The Kindle line basically started the digital reading revolution. They were neither the first nor the best when they appeared, but Kindles were the driving force behind it. Amazon got too powerful, customers likes affordable eBooks too much, and publishers freaked out to the point of getting involved in what seem to be fairly illegal activities while trying to counter all that. We’ve been over all that before. The big question now is “Why are Kindle eBook prices still so ridiculously high?”
I’m not just talking about the results of the DOJ suit against the publishers over their adoption of the Agency Model. I’m glad that’s happening, and I wish them all the luck in achieving a decisive conviction, but even those publishers who have chosen to settle already will not have had much of an effect just yet. I’m more concerned with common sense.
The most obvious side of this is the obvious dislike of the format. Publishers want physical media to be favored because it is more easily controlled. eBooks are too convenient and most especially too easily pirated, so we have to expect these publishers to try to persuade people to stick to proven methods, right? Some variation on this argument is likely to come up in any defense of the Big 6.
I’ll be honest, I’m not even going to address it at length here beyond saying that it flat out ignores the facts. Study after study demonstrates that piracy either increases or fails to affect overall spending as a trend. It’s unintuitive, so I don’t blame them for being slow to catch on, but surely somebody employed by these companies could do some research that goes beyond ominous warnings of the dangers of piracy like those thrown around by the MPAA. Maybe I’ll go into more detail on that another time.
Even assuming that was too hard to grasp, however, there is plenty of easy to understand information about adapting to a market that does away with the concept of limited supply. The most dramatic example comes from the video game industry where Valve CEO Gabe Newell explained a while back that briefly discounting media by 75% had unexpectedly resulted in sales numbers jumping by a factor of 40. I’m not saying the two industries are directly analogous, but clearly there are signs that digital distribution needs to be approached a bit differently.
There have been a few signs that publishers were tentatively trying to figure all this out. Some short-lived discounts have popped up, and last summer’s Kindle Sunshine Deals promo comes to mind as a large effort to feel out the market. It still seems like the biggest motivator for these publishers is a desire not to change.
They have a good thing going and can basically control the entire publishing landscape when they work together. The Kindle, along with its eReader competitors, is an unknown. If it were embraced, somebody else might figure out how to do things better and that would be bad.
I have no idea when this will change, but it can’t come soon enough. All that publishers have managed to accomplish with this ridiculous behavior is temporarily setting back Amazon by shooting both themselves and their customers in the foot.
Nobody really wants traditional publishing to be completely out of the picture, but lately they’re doing more harm than good. One of these days they will have to realize this and Kindle owners everywhere will breathe a sigh of relief while stocking their digital libraries.
We are well aware that Amazon has come to completely dominate the Android tablet market with their Kindle Fire and that this has been accomplished in an amazingly short amount of time. Unfortunately for Amazon, market research firm IDC has released a report of the Android tablet market shrinking at a noticeably higher rate than the tablet market in general. This could prove problematic as a trend, but the situation may be even more complicated than that.
IDC’s report indicates a bit of a slump as we come into 2012. Total shipments for tablets are coming in below expectations, especially compared to the previous quarter’s record breaking sales numbers. Apple’s new shipments are up to 68% of tablet sales compared to just 54% at the end of 2011, indicating that Android has lost a bit of traction despite the lack of reason to get excited about the iPad 3. Much of this, according to IDC, may be attributed to Apple’s keeping the iPad 2 around as a cheaper alternative to their newest offerings.
Where many are taking this as a death sentence for the Kindle Fire and Amazon’s tablet prospects more generally, there have also been issues raised with IDC’s research methods. Namely, they are making their determinations based off of total shipments from factories to warehouses and stores. This is itself a problematic point to raise since it calls into question IDC’s analysis of Q4 2011, but does make sense. There were obviously going to be plenty of retailers that still has stock left over from the holiday season, so maybe it would be smart to account for that. Even so, sales almost certainly dipped compared to the iPad.
