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Should Amazon Give Away Free Kindles?

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A recent article on CNN caught my attention – the article suggests that Amazon should give away the Kindle free of charge. At first glance, it doesn’t seem like it makes sense to give away the product when they are selling millions of them – research show the Kindle has a 47% market share for eReaders.

Free Amazon Kindles?

Amazon Kindle 3

Amazon Kindle 3

But when you take a deeper looks into Amazon’s business model you can see why it makes sense to get the Kindle into as many hands as possible. Here’s why:

Amazon is in the business of selling books, not hardware. Amazon’s core business model is selling books, music, and other media. Sure, they have a great piece of technology, but will Amazon be able to compete with the tablets and other eReaders in the long run? Unless the Amazon Kindle comes with a web browser or other bells and whistles, many people will opt for the iPad and similar multi-function tablets – unless Amazon can get the price of the Kindle low enough that it’s a no-brainer to own one in addition to another device.

Check out the features of the Amazon Kindle at Amazon.com.

Kindle is more than a device – it is a format. Apple did great things with iTunes and in some ways, the Kindle Reader format has an opportunity to do something similar. Apple gave away the iTunes software which spurred sales of millions of iPods and the iTunes Store has become a huge revenue source. But here’s the beauty of it – you don’t need to have an iPod or even an Apple product to use iTunes, or for Apple to make money from you as a customer. iTunes can be loaded on a variety of platforms and purchases can be made directly through the app. The iTunes example is why it’s important for Amazon to put the Kindle into as many hands as possible – which is what they are working on.

The Kindle Reader is already everywhere. Folowing in the path of iTunes and music, Amazon is making great strides in making “Kindle” synonymous with “eBook.” You can get free Kindle Reader software for a variety of devices, including the iPad/iPhone/iPod, Macs, Windows PCs, Windows 7 phone, BlackBerry and Android operating systems. And the cool thing is that all of these synchronize to each other so you can pick up where you left off on any device, as long as you have Internet access. People buy iPods because they are great pieces of technology, but also because they already have the software on several devices. Making the Kindle Reader accessible on a variety of devices makes it easier for Amazon to dominate market share – people will want the Kindle for home and vacation, and can still have access to their books on their phone or other device.

Give away the razor, skin you on the blades. Razor blade companies have been doing this for decades – charge a pittance for the razor (or even give them away), then charge high prices on the blades. It’s the ongoing expenses that make the razor blade companies more money. Lowering the cost of entry gives them a long term (and more profitable) customer. Why? Because people are creatures of habit and aren’t likely to change if it means a big cost in either time or money. Amazon has the same opportunity right now with the Kindle. Get it into as many hands as possible, then continue to profit from the customers by selling them books. People won’t want to change to another device or eReader down the road because the Amazon Kindle uses a proprietary data format for its eBooks. This format can’t be transferred to other readers unless you first change the format, which most people either don’t know how to do, or aren’t willing to do. And since the format can be used on the Kindle Reader software on other devices, people are more likely to stick with the Amazon format in the long run. It’s a brilliant business model.

Don’t expect free Kindles soon – but expect price drops

I think free Kindles is an intriguing idea, but I don’t think we will see it soon. From all accounts, Amazon is still selling these at a high rate. But I don’t think it will be long before we see the Kindle in the $99 region, and possibly much lower by Christmas. I also wouldn’t be surprised to see some new features on the next version.

I don’t have a Kindle or other eReader at this time, but I’ve played around with them and I believe the technology is intriguing. I’m excited to see where it leads.

Do you have a Kindle? What are your thoughts about it?


Published or updated December 29, 2011.
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{ 10 comments… read them below or add one }

1 donna

I don’t have a kindle, but did buy one for hubs, who like i am, an avid reader. He just finished reading Moby Dick, there are many sites where you can download books free , or if you want the current books, pay. We have a very small home, have had to part with many books we had collected over the years, so the Kindle for us is a good thing. no books to have to find room for! It is mobile (can take it with camping, just don’t get it wet). you can get games to play on it also.
Keeps the husband entertained anyway.
I may eventually get one for myself but need to check out downloads i would be interested in, first.

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2 Craig Kessler

As someone who is interested in buying an Ereader, specifically a kindle, I would love this.

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3 Echo

I don’t have a Kindle and probably the reason why is that I don’t want to pay for the device itself. Giving them away for free doesn’t really make sense until you really do the math and see that by selling more books and subscriptions (as the iPad is about to do) they will make a ton of dough.

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4 Ryan

I don’t think Amazon will ever give them away unless it is as part of a package deal (ex: buy “X” books, or sign up for Amazon Prime, or something similar). But the prices will surely come down and the features will improve. They will have to if they want the Kindle to remain relevant compared to the tablets and other devices out there (and soon to come).

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5 krantcents

My wife received one for the holidays. I agree they should give it away, and I would be happy to get one.

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6 Wojo

I think giving it away for free would lower the perceived value of the device. Right now, it’s generating a lot of buzz and is the new “thing to have.” But I definitely agree that the “razor” business model can be applied here–making the Kindle a very low-cost device and making insane profits on the eBooks.

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7 Craig

Interesting discussion. I just bought a Nookcolor, which runs on the Android platform. Many are saying B&N should unlock the features and allow the Android market to be used. The argument being, the more features you can give the more people will buy them and they need to get as much market ground as they can. An eReader may be more important for B&N than it is for Amazon.

While not the same as giving away a free reader, the idea is the same. Do whatever you can to get people on board with your format.

I’ve also read how eReaders and tablets will become more of a commodity before we know it.

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8 Ryan

It definitely won’t be long before eReaders and tablets become a commodity. The prices will come down in the very near future – there are over 100 companies planning Android based tablets in the next year, which will lead to a glut of tablets on the market, leading to lower prices and a consolidation of companies and technology. It should be very fun to watch over the next year or two. I’m planning on waiting it out to see where the technology goes. By the time I buy one I’m sure the prices will be half of what we are seeing now, and the technology twice as good. Win-win in my book!

Btw, you can jailbreak your B&N Nook and open up the Android platform to run almost all Android apps, even the Kindle Reader app, believe it or not. It voids the warranty, but gives you more functionality. So do it at your own risk! Here is an article about it at the Wall Street Journal.

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9 Blaine Moore

I got one so that I could test out the books I’m selling on kindle to make sure they look all right. All I can say is, “Wow.”

I’d never have expected I’d really like it as much as I do…I hate reading on screen but have to do a lot of it. Reading w/the e-ink technology is nothing like reading a computer monitor. The convenience of getting the book whenever and wherever you want also can’t be beat.

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10 Ryan

Great idea to buy the Kindle so you can test your books in advance. I’ve used a Kindle, and I like it a lot. It’s not the same as a book, but the convenience of having a library in your hands is awesome.

I’m planning on waiting until I buy one though. I don’t have an express need at the moment, and I’m pretty sure the prices will continue to drop. But I think they are a solid deal at the current price, so I wouldn’t be bothered if the prices don’t drop much.

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