5 ms·

Jeff Bezos: Why the Kindle Is So Expensive

50 points by silkodyssey 17y ago

TweedHeads 17y ago
"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.
- anon-e-moose 17y ago
  Because netbooks have a completely new kind of display? Included in that cost is (presumably) the cost of developing a display that looks nice and holds an image without battery, and the cost of setting up new manufacturing lines for it. Its still a little cheaper than the iPod Touch was originally, isn't it?
- jm4 17y ago
  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.
  - wallflower 17y ago
    > I've used netbooks and e-ink ebook readers. The ebook experience on a netbook does not compare. Pixel Qi's screen will narrow that gap eventually, at the price of being less available and more expensive in the short and medium-term. http://www.pixelqi.com/blog1/ http://www.pixelqi.com/blog1/
  - rbanffy 17y ago
    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.
    - DannoHung 17y ago
      Kindle has a thickness of a cellphone. This is an important factor that many of the "NETBOOK" people seem to want to ignore.
      - rbanffy 17y ago
        It's largely irrelevant. Netbooks are not designed to use flat batteries - most of them use cylindric cells - and have higher profile motherboards because memory and SSDs/hard disks live on sockets on top of the motherboard - because PC users are used to expand them. Netbooks also heat up a lot more than the cellphone-sized brain Kindles use and netbooks must accommodate heat management hardware (fans, heat exchangers) Kindles don't
jnorthrop 17y ago
The honest answer: "Because this is what people are willing to pay!"
- krschultz 17y ago
  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 17y ago
    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 17y ago
      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 17y ago
        Hopefully, Pixel Qi's displays (and dev kits) will be available on digikey soon after they ramp up, as well.
medianama 17y ago
This is Price Skimming - http://en.wikipedia.org/wiki/Price_skimming http://en.wikipedia.org/wiki/Price_skimming Done so well by Apple and others in consumer electronics space.
- tallanvor 17y ago
  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 17y ago
    If it was price skimming, wouldn't the newer versions of the product cost less?
    - medianama 17y ago
      There'll be a significant drop in price when a strong competitor emerges...
- cookieliaokai 17y ago
  sexy girls,sugar daddy&baby ,rich successful men, search profiles, online chat.... free sign up on ^-^ http://SugarBabyMeet.com/ http://SugarBabyMeet.com/ ^-^ The largest dating site for sugars. Thousands of single members with hot and sexy figure are here waiting for you. Not only the online relationship, but also find true love near you..
rbanffy 17y ago
I want mine with a GSM-ish modem and no lifetime data plan. That should make it cheaper.
TrevorJ 17y ago
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.
augustus 17y ago
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.
- JoelSutherland 17y ago
  When a Kindle version of a book is available it makes up 35% of that book's sales. (http://www.businessinsider.com/henry-blodget-kindle-sales-now-a-shocking-35-of-book-sales-when-kindle-version-available-2009-5 http://www.businessinsider.com/henry-blodget-kindle-sales-no...) It has succeeded already by most reasonable business measures.
- lacker 17y ago
  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 17y ago
    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.
- 17y ago
loincloth 17y ago
Whether it's still too expensive or not, I'm not sure yet.. but I definitely prefer the current business model over 'the cell phone' one.
seshagiric 17y ago
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.
koepked 17y ago
“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.
- callahad 17y ago
  Honestly, I feel like Amazon wants to own the e-book market badly enough that they were forced to introduce their own reader. Once competing hardware shows up, I'd put my money on Amazon dropping or scaling back the Kindle to focus on content sales. Especially when you consider their margins. Books on the Kindle store have a publisher-set "suggested price," but Amazon retains the right to sell the item at any price point. For each sale, regardless of actual price, the publisher gets 35% of their suggested price. Imagine publishing an item for $100 on the Kindle store. Amazon can mark it down 25% and still $40 per sale while you only get $35. Not a bad situation for Amazon.
- shimon 17y ago
  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 17y ago
    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?
jonursenbach 17y ago
It's offensive that they considered _forcing_ Kindle owners to purchase a minimum amount of books per month.
- mrkurt 17y ago
  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 17y ago
    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.
    - mrkurt 17y ago
      Maybe that's one of the reasons they didn't go that route? The subsidized cell phone business model can suck for consumers (sorta the point Bezos was making), but requiring a minimum book purchase is still something some people might go for. I have no idea how they'd implement it, but I suspect you'd pay a monthly fee that "earned" you X number of books. You'd hope they wouldn't let you "forget to buy enough" and thus lose your Kindle service.
    - prospero 17y ago
      Does your cell phone turn off if you don't use the full allotment of minutes?
      - amalcon 17y ago
        It does if I don't pay for the ones I don't use.
    - bdr 17y ago
      It would make more sense for them to charge you $(X-Y) if you only bought $Y worth of goods in the month.