Looking forward to the year ahead, this doesn’t start Amazon off on a high note. The Kindle Fire was just their first generation product, however, and we are expecting the next generation in a matter of months. It will likely be larger, or at least have the option of being larger, and will definitely be more powerful. Pricing can be expected to remain highly competitive. This is certain to lead to a resurgent interest in the Android segment of the market even leaving aside such strong offerings as the new Samsung Galaxy Tab 2 and Google’s anticipated budget tablet.
Larger screen or not, it is hard to say in advance if Amazon has a Kindle Fire 2 vs iPad 3 comparison in mind. It is even harder to tell if this would be a smart move at this time. Both Android and iOS sales may be hit hard toward the end of this year with the introduction of Windows 8 tablets to the competition. Since these will certainly be all-purpose tablets along the lines of the iPad, it might be more effective for Amazon to continue building the Kindle Fire’s niche as a consumption device that serves specific needs at a lower price than the alternatives.
The bottom line is that right this minute it is doubtful Amazon has anything to be worried about with regard to the Kindle Fire. Things are going well even if there’s a bit of a slump right now. The big challenge will come later this year when Android is hit from both sides by iOS and Windows 8 and consumers are left to decide which will be their long-term choice.
While it has been known for a while now that Amazon’s first effort at tablet design, the Kindle Fire, was probably the most popular non-Apple tablet on the market, we have only just learned to what extent that is true. Recent information coming out of comScore indicates that the Kindle Fire has managed to acquire 54% of the Android tablet market in the months it has been available. Nobody else even comes close.
The last time we talked about this topic, the Kindle Fire had just started pulling ahead of the Samsung Galaxy Tab as the most popular of the iPad alternatives. Things are now apparently a bit less close. comScore reports that the Kindle Fire now has just under four times the market share enjoyed by the Galaxy Tab.
This report looks exclusively at the period from December 2011 through February 2012. In that time the Kindle’s popularity nearly doubled while not a single other Android tablet gained at all. The Galaxy Tab family lost nearly ten percent, falling from 23.8% to 15.4% of the market.
Amazon clearly struck the right note with their surprisingly low pricing of the Kindle Fire. At $199, it immediately enjoyed an advantage over the competition. While there are other options now at the same price, nobody has managed to leverage that advantage quite as well as Amazon did. Some of that is likely due to exposure and brand recognition. The Kindle Fire was the first truly useful $199 tablet and by far the most heavily advertised.
Mostly we can blame the competition’s failures on the inability to compete with Amazon’s media integration. Google has been doing great things with Google Play recently, including huge efforts to clean up the App selection and greater emphasis on video and music selections, but it is far from the experience the Fire offers even on a completely unaltered installation of Android.
The big question now is whether anybody else can hope to compete. The tablet market is increasingly centered around the iPad and the Kindle Fire. Admittedly this is already a change since six months ago it was entirely centered around the iPad. That said, the low price that Android tablet customers are coming to expect means that the potential for profit among hardware manufacturers without their own content hubs is shrinking at an alarming rate. Samsung’s new Galaxy Tab 2 is impressive, but it seems unlikely that the desire for a more versatile tablet will overcome the Amazon advantages across a large audience.
The Kindle Fire is clearly doing something right to have pulled this far ahead. While Amazon is rumored to be either subsidizing the price slightly or at most selling the hardware at cost, they are not the only option available. Even among the Kindle’s traditional competition, nobody seems to realistically consider the Kobo Vox or Nook Tablet to be equally attractive products at this point. There is more to that than just Amazon’s ability to throw money at problems until they come out on top.
It’s been clear since early this year that as the Kindle Fire was taking off so impressively, Amazon was experiencing some amount of decreased Kindle eReader interest among its customers. It is probably fair to say that most people expected this. The Kindle accomplishes its narrow purpose well, but many people will always prefer a device that does many things adequately over one that does one thing extremely well. As the trend continues, and as the Kindle Fire becomes the first in its own line of tablet products, do we have to worry about this being a popular enough substitution to lead to the end of the Kindle eReader?
