#kindle

Speaking of Amazon, here’s Jason Del Ray on some insane numbers the company is projected to see from Kindle owners:

Based on its research and analysis, CIRP estimates that Kindle owners spend $1,233 per year on Amazon compared to $790 per year for Amazon shoppers who don’t own one of the company’s e-readers or tablets. Kindle owners aren’t necessarily buying more at a shot, but are buying more frequently.

“Another way to look at Kindle Fire and Kindle e-Reader is as a portal to Amazon.com,” CIRP’s Mike Levin said in a statement. “Kindle Fire provides access to everything Amazon sells, while Kindle e-Reader has become the way that Amazon customers buy books, Amazon’s original product line.”

On the surface, at least, one could make the argument then that Amazon could potentially drop prices on the devices to get them into the hands of more people, since they become more valuable customers. But, drop prices too far and you may attract a different set of customers that may cause that spending disparity to shrink.

This, in a nutshell, is why I think it’s probably smart to think of any phone Amazon does as more of a “Amazon Prime Phone” and less of a “Kindle Phone” (even if it’s called something more along those lines). It’s sole purpose may be to supercharge Amazon sales (both digital and physical)

Sean Buckley:

The Kindle brand and its sunlight-readable e-paper display probably aren’t going anywhere, but the category is edging away from the mainstream. Users demand more out of their devices these days, and slow-refreshing E Ink just can’t cut it for a media tablet. If our predictions for the future need to be grounded in reality, then maybe it’s time we finally put our color e-reader dreams to bed. The technology may eventually find a home somewhere, but at this rate, it likely won’t be on our nightstand.

Are we really ready to fully rule-out Amazon making a move into color e-ink at some point? I’m not sure they will or even should, I just wouldn’t bet against it.

Just because others have tried and failed means nothing. Others tried and failed at eReaders for years as well.

The Justice Department suing Apple and the major publishers was supposed to be a huge win for consumers as eBook prices were going to plunge to the levels Amazon wanted. Except that hasn’t happened.

Why? David Streitfeld of The New York Times argues that it may be due to the fact that we’ve now passed the peak of the eReader market and the prices for both those devices and tablets are plunging, making the eBook margin actually matter somewhat to Amazon.

I’ll echo many of John Gruber’s thoughts on the Kindle Paperwhite. It’s solid — by far the best Kindle I’ve ever used. But it could be even better.

Namely, the unevenly lit bottom is annoying. It reminds me of the bottom of a billboard that’s being lit up. It’s less annoying depending on the brightness setting you use, but it’s impossible not to notice because the rest of the display is so wonderfully and evenly lit.

Also, this is something I hadn’t really thought about consciously but I totally agree with subconsciously:

But page-turning is a bit of a setback. It’s good that you can use the touchscreen to turn pages, but why not include dedicated page-turning buttons as well? The e-ink Kindles are designed to do one thing really well: display long-form text. Page-turning is at the heart of the Kindle reading experience. An active Kindle reader is going to go to the next page hundreds — in some cases, I’m sure, even thousands — of times every week. There should not just be buttons for page-turning, but great buttons. Buttons exquisitely designed and engineered to be perfectly placed and delightfully clickable. The problem with using the touchscreen to turn pages is that you have to move your thumb, from the bezel to the display and then back to the bezel after tapping, each time. With page-turning buttons on the bezel, like on the old pre-touchscreen Kindles, you never had to move your thumbs while reading. Not having to move your thumbs is one way a dedicated e-reader could hold an advantage over tablets like the iPad and Kindle Fire — a missed opportunity here. It’s a little thing, but as always, it’s the details that matter.

Using the Kindle Paperwhite, it seems clear that Amazon wanted to remove all physical buttons. Very Apple-like, right? Not really. My thumb is constantly moving from the bezel to the screen to turn pages. It’s a small gesture, but it’s unnecessary friction. Sure, traditional books (you know, the actual paper variety) require more work for page-turns, but if you can improve something with technology, why not do it (especially if you were already doing it)?

And yes, Apple’s iBooks app requires you to touch the screen to turn pages as well, but at least they give you a lovely page-turning animation to harken back to the good old days. More importantly, the iPhone/iPad isn’t designed to be a pure eBook reader. The Kindle Paperwhite is.

I also miss the “home” button found on the last generation Kindle Touch. Fewer buttons isn’t always better. It should be all about the reading experience, not some minimalism pissing match.

Also, be sure to read Gruber’s thoughts about typography on the device.

Look, the Paperwhite is great. If you’re a big reader, I highly recommend it. But there’s no question that it could be and probably should be even better.

The headline is your typical click-baity BI stuff, but Henry Blodget’s post itself is worth a read. Well, aside from this part:

Apple is expected to introduce an “iPad Mini” next week, which will compete directly with the Kindle and Nexus, but it seems unlikely that this device will sell well if it is priced at, say, $299 (only $100 cheaper than the full-sized iPad). And if the iPad Mini is priced at less than $299, it’s tough to see how Apple will make much profit on it.

First of all, anyone following along even loosely would know that Apple is not expected to introduce an iPad mini next week. That would be next month.

Secondly, if you really don’t think Apple would sell a shit-ton of said devices at $299, you’re a fool. People want that form factor. (Though my money is still on a $249 price point.)

Thirdly, if you don’t think Apple will be able to turn a nice profit on such a device, you’re an even bigger fool. This is Apple, that’s what they do. No, it won’t be an iPhone-like profit, but no one is expecting that. That’s an anomaly thanks to carrier subsidies.

