

Jeff Bezos: Why the Kindle Is So Expensive - silkodyssey
http://www.wired.com/epicenter/2009/06/jeff-bezos-why-the-kindle-is-so-expensive/

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koepked
_“We want to have the best electronic book store, and we want to have the
best-built e-reader — not try to use one to thing to advantage the other,”
said Bezos._

 _Someone might want to tell Steve Jobs; Apple, um, clearly didn’t get
anywhere by tying iTunes to the iPod._

Can someone clarify for me, does it sound like Bezos' stance might be that
allowing each product to compete in its own market without the advantage of
the other will help force it to become a better product? And that ultimately
this will be better because each product will have more merit independent of
the other?

I can't tell if that's what he thinks or if that's what I think he thinks.
Either way, I think I like this way of thinking.

~~~
shimon
Bezos' claim is bullshit; of course they want to use their reader to advantage
their store. Long-term, the book-selling business is probably larger for them
than the hardware business. But as long as they have the dominant reader
device, of _course_ they are going to leverage that into a position of
dominance in ebook sales.

He'd love us to believe that the store and reader are not in some sort of
mutually-reinforcing dominant position. But if they really were separate,
wouldn't I be able to buy e-books from amazon with a different device? And
start my own bookshop for kindle users (maybe paying amazon for traffic to the
device)?

~~~
mlinsey
_But if they really were separate, wouldn't I be able to buy e-books from
amazon with a different device? And start my own bookshop for kindle users
(maybe paying amazon for traffic to the device)?_

You can definitely do the former. You can use your PC to buy Kindle books on
Amazon and then read them on your iPhone or iPod touch. (You can't buy them
directly on the phone, but who knows whether this decision was made by Amazon
or by the Apple App Store guardians.)

As for the latter, you can probably do that too, albeit in a pretty cumbersome
way. Native PDF support on Kindle DX will make it much more viable, although
the biggest barrier would be limited access to the Kindle's wireless
connection.

I suppose one possibility if you were making your own Kindle store would be to
have your customers add your site's email address to your Kindle's whitelist
of addresses allowed to send documents to your Kindle. This would mean
customers would pay an extra $0.15 per MB with each transaction...but now that
I think about it this is still way less than Amazon would charge you to sell a
book in the Kindle store at Amazon.com....hmmm...I wonder if this may actually
be viable?

~~~
throw_away
actually, with the newest version of the kindle iphone app, you can buy books
and have them sent to your iphone OTA.

and dave thomas at pragmatic programmers has been targeting kindles for a
couple of months now. you pay him for the file and then it's up to you to get
it on your kindle (by cable or by email), but I prefer his formatting over
what you get with other technical books at the kindle store. he's put a lot of
thought into making code examples readable on the device.

------
jnorthrop
The honest answer: "Because this is what people are willing to pay!"

~~~
krschultz
Actually working at a company that designs similiar devices the real answer
is: e-ink is crazy expensive. You can buy a 24" lcd screen for the price of a
9" e-ink display. It was impossible for us to match the Kindle's price because
they are getting a relatively good deal on the technology compared to the
average company.

~~~
sireat
Agreed, the biggest factor holding up the price is the display, no question
about it. When we can get alternative e-ink manufacturers, the price will
drop.

I looked into developing an e-ink reader, but the developing kit is/was around
$3500, enough to keep out hobbyists at this moment.

~~~
proee
Yes, I think the main reason they are charging 3.5k is to keep the hobby crowd
away from the technology. They (eink) does not want to deal with you unless
you have serious plans to develop a mass market product.

I decided to call up PVI directly (a fun experience since they answered the
phone in a foreign language) and they were willing to sell me 6" displays for
around $85 in low quantities.

For hobby related projects, the best bet is to use kent display's CHLCD
modules which are similar to a LCD but with bistable pixels. The display
driver is also integrated so much easier to interface with.

~~~
ph0rque
Hopefully, Pixel Qi's displays (and dev kits) will be available on digikey
soon after they ramp up, as well.

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augustus
In my humble opinion, I can't see the Kindle succeeding in this pricing model.

I really respect Bezos but to me he is seeing things from his side not the
customers.

The consumer has limited space in his pocket. Why would anyone want to have a
Phone and a Kindle with them at the same time.

I can't really see the Kindle appealing to the mass market with that pricing
model. I think Amazon's best bet might be offering subscription through
smartphones like iPhone and others.

When the iPhone originally came out with the $500 price tag it only appealed
to the fan boys. But by cutting the initial price they started appealing to
the average Joe.

The thing with the average joe is that they don't do the two year math. They
only look at the upfront price. We justified our monthly data plan costs by
getting rid of our land line. I think that's why the smartphone makes sense to
lots of consumers.

~~~
lacker
_The consumer has limited space in his pocket. Why would anyone want to have a
Phone and a Kindle with them at the same time._

I think this misses the point. A Kindle doesn't even fit in your pocket. The
value of a Kindle is not that you take it with you anywhere, but that for many
people it's a better way of reading books.

~~~
jrockway
Indeed. I do most of my Kindle reading on my couch.

Of course, it's also nice to have the same ability on an airplane, too. And
it's nice that the battery doesn't die in an hour like my phone would.

I wouldn't want a Kindle if my phone could magically shape-shift to be the
size of a book and if it had unlimited battery life. But in the real world,
you have to compromise.

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seshagiric
As long as the total cost of Kindle + 'x' number of k-books is less than what
it costs for printed ones, it is cheaper for the customer (ok take some points
for style, ease-of-use etc).

The risk with current pricing model is that once somebody buys a Kindle they
have to keep buying the k-books at whatever price they come. Otherwise the
device becomes useless. One can only hope Amazon keeps a tab on the k-book
prices.

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TrevorJ
Every new technology goes through this cycle. Even if it is new only in form
and not in it's underlying technology. Some people will be willing to pay a
premium to be early adopters. Later on, when competition hits and the market
is more saturated (and when the economies of scale are in full swing) the
prices will reduce drastically.

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medianama
This is Price Skimming - <http://en.wikipedia.org/wiki/Price_skimming>

Done so well by Apple and others in consumer electronics space.