A year or two ago I would have, and am known to have, argued against the idea. The strengths of the Kindle are things that you just can’t match in a tablet. The Kindle Fire’s inferior screen, shorter battery life, and greater weight all make it a distant second-best for reading activities by comparison. Clearly not everybody is agreeing with those points, as sales estimates for the popular eReader have been declining coming into this year.
I believe it is possible to argue against this being just a matter of one device being somehow better than the other, though. The real problem is the way that Amazon has segmented their customer base.
If we assume that the Kindle Fire is more appealing to people who only read occasionally, and who would like to get more regular use out of their purchase, that leaves E Ink Kindle buyers as the more dedicated reader base. Let’s face it, Amazon’s actions lately have not been entirely pleasant for many fans of literature despite bringing prices down.
People get very attached to their favorite authors, and to the idea of authorship in general. For many, the “One of these days I’m going to sit down and write a book” mantra is less a matter of actual intent and more a sign of respect for the craft. The cult popularity springing up around any number of self-published Kindle authors is just another sign of this. By pitting themselves against groups like the IPG, and thereby inspiring even more public condemnation from big name author and those speaking more or less officially on their behalf, Amazon is damaging their pro-reader stance.
I don’t believe that the eReader as we know it is on the way out. The E Ink Kindle remains one of the best options for reading that money can buy and the combination of great selection with commitment to customer satisfaction works heavily in Amazon’s favor. This sort of questionable behavior does much to dampen enthusiasm for the product among potential buyers, though.
So is Amazon biting into Kindle sales? Definitely. There’s at least as much interference coming from their heavy-handed negotiation tactics as their tablet alternative, though. The Kindle Fire is an amazing little device and most people seem glad to have it once they take it home, but for reading nothing can beat E Ink so far. Sadly, Amazon has been doing some work making sure people have doubts about tying themselves to the otherwise amazing Kindle ecosystem in the long term, and so there are issues.
While it is hardly the only place that media piracy is coming up these days, eBook piracy is very much on the minds of publishers and booksellers. There has been some informed speculation made that possibly as many as 20% of all eBooks currently loaded into devices like the Kindle are pirated rather than purchased. The number is almost shockingly high for some and seems to demand a response. The big question is what action could and should be successful.
Since I’m assuming that this reaches a relatively well informed and reasoning audience, I don’t need to spend much time on the fallacy of assuming that every eBook loaded onto a Kindle thanks to piracy is a lost sale. Naturally this is not the case as studies have shown repeatedly when looking into music, movie, and video game piracy. Most of these same studies have shown that piracy does not have any strong negative effect on sales at all, but let’s assume for the moment that at the very least it allows the market trends to shift based on where customers see the most value to be gained for their money.
This is where the piracy “problem” gets relevant. Publishers wish to control the perceived value of their product. It is problematic for them if customers are able to get the same quality of experience from a $3.99 eBook that they do from a $17.99 hardcover, as this has an adverse effect on a mainstay of traditional publishing. Unfortunately, this sort of control can only be exercised in a situation where the publishers can regulate the flow of new work being made available to customers. eBooks naturally render this impossible, especially given how simple it is to choose self publishing these days thanks to Amazon, Barnes & Noble, and others.
Do I agree with the idea that books should lose value in an environment where there are too many of them to possibly read? Not entirely, but that’s just the way things work. If you have two similar titles being offered for wildly different prices then the cheaper one is likely to win out, barring dramatically successful marketing efforts. The only way that piracy really plays into this is in allowing readers to still have access to their favorite authors in situations where they would feel unable to justify paying now-outrageous prices. This is not necessarily a view of the emotional or philosophical “rightness” of the act, just an awareness of the psychology at work.