Aside from that, Blodget’s thoughts on what Amazon could do to disrupt the mobile space are good. For all the talk of Android being “free”, it hasn’t truly changed the U.S. smartphone game by driving down prices. The top of the line phones are still $200 - $300 after subsidy. If Amazon can nail hardware with all their Kindle work, they could really drive prices down — because they don’t care about making money on the hardware.

And:

Unlike Google, which has no natural physical distribution channel, Amazon also has the ability to effectively market and distribute its tablets and smartphones. It doesn’t need carriers to do this, the way other hardware manufacturers do. This means that Amazon would likely be able to compete more effectively with Apple, especially if it offered a radically cheaper option.

That, I agree with.

Fascinating interview with Jeff Bezos. On the topic of losing money on the Kindles, he notes:

We don’t disclose the exact bill and materials, so I can’t answer that. But we don’t want to lose a lot of money on the device because then we’d really hate it if you put it in the desk drawer. On the other hand, if you make a lot of money on the device, I believe you haven’t earned your money on it yet, and then you’ve incentivized them (the customers) to stay on the upgrade treadmill that I mentioned today.

Translation: we are making some money, but not a lot. (Though it’s not clear the Kindle eReader vs. Kindle Fire breakdown there.)

And on the topic of the $499 cost of Kindle Fire HD subsidizing the data plan, Bezos:

I’m not going to break out the economics of any particular piece with you, but you’re right, it’s an astonishing price point.

Translation: Likely yes.

Doing The Math

With the iPad, AT&T offers 250 MB of data a month for $15 a month (technically, $14.99, which is odd since every other deal is a round number). With the Kindle Fire HD, AT&T offers 250 MB of data for $50 a year. So that’s $180 a year versus $50 a year for the same data on the two different devices.

Perhaps not coincidentally, when you factor out the storage markup, Amazon is charging users $130 to upgrade to the Kindle Fire HD with 4G/LTE. 

So it’s possible that Amazon is passing the entire $130 from consumers over to AT&T to secure their good-looking deal. But if that’s the case, why not either tack-on or eat the remaining $50?

It’s just another layer of complexity for the consumer and it’s a weird one since most consumers are going to want more than 250 MB of data a month with an LTE connection. In fact, it’s such a weirdly small amount, that Verizon doesn’t even offer the option. 

Again, I just don’t get it.

The $499 Kindle Fire HD

I was very impressed by Amazon’s press conference today. I went in thinking it’d be a single (as opposed to the whiffs by Nokia and especially Motorola the day before), but I ended up thinking it was actually a homerun. I already bought a Kindle Paperwhite. 

But there’s one thing I’ve been thinking about that I still don’t really get: the $499 Kindle Fire HD.

That price doesn’t bother me per se, but why is it so much more expensive than the $299 version? It has two key differences: twice the storage (32 GB versus 16 GB) and 4G LTE connectivity. 

Amazon is selling the non-4G Kindle Fire HD with 32 GB for $369, which means they value the 4G element at $130. Coincidentally (or not) that’s the *exact* premium Apple charges for LTE on the new iPad. 

But that’s a huge premium. There’s no way the 4G/LTE chip costs that much. Apple gets away with it because Apple gets away with charging huge premiums. But Amazon usually does the opposite. And in fact, Jeff Bezos himself made a point of saying today that they’re not in this to make money from the hardware. So why the huge markup?

You could certainly argue that you’re getting more with Amazon’s 4G/LTE upgrade — and you sort of are. Amazon is bundling 20GB of Cloud Drive storage and a $10 Amazon Appstore promotional credit (which is just as beneficial to Amazon as the consumer since it encourages app lock-in). You also get 250 MB of data a month for 12 months — but you have to pay an additional $49.99 for that.

I suppose some of the $130 4G/LTE markup may go towards the data rate they secured for consumers from AT&T. But 250 MB worth of data is basically a joke these days. Especially with LTE. (Verizon doesn’t even offer the option for the iPad. Naturally, AT&T does, for $14.99 a month.) $50 a year may *look* like a great deal for a year of data, but it’s just sort of a weird, borderline deceiving deal. You’re going to want more.

Overall, there’s no question that the 4G Kindle Fire HD is a better price than you’d get with a similar iPad. But based on the early hands-on, it certainly seems like the iPad is still a much nicer device. It’s bigger. Faster. And again, Apple goes after premiums on the hardware. They’re in the business of selling hardware. Amazon is not.

I don’t get why Amazon wouldn’t launch the 4G Kindle Fire HD at $399. Or, if they’re insisting on going with $499, why not eat the silly $50 extra cost for the 250 MB of data? It’s like they subsidized 75% of the data cost, but didn’t feel like going the entire way.

It almost feels like Bezos decided he wanted to make some kind of point about the $499 price and really, the iPad, on stage today. So maybe he went to his team and said, “what’s the best we can offer for $499?” And this is what we got. 

The product just doesn’t feel like it’s priced right to me, given Amazon’s other Fires, and their intentions. I think the iPad still wins at the $499 price point, even without LTE. Amazon didn’t quite sell me on this one. 

Update: Doing the math.

Marco Arment: 

My recommendation: if you’re itching to preorder one of the new Kindles and absolutely can’t wait until the reviews are out, go with the Paperwhite Wi-Fi with ads.

That’s the one I just bought. I have both a second generation Kindle with 3G and a current Kindle Touch with WiFi — I don’t miss the 3G at all. As for the ads, they’re really not intrusive. And sometimes the deals actually seem pretty useful (like $1 Kindle books, for example). Also you can pay to turn them off after you buy the device.

(By the way, that’s Marco’s affiliate link not mine. He’s a hard-working developer. Throw the guy a bone.)