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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Kindle - Amazon&'s e-Reader cont..

Kindle DX is priced at $489 which is $130 more than the earlier versions.²¹ It also has the feature of changing the display from portrait to landscape when rotated, a feature resembling an iPhone. Besides the positive features, Kindle DX faces a major drawback wherein e-ink technology used in the device was not able to fix the disbursing flash that comes out of the reader while navigating from one page to another. Despite this drawback, Amazon firmly believes that the additional features of Kindle DX would enable it to target a huge customer base.

Kindle users can have access to 300,000 titles available in Amazon and can store up to 3,500 books on Kindle DX.²² Apart from books, Amazon is also offering access to online versions of newspapers for its Kindle users. Around 37 newspapers are available for subscription via Kindle which costs $10 per month/subscription.²³ Speaking on the availability of newspaper, Guy Kawasaki, managing director, Garage Technology Ventures²⁴ , said, "It's a beautiful thing to wake up and get on a plane with a Kindle, not have to sync it with a computer, and know your newspaper is on it."²⁵

Of late, Kindle lured the customers because of its hassle-free system for downloading books. Although, Amazon did not reveal Kindle's sales and revenue data, it observed that since the launch of Kindle, the demand for e-book readers has been gradually picking up. Mark Mahaney, analyst, Citigroup estimated, "Since Amazon launched Kindle in 2007, it has sold 500,000 at $399 a pop (now $359) - roughly a $200 million business."²⁶

Meanwhile, Amazon has a road-block of selling Kindle out of US as it has to still enter into agreements with the mobile operators in other parts of the world to enable wireless downloading of books. However, Kindle can be used and content can be read on it anywhere in the world bearing the constraint of the unavailability of the device and downloading new material into the device outside the US. In spite of this, Amazon is very much confident that its business would flourish.

Competition to Amazon's Kindle

The launch of Amazon's e-reader triggered competition from other players like Sony. Even before Amazon launched its e-reader, Sony introduced its own e-reader into the market. The competition between Amazon and Sony exists to a certain extent as Sony's e-book readers are priced lesser than that of Amazon's Kindle. Sony's another version of e- reader PRS 700 launched in 2008 is available at $350.²⁷ When Kindle got outsold soon after its launch (in 2007), Sony utilised the opportunity to go on an exhaustive publicity campaign in order to increase its sales. However, Kindle has a competitive advantage over Sony in technological aspects

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21]Stone Brad and Rich Motoko, "Amazon Introduces Big-Screen Kindle", http://www.nytimes.com/2009/05/07/technology/companies/07kindle.html?scp=8&sq=amazon&'s%20kindle&st=cse, May 6th 2009
22]"Kindle DX: Amazon's 9.7" Wireless Reading Device (Latest Generation)", http://www.amazon.com/Kindle-DX-Amazons-Wireless-Generation/dp/B0015TCML0/ref=kin2w_ddp
23]Stone Brad and Rich Motoko, "Turning Page, E-Books Start to Take Hold", http://www.nytimes.com/2008/12/24/technology/24kindle.html?scp=9&sq=amazon’s%20kindle&st=cse, December 23rd 2008
24]An early-stage venture capital firm.
25]Jana Reena, "Kindle 2: More Than a Pretty Face", http://www.businessweek.com/innovate/content/feb2009/id2009029_980088.htm,February 9th 2009
26]Copeland V. Michael, "The end of paper?", http://money.cnn.com/2009/03/03/technology/copeland_epaper.fortune/index.htm, March 3rd 2009
27]"Google backs Sony Reader against Amazon Kindle", http://ereadgizmo.com/category/ebooks, March 19th 2009