When it comes right down to it, you can’t stop piracy. No matter how restrictive the DRM, there are always more people interested in breaking it than maintaining it. What you can do is adapt to the market and respect your customers. Publishers who insist that if they can just shut down piracy sites and force Amazon to set high prices for Kindle books then all will be well are deluded. The only way to control piracy is to make legal acquisition affordable enough and simple enough that the alternative is too much of a hassle to be considered. The problem is not that the Kindle allows readers to access files they pick up from anywhere on the net, it’s things like the Big 6/Apple Agency Model implementation that try to freeze an entire form of media into an economic model that no longer functions.
Investors have recently suffered a bit of disappointment as Amazon’s fourth quarter revenue failed to meet expectations. Stocks fell, as a result. The big question is why this was the case. With Amazon saying that the sales of their Kindle line were up 177%, and the Kindle Fire specifically being the best selling product on their site since before it was even released, it’s possible we have an answer.
Regardless of whether or not the Kindle Fire, or any of the Kindle eReader devices for that matter, is being sold at a loss, it is definitely not being sold for a significant profit. That is even taking into account nothing beyond the simple numbers that people have managed to break down as far as parts and manufacturing cost estimates and ignores any other form of investment the company has to make to create a successful product. This means that everything after launch from software development to marketing to Amazon’s ever impressive support staff will inevitably push things over into the red. This can create some misleading information when you launch something like the Kindle Fire that exceeds expectations so strongly.
The way the Kindle line works, especially the Kindle Fire, is that the profit always comes from media purchases over the course of the device’s life. By providing each customer with a simple way to get whatever they want at a moment’s notice with no complications, Amazon makes it easy for a $1 eBook here and there to add up to a decent income. This means that while expected income for the company on each Kindle Fire is estimated to exceed initial guesses, it will take time for that to manifest. The short term will see more investment in making the product as indispensible as possible to users and cement customer loyalty even if it means taking larger short term losses than expected due to the sheer number of new users.
Basically that is what this all seems to come down to. Despite the doomsday predictions floating around now that Amazon has had a superficially bad quarter, there is reason to believe that the short term loss is actually a good predictor of long term growth.
The Kindle Fire has had a huge impact on markets and now accounts for the largest percentage of Android tablet usage by some accounts. It is beating out the competition and still gaining momentum along the way. There have been some reports that Android developers are currently making as much as 250% more off of their app sales on the Amazon Appstore than on those made through the general Android Marketplace, especially in those situations where revenue is advertising based.
The model is working and people are definitely making good use of their new tablets. While it remains to be seen what will come of Amazon’s efforts beyond the Kindle Fire, particularly given that future installments are rumored to be vaguely directed at confrontation with Apple’s iPad, right now there is every reason to believe that the experiment in moving beyond eReaders was a success.
For as long as eReaders have been around, it seems at times, people have complained that they aren’t available for under $100. They’re finally getting there, with the Kindle available for as little as $114 new. We might even see a $99 Kindle by the end of the year. An important question to ask the people who came up with this number might soon be “Is that before or after tax?”
There is obvious competition between online retailers and the brick & mortar set over taxes. While it is technically true that somebody buying a Kindle on Amazon.com should be paying the same taxes as somebody grabbing the same product from the local Best Buy, it isn’t surprising that most customers somehow forget to file the forms to pay those taxes at the end of the year. These stores aren’t the only ones affected, of course.
Most states have begun to take notice of the problem, with some targeting Amazon directly due to its prominent status and high sales figures. It’s a matter of hundreds of millions of dollars per year in revenue that the state governments rightly feel they should have access to. Amazon’s response, which is either due to the inconvenience of keeping up with unendingly complex local sales tax interactions and iterations or due to the fact that it makes their store more appealing to customers to be able to avoid sales tax (depending on your current level of cynicism and trust of a major corporation’s word on the matter), has been to withdraw their physical presence from nearly any state that has tried to enforce collection requirements on them.
