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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Competition to Amazon's Kindle cont..

The major breakthrough of Amazon's e-book reader when compared to its competitors is its wireless connectivity through a technology called Whispernet²⁸. Unlike the case of Sony e-reader, customers using Kindle need not connect to the internet to buy e-books. This feature is the Unique Selling Preposition (USP) and an added advantage for Amazon to be a notch ahead of its competitors. According to Bezos, "The vision is that you should be able to get any book-not just any book in print, but any book that's ever been in print-on this device in less than a minute."²⁹

Speaking on the changing trend, Steve Haber, president of Sony's digital reading division, commented, "The perception is that e-books have been around for 10 years and haven't done anything. But it's happening now. This is really starting to take off."³⁰ The competition between e-readers and the traditional publishing industry is intensifying questioning the future of the publishing industry.

Kindle and the Future of Publishing Industry

After the advent of the e-book readers, the sales of e-books gained momentum. According to book publishers like HarperCollins, Random House and Simon & Schuster, prior to the emergence of ebook readers, the sales of e-books for any device including laptop was a meagre 1% of the total book sales.³¹ However, the demand for e-books increased gradually over the years . Speaking on the emerging trend of e-book readers, Steve Kessel, senior VP for worldwide digital media at Amazon, declared, "We knew we couldn't out-book the book. We needed to do things that books couldn't do. We have 3G [wireless], which allows you to look up a word or go directly from a passage to Wikipedia."³²

On the other hand, the e-books are offered at a lesser price than the printed versions by Amazon and Sony on their e-book readers. Amazon is offering the books for Kindle users at $9.99 per book. These e-books are cheaper than the e-books which Sony is offering to its e-book readers at $11.99.³³ The e-books offered by Amazon to its Kindle users are also much cheaper than the printed versions which are available at $25.³⁴ Analysts opine that this would certainly lure the book lovers and in a way kindle the growth in sales of the e-readers. E-readers, which are developed using e-ink technology³⁵ give customers the same experience of reading from a hard copy. The e-readers are slowly transforming the traditional publishing industry. Without the cost of paper, printing and delivery, the publishing industry can deliver its content to the readers through e-book readers.

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28]Whispernet is a wireless delivery system for Kindle that allows the user to surf the web and download books and other Kindle content without the use of an outside internet provider.
29]"The Future of Reading", op.cit.
30]Stone Brad and Rich Motoko, "More readers picking up electronic books", http://www.nytimes.com/2008/12/24/technology/24iht-24kindle.18903447.html?_r=1, December 24th 2008
31]"Turning Page, E-Books Start to Take Hold", op.cit.
32]Ibid.
33]"Turning Page, E-Books Start to Take Hold", op.cit.
34]Cornelia De Suzanne, "Google's Entry into E-Book Publishing Will Cut Amazon's 70% Stake in the Growing Segment", http://ezinearticles.com/?Googles-Entry-Into-E-Book-Publishing-Will-Cut-Amazons-70%-Stake-in-the-Growing-Segment&id=2446957
35]It is a display technology designed to mimic the appearance of ordinary ink on paper.