretty smart really. Can you spell M O N O P O L Y??? :-)

OK, well it’s 2.25 am here and I SHOULD have been in bed 2 hours ago, but I wanted to get this done. Now it’s over to you folks. Please post your comments below – let me know what other things I may have missed, whether you agree (or god forbid – disagree :) ) with my predictions, and where you see this product going. And, please (if you enjoyed reading this) vote for this article on sites like StumbleUpon, Sphinn, Digg, etc.

 

About Eran

I am 42 yo, rabidly enthusiastic internet marketer who lives in Perth, the capital city of Western Australia. I work a "day job" as a professional Search Engine Marketer for WCR Internet Marketing - one of Australia's premier SEO firms, and my "night job" is growing my own empire of online businesses.
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7 Responses to Amazon Takes The Next Step With Kindle

  1. mandrake99 says:

    Very interesting.

    Reminds me what apple did with the ipod.

    They created a playback device and used the popularity of this to dominate the sale and distribution of music.

  2. Lex says:

    Interesting post Eran!

    My first concern about a device like this is how readable is the screen?

    Somehow physical books, even with their small fonts, seem more readable than reading the same thing on a laptop screen. Maybe being able to hold it in your hands like a book may change this.

    Possibly depends on how heavy it is.

    Newspapers would need to reformat their content to make it readable on a device like this as well. Reading PDFs of newspapers and magazines is usually a pain, because you have to scroll the screen left/right/up/down all the time, and you tend to lose the flow of what you are reading.

    It will be interesting to hear some real-life reports of how usable these things really are…

    Lex

  3. Peter says:

    Hi Eran.

    I think Amazon have done well to hold off releasing this product for 3 years while they got it right. When they launch it has to be a big success or they won’t get another chance (imagine if Apple had released a dud instead of the first Ipod … they would have gone nowhere).

    In the future, I hope they add WiFi ability and a browser that is open to any website – this would make it a handy platform for light browsing … think of leaving your Kindle on the coffee table within easy reach if you want to quickly check the weather or a sports score or find a recipe.

    I think a handy feature is:
    “In addition, a copy of every book you purchase is backed up online in Your Media Library in case you ever need to download it again. This allows you to make room for new titles on your device, knowing that Amazon is storing your personal library, which can always be re-downloaded wirelessly. If you are out of wireless coverage, such as traveling overseas, you can download books to your computer from Your Media Library and transfer via USB to your Kindle. Think of it as a bookshelf in your attic—even though you don’t see it, you know your books are there.”

    Cheers,
    Peter

  4. Simone says:

    Hi Eran,
    I was wondering when we were going to catch up to that part of Star Trek technology. Awesome!

    The whole thing sounds great and I imagine it would be super cheap to get these books and things considering, as you mentioned, there are no actual printing or shipping costs etc.

    Can you imagine what this can do for the environment if we aren’t chopping down trees to make books?

  5. i dont think i could say this is the next ipod. at the time the mp3 player industry was just starting to pick up. apple just released the first good one and mass produced it so it was cheap. i would consider buy any other mp3 player if it was as good/cheap. also its not like apple took a gamble, people have been listening to music on the go all the time. walkman?

    i guess you could say the same about books, but it just doesnt feel right to me to read an ebook on the train.

    i dont see myself buying a kindle, i dont feel the need to read e-books on the go. although if you did read ebooks this would be perfect for you.

    what about that microsoft giant touch screen product? has anyone seen any of those?

  6. Eran says:

    @Scott,

    I agree that Apple didn’t “invent” the genre – just was first with something cool, popular & reasonably priced. As in all marketing successes, sometimes the key is being first to market…

    Re: buying a kindle – it’s not for everybody. I’d be the first to agree with that, but as is the case with cool tech stuff, there ARE lots of people who will buy this or something similar.

    If “just” 1 in 10 people WOULD buy (in time), Amazon will have a KILLER success on their hands. It’s just a matter of time really – it may take a few years to build up momentum, but I still think it (or a future derivative of it) will become the ipod of ebooks.

    @Simone,

    Yeh, the environmental impact that a product like this could have will be significant, over time. While I don’t see paper books disappearing anytime soon, it could definitely have an impact on newspapers & magazines in particular.

    Once the big media firms start offering it as an option (think major newspaper publisher, for example), it will really have an impact there.

    @Lex,

    From what I read, the screen quality IS good. And yes, obviously publishers will have to start reformatting their content to fit the screen dimensions, but as you (and I) know, that really is very easy, since all print layout is done on computers these days anyway.

  7. Jenny says:

    Sounds Great for someone like my mum who has outread the local library.
    Just hope she could afford the downloads with the amount she reads.

    Can the print screen be adjusted for old eyes to be able to read?

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