Now, in an arrangement with the California government, not only will Amazon not be pulling their presence from the state, they will be working openly to resolve the issue of sales tax on inter-state commerce due to the rise of the internet. There’s a bit of back story to the arrangement, with both the state government and Amazon making threats over the issue, but essentially it seems that a compromise was reached. Amazon, and online companies in general, will be given until July of 2012 to persuade Congress to adopt some form of nationwide measure for the collection of internet sales tax. Should this not come to pass, there are fallbacks to allow for California to collect beginning in 2013.
While it would seem at first glance to be not in the company’s best interest to cooperate, they have simply gotten too large to avoid notice at this point. Increasingly, Amazon will be singled out as iconic of the problem with online retailers. The only safe path for them will be to seek a system that can catch their competition on all levels in the same net, to keep anybody from getting a major advantage.
The knowledge that this was coming could be one pressure that has pushed Amazon to focus on digital media distribution recently, giving them products that cannot be conveniently purchased locally. Whether or not that is the case, however, it seems a safe bet that Amazon won’t be driven out of business by the inconvenience of it all or the price bump that customers should be paying for already anyway.
There are any number of reasons to pick yourself up a Kindle, from convenience of transportation to instant 24-hour delivery of all new book purchases, but let’s take it down to the basics for a moment. Assuming that you have absolutely no concern besides the direct tradeoffs with paper, how much do you have to read before your Kindle has justified itself?
We’ll make the somewhat depressing assumption that you read nothing but current bestsellers. I sincerely hope this isn’t the case, of course, but it makes the price estimation easier for me and negates the obvious point of free books that you should already be aware save you money. Looking through the top 15 bestselling new hardcover book releases in the Amazon.com store(not the Kindle Store since that might indicate a customer predisposition toward discounted books), there are 13 books that the Kindle saves money on, one where the price is even based on pre-order discounting, and one book that is not available in Kindle format.
The actual average savings on those books that are available is around $2.47(ranging from $0.98 to $5), but for the sake of argument we can round it down to $2. Always better to err on the side of caution. This means approximately 58 Kindle books purchased during the life of your Kindle device before it has saved you money, if you pick up the $114 Kindle WiFi w/ Special Offers. Now, I’m aware that reading five books per week is abnormal so my average doesn’t really play into this. For the sake of argument, it seems safe to assume a conservative pattern of finishing a book every two weeks. That would mean that you have to own a Kindle for a little over two years before it saves you any money, assuming this level of consumption and no taking advantage of special offers or hunting for savings. Not unreasonable, if perhaps more than some would like. These things do work pretty much forever if you take care of them. It also might be worth knowing that Kindle owners are said to buy books at more than three times the rate of paper book customers, which speeds things up a bit.
Another major concern that has come up before is the environmental impact of eReading. While there is definitely a lot more that goes into the manufacture of an eReader like the Kindle than ever would in a paper book, there is more than that to take into account. Between production, transportation, storage, shipping, and all the other associated fuel costs, each book creates a noticeable amount of pollution. The question is where these numbers cross over.
Last year, in reference to Kindle 2 production, a report came out on the impact of producing Kindles compared to that of books which said that a Kindle creates a bit over 20 times as much pollution as a book in its creation. You could always assume that Amazon has gotten more efficient in their production with the next generation of the device, improved processes being good at that sort of thing, but let’s ignore that speculation and focus on what numbers we actually have. Round that first estimation up to 30 books worth if you want to account for the impact of charging your Kindle and I would be willing to bet that there are still very, very few people ever to own an eReader who didn’t manage to offset these totals.
Putting aside used books and libraries, since if you buy used books then you already know the advantages and the interaction between libraries and Kindles is in flux at the moment and hard to judge in the long term, picking up a Kindle, or any eReader, is just generally a good long term investment for you and the planet.
Well, it’s August again. That means it is definitely time to get things ready for the upcoming school year for all those parents out there. Normally, this is where I would come right out and say “Hey, buy them a Kindle and save money in the long run!” We’ll consider that a given for all the usual reasons like pricing and saving on precious and increasingly overused bag space and move on to why this year provides some interesting factors to take into consideration. It’s also a great way to encourage a little bit more reading in kids who are otherwise bombarded with far too many other attention draws to consider it time well spent without something extra to make it appealing.