~~~
tallanvor
Not necessarily. We don't necessarily know what type of profit margins Amazon
gets on the Kindle. --What looks like price skimming can also be due to
maturation of a technology.

~~~
mleonhard
If it was price skimming, wouldn't the newer versions of the product cost
less?

~~~
medianama
There'll be a significant drop in price when a strong competitor emerges...

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TweedHeads
"The Kindle DX is $489, and that is an unbelievably low price for something
that has inside it a sophisticated computer, a completely new kind of display
of that size, and a 3G wireless radio, Bezos said."

Somebody please send a $250 netbook to Bezos, or two for a Kindle's price.

~~~
jm4
I'm so tired of this netbook argument. They're apples and oranges. One is a
dedicated ebook reader and the other is a multifunction ultra-portable
computer. Just because one is capable of doing something the other is capable
of does not necessarily make them comparable. I've used netbooks and e-ink
ebook readers. The ebook experience on a netbook does not compare. This is
like saying cell phones are a rip off because you could use a $40 pair of
walkie talkies without a monthly fee instead.

Not to mention, we have no idea what the cost is on a Kindle. Netbooks use
commodity components that are widely available from numerous manufacturers.
The same is not true of e-ink displays. This is at least partly a factor in
the perceived high cost of an ebook reader.

We also don't know what kind of arrangement Amazon has with Sprint. Amazon
gives a few cents to Sprint when you purchase something using Whispernet.
Maybe Sprint also gets a flat fee every time a Kindle is sold. We simply don't
know.

There's also the issue of limited competition in the ebook market right now.
There are only a few manufacturers of quality e-ink readers and on top of it
all the Kindle is the only game in town if you want to buy ebooks from Amazon.
This is relatively new technology and the price will go down. We've seen it
before with the components that go into a $250 netbook. This is economics 101.

~~~
rbanffy
I do not agree because:

\- Netbooks are usually based on Atom processors that are cheap when compared
to Core2 and other more traditional PC processors but are much more expensive
than the cellphone-class ARM processor used in the Kindle

\- Netbooks use higher-capacity batteries because Atom processors use more
juice than the ARM in the Kindle.

\- The Kindle uses far more commoditized components than a netbook does - it
uses cellphone-class components while netbooks use PC-class ones.

\- Netbooks also have more RAM - the Kindle certainly has less than a gigabyte
of RAM - I would risk the Kindle has no more than 128 megs, soldered on the
motherboard - which is also cheaper than mounting RAM into a socket.

\- The e-ink displays are not new technology - a couple years ago my carrier
(in Brazil) offered me a Motorola phone with e-ink display. It was an entry-
level "dumbphone" and I did not need one. The only "new" thing in the Kindle
DX display is its size and design considerations that follow from it.

~~~
rglullis
Dude, you do not want to compare the e-ink technology from your "Motorola
phone with e-ink display". That was cheaper, of course, but the resolution was
awful (2x6). Not to mention refresh speed and screen size.

Pocket calculators have LCD displays for decades, too. That does not mean that
your 22" inch LCD screen has no "new technology" and should be cheap.

~~~
rbanffy
The e-ink part is exactly the same. It's the logic behind the screen that is
different.

And Kindles are not that different from any other e-paper display device
bundled with e-readers from many other sources.

The Kindle should be cheap to build

~~~
jrockway
You know this isn't Reddit, right? Just saying something 100 times doesn't
make it true.

~~~
rbanffy
The same way as saying any number of times something is false doesn't make it
so.

This discussion lacks a price list for all parts. Until then, it's my common
sense against yours.

Or better: my biases against your biases.

~~~
jrockway
Source: <http://www.isuppli.com/NewsDetail.aspx?ID=20138>

~~~
rbanffy
Thanks.

US$ 60 for the display doesn't look that expensive. At US$ 190 total cost of
manufacture for the 2, I would risk the wireless free forever subsidy seems to
be a substantial part of the unit cost. Would it be a safe bet to estimate the
display of the DX to be around US$ 120?

So, again, I would be happy with a DX that used wi-fi or my own GSM/3G instead
of the US-only cellular network. And the bright side is that it could probably
be sold for less than the current versions.

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rbanffy
I want mine with a GSM-ish modem and no lifetime data plan. That should make
it cheaper.

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jonursenbach
It's offensive that they considered _forcing_ Kindle owners to purchase a
minimum amount of books per month.

~~~
mrkurt
Really? It's offensive that they considered a plan that would subsidize
hardware with required book purchases? I'm glad they didn't go that route, but
it would have been stupid of them to not think about it.

~~~
jonursenbach
If they're forcing you to purchase a certain amount of books, and you don't,
your hardware would most likely get turned off; meaning that you are really
leasing it. Which is complete bullshit.

~~~
prospero
Does your cell phone turn off if you don't use the full allotment of minutes?

~~~
amalcon
It does if I don't pay for the ones I don't use.

