Amazon.com's Kindle: Publishing Industry's iPod?
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Themes: Strategy
Pub Date : 2009
Countries : US
Industry : Services
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Case Code : INA0111
Case Length : 25 Pages
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Kindle and the Future of Publishing Industry cont...
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Besides all these facts, many analysts feel that Kindle should not be perceived as a mass market product as many other emerging technologies such as smart phones and net phones which are on par with Kindle and Sony are competing for a market share. Michael Norris, senior analyst, Simba Information53 opines, "There are already so many ways for a consumer to spend free time in front of a mobile device or PC. People have no need for an iPod of books."54 He also opines that majority of readers buy less than five books in a year and for them it is not useful to own Kindle that would cost more than buying the books itself. He also says that Kindle is more apt for prolific readers and Amazon had already targeted them. Also, even Kindle has competition from new entrants like Plastic Logic and Cool-er. Plastic Logic is planning to come up with an e-reader that makes reading of newspapers more comfortable. Cool-er e-book readers launched in 2009 are much cheaper than Kindle. These pose challenge not only to Kindle but also to the publishing industry. |
In order to boost the sales of e-readers, Amazon slashed the price of its Kindle 2 to $299 making
it available at $60 less than the previous price.55 But a Forrester Report opined, "The maximum
addressable market for e-readers as they are currently priced is substantial - but to reach the largest
market possible, the prices will need to come way down. And even then, e-readers are never going to
be as big a market as mp3 players, which 110 million US consumers own. But they will still have
phenomenal social and economic impact as they catalyze a new behavior of digital reading across
multiple devices. We're just at the beginning of this revolution...."56
Kindle on the other hand is slowly trying to compete with Sony outside the US market as well.
Expanding its market base, Kindle e-reader is launched in around 100 countries. In October 2009,
Amazon launched the same in India. The product is sold via the company's website and is priced at
$259 (approximately INR 12,400), which is considered expensive in an Indian market. Frank D’Souza,
partner, BMR & Associates57 opined, "Selling in India will be tougher than a lot of markets, as per
capita consumption of books is less and books are cheaper here."58 Analysts felt that a physical
copy of the book would be less expensive when compared to the e-book. Moreover, people would
have a chance of opting out as the company would levy shipment charges of its product if it does not
have a base in a country where it is launching.
Although Kindle has 'a very small group of potential buyers' in India, Wharton marketing professor
Jagmohan Raju opines that Amazon will not be at loss. According to him, "It seems they are targeting
only those who already buy from Amazon, and those for whom this will be a way to signal status...it
is better to be there and not have to catch up in case [a competitor] shows up. It's not a costly launch.
They are just making it available."59
53]Media and publishing researcher.
54]"Amazon's Kindle 2: No iPod for Books", op.cit.
55]Rogers James, "Amazon Slashes Kindle's Price", http://www.thestreet.com/story/10538140/amazon-slashes-kindles-price.html,July 8th 2009
56]"Read It and Weep: Will Amazon's Kindle Succeed in India?", op.cit.
57]It is a premiere professional services firm that provides high quality services to its clients in the tax and regulatory domains by giving inputs for tax and regulatory issues.
58]Prasad Anurag, "Amazing But...", Outlook Business, November 2009, page 68
59]"Read It and Weep: Will Amazon’s Kindle Succeed in India?", op.cit.