The pricing on eReaders has gotten to the point where, pretty much across the board, they are affordable as replacements for the sort of fiction that usually comes up in schools. When you are used to paying $7.99 per book for something you can get on a Kindle for a dollar or even for free, the device pays for itself pretty quick. The same is true of the competition as well, naturally. Right now, as far as school use goes, I would consider both the Nook Simple Touch and any of the Kindles as ideal for the purpose.
The most important factor, aside from text pricing and availability which are fairly universal as relates to what might be required in these circumstances, is durability. Ideally, you don’t want to have to replace whatever you go for any time soon since it can take the better part of a year for the savings to offset the purchase price unless your child is a big reader. The new touchscreen Kobo isn’t bad, but it feels a bit flimsy by comparison with others. Both the Kindle and Nook at this point are pretty equally rugged and have a large variety of cases available for protection and personalization. Do not skip getting a case, if you can help it. These are generally solid devices, but even an inexpensive case like those in the Marware Eco-Vue line is enough to save from most wear and tear taken in transit and even buffer against short falls that would otherwise destroy the screens.
If neither eReader option is quite what you are hoping for, it might be a better choice to hold off on a purchase entirely, for once. Amazon has two new Kindles on the way, according to seemingly accurate reports. While they will not be making it in before the beginning of this Fall Semester, being October releases, there promises to be an introduction of touchscreen technology and possibly even a price drop even beyond what has been happening recently with the Kindle in general. We may even see the first in the new line of Kindle Tablets, making possible all sorts of new uses including the replacement of textbooks. That latter point, of course, won’t apply to most pre-college students, but it might be important for kids who are near to graduating and moving on.
I’ve been giving some thought to the implications of the still fairly new Kindle w/Special Offers as far as directed marketing goes, especially in light of the increasingly common speculation about Kindle Tablet PCs. The fact that this made such a splash, both in terms of controversy and in its success, only serves to emphasize the importance of the concept they are dealing with. It seems like Amazon is in a good position to capture the attention of huge numbers of deal seekers, and that there is some reason to believe that this is exactly their intent in the near future.
We know that people get excited about a good deal, even when it is on something they don’t necessarily need. The site Groupon has become amazingly popular recently for providing exactly this sort of deal. You sign up, log in, grab the deal of the day in your area, and likely end up making a purchase that would otherwise either have never occurred to you or been dismissed as wasteful. They basically rely on the fact that they can localize the deals to the point where hundreds of communities have something interesting going on in their area at any given time. It isn’t exactly a new concept, but it can be powerful when properly executed.
Amazon is in a position to take a swing at something like this from multiple angles at once. The most obvious approach is through the newest Kindle. You have to have an Amazon account to use it in the first place. Amazon has, as a result, potentially detailed information about the purchasing habits of just about any of these customers and can use something along the lines of their recommendation system to personalize deals to individual tastes. This is on top of the more widely ranging deal options. Already we’ve seen things like the $20 Gift Card for $10, which you can’t really go wrong with but which also guarantees Amazon a sale that might not otherwise have taken place. They also made the acquisition of popular deal of the day site Woot.com last June that offers a framework for even more impulsive buying opportunities. All of this is in addition to the Gold Box Deals, sales, and otherwise plentiful discount opportunities to be found on any given day on the Amazon.com website itself. There’s a lot going on here.
If at all possible, I expect to see this concept extended to the upcoming Kindle Tablet as part of the most basic experience of using the site, whether it focuses on media, app sales, or simply referrals. The success of such an effort would be exactly the thing to allow Amazon to undercut the competition on purchase prices without putting themselves at a disadvantage. While I don’t expect it will be nearly this amazing, I doubt anybody would mind getting the occasional special offer screensaver on their Kindle Tablet if it means that they get iPad-like functionality for less than the cost of a Nook Color.