50 points by silkodyssey 17y ago

"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.

anon-e-moose 17y ago
Because netbooks have a completely new kind of display? Included in that cost is (presumably) the cost of developing a display that looks nice and holds an image without battery, and the cost of setting up new manufacturing lines for it. Its still a little cheaper than the iPod Touch was originally, isn't it?
jm4 17y ago
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.
- wallflower 17y ago
  > I've used netbooks and e-ink ebook readers. The ebook experience on a netbook does not compare. Pixel Qi's screen will narrow that gap eventually, at the price of being less available and more expensive in the short and medium-term. http://www.pixelqi.com/blog1/ http://www.pixelqi.com/blog1/
- rbanffy 17y ago
  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.
  - DannoHung 17y ago
    Kindle has a thickness of a cellphone. This is an important factor that many of the "NETBOOK" people seem to want to ignore.
    - rbanffy 17y ago
      It's largely irrelevant. Netbooks are not designed to use flat batteries - most of them use cylindric cells - and have higher profile motherboards because memory and SSDs/hard disks live on sockets on top of the motherboard - because PC users are used to expand them. Netbooks also heat up a lot more than the cellphone-sized brain Kindles use and netbooks must accommodate heat management hardware (fans, heat exchangers) Kindles don't

jnorthrop 17y ago

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

krschultz 17y ago
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 17y ago
  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 17y ago
    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 17y ago
      Hopefully, Pixel Qi's displays (and dev kits) will be available on digikey soon after they ramp up, as well.

medianama 17y ago

This is Price Skimming - http://en.wikipedia.org/wiki/Price_skimming http://en.wikipedia.org/wiki/Price_skimming Done so well by Apple and others in consumer electronics space.

tallanvor 17y ago
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 17y ago
  If it was price skimming, wouldn't the newer versions of the product cost less?
  - medianama 17y ago
    There'll be a significant drop in price when a strong competitor emerges...
cookieliaokai 17y ago
sexy girls,sugar daddy&baby ,rich successful men, search profiles, online chat.... free sign up on ^-^ http://SugarBabyMeet.com/ http://SugarBabyMeet.com/ ^-^ The largest dating site for sugars. Thousands of single members with hot and sexy figure are here waiting for you. Not only the online relationship, but also find true love near you..

rbanffy 17y ago

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

TrevorJ 17y ago

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.

augustus 17y ago

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.

JoelSutherland 17y ago
When a Kindle version of a book is available it makes up 35% of that book's sales. (http://www.businessinsider.com/henry-blodget-kindle-sales-now-a-shocking-35-of-book-sales-when-kindle-version-available-2009-5 http://www.businessinsider.com/henry-blodget-kindle-sales-no...) It has succeeded already by most reasonable business measures.
lacker 17y ago
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 17y ago
  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.
17y ago

loincloth 17y ago

Whether it's still too expensive or not, I'm not sure yet.. but I definitely prefer the current business model over 'the cell phone' one.

seshagiric 17y ago

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.

koepked 17y ago

“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.

callahad 17y ago
Honestly, I feel like Amazon wants to own the e-book market badly enough that they were forced to introduce their own reader. Once competing hardware shows up, I'd put my money on Amazon dropping or scaling back the Kindle to focus on content sales. Especially when you consider their margins. Books on the Kindle store have a publisher-set "suggested price," but Amazon retains the right to sell the item at any price point. For each sale, regardless of actual price, the publisher gets 35% of their suggested price. Imagine publishing an item for $100 on the Kindle store. Amazon can mark it down 25% and still $40 per sale while you only get $35. Not a bad situation for Amazon.
shimon 17y ago
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 17y ago
  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?

jonursenbach 17y ago

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

mrkurt 17y ago
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 17y ago
  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.
  - mrkurt 17y ago
    Maybe that's one of the reasons they didn't go that route? The subsidized cell phone business model can suck for consumers (sorta the point Bezos was making), but requiring a minimum book purchase is still something some people might go for. I have no idea how they'd implement it, but I suspect you'd pay a monthly fee that "earned" you X number of books. You'd hope they wouldn't let you "forget to buy enough" and thus lose your Kindle service.
  - prospero 17y ago
    Does your cell phone turn off if you don't use the full allotment of minutes?
    - amalcon 17y ago
      It does if I don't pay for the ones I don't use.
  - bdr 17y ago
    It would make more sense for them to charge you $(X-Y) if you only bought $Y worth of goods in the month.