How Amazon Saved The Kindle
As Apple (NASDAQ:AAPL) prepared its iPad tablet in 2009, many tech writers — ourselves included — wrote the Kindle off for dead.Who would want to spend money on an expensive Kindle that only does one thing, when an Apple tablet would do so many more things for not much more money?
But things changed.
The Kindle (NASDAQ:AMZN) is still here, and it appears to be thriving. It may not be outselling the iPad — we don’t know, because Amazon won’t tell us how many it’s selling — but it has certainly kept its place in the gadget world.
How did Jeff Bezos and company do it?
Price: The Kindle 3 is cheap enough for millions of people to buy
The Kindle’s price tag is its most important feature. Starting at $140, the Kindle 3 is in impulse-purchase territory. You can buy one for the house, one for the cabin, and one for the kids. You can buy it as a gift, even for someone you don’t like that much. You won’t freak out if it gets banged up a little.
And you can buy one even if you own an iPad, because it’s cheap enough to have both. This isn’t like the first Kindle, which cost $400 and required some serious calculus to justify buying.
Imagine how many Kindles Amazon will sell when it’s even cheaper next year — say, starting at $99.
Cross-platform support for Kindle books
Amazon’s devotion to the Kindle as an e-book platform, and not just as a hardware device, is a huge reason for its success.Amazon offers Kindle reading apps for the Kindle (obviously), the iPhone and iPad, Android (NASDAQ:GOOG), BlackBerry (NASDAQ:RIMM), Windows Phone 7 (coming soon) (NASDAQ:MSFT), and the Mac and PC. We wouldn’t be surprised if Amazon would make a Kindle app for the Barnes & Noble Nook (NYSE:BKS), if it were ever technically possible.
Even the iPad owners that we surveyed said they are more likely to buy Kindle e-books than Apple iBooks.
It’s funny. People criticize the Kindle store for being “closed” because it uses Amazon’s proprietary e-book format. But in practical terms, it’s actually quote “open,” because it works on so many devices.
Didn’t try to compete with the iPad on features, and focused on what matters to readers
A Kindle in Provence
Image: Dan Frommer, Business Insider
Amazon didn’t freak out and rush a Kindle with a color LCD screen when Apple’s iPad came out. (It may be working on one internally, but it didn’t rush anything to market.) That’s because there’s no reason for Amazon to compete with Apple’s iPad on features, especially when it has such a huge price advantage.Instead, Amazon kept its product focused on what matters to readers. Things like size and weight, portability, e-ink screen quality, the ability to read in the sun, and battery life. It made improvements, like better support for grayscale, and faster page-turning, but it kept things simple.
Sure, Amazon is dabbling with an App Store, like every other platform. But it’s obvious that it’s not trying to mimic Apple at every move.
Great commercials that really tell the Kindle story well
Played ball with publishers to keep the Kindle e-book selection massive
Amazon’s relationship with book publishers has been bumpy. But it has ceded control when appropriate, and in return, it has maintained a selection that is still much more impressive than rivals’, like Apple’s iBooks store. One key sacrifice was letting publishers move over to a so-called “agency model,” which let the publishers set e-book prices, rather than giving Amazon that power.
That’s why you don’t see many $9.99 Kindle books anymore, because publishers think that e-books shouldn’t cost so little.
Amazon made some sacrifices, like stripping out the 3G modem to cut another $40 off the cheapest Kindle’s price tag
In theory, the Kindle’s free-forever 3G “Whispernet” service is a big advantage over rival e-readers that don’t have built-in 3G service. But it’s not something everyone needs.So it was smart for Amazon to sacrifice that “it just works!” feature in order to shave $50 (more than 25%) off the Kindle’s price tag. For the people who care about those extra $50, they won’t care as much about missing Whispernet. And for the others who learn about Whispernet and its convenience, and end up buying the more expensive Kindle, at least the cheaper model got them in the door.
So, what’s next?
We expect that Amazon will eventually broaden its Kindle lineup to include a high-end, more-tablet-like device, sort of like the Android-powered Nook Color. Or at least something with a color screen, or a touchscreen, to get rid of those plastic QWERTY buttons that take up way too much potential screen space.We expect that Amazon will continue to push the price down of low-end Kindle hardware, so that more people can buy them. A $99 Kindle by next Christmas wouldn’t surprise us. That would be great for school children.
We expect that Amazon will continue to evolve the Kindle platform, supporting as many devices as possible, and maintaining a selection-size lead over rivals, including Apple’s iBooks store. It still needs to do a better job with graphics, for instance.
In general, Kindle should keep its lead in the e-book platform war, especially if Android tablets give the iPad a run for their money, the way Android smartphones have quickly neutralized the iPhone.