What the Kindle was meant to be, and what it’s turning into

Please Note: This post is all conjecture. By Kindle it means eReaders in general – Kindle is the best example because it had the most thought put into it.

Most of this post will revolve around the assumption that empowering customers wasn’t really what the Kindle was about. It was about freeing customers, and Amazon, from Publishers. It’s a very important distinction because things are beginning to get out of control – in good ways and bad.

What the Kindle was meant to be

iTunes with $10 books. An Amazon Store in everyone’s hand.

Longer Version:

Amazon saw a future for books where physical books would be replaced by digital. That meant two things -

  1. Amazon had to move to ensure its stream of book sales revenue was preserved.
  2. Amazon had the opportunity to become the platform for all of Publishing.

The latter goal is really what the Kindle was about. Amazon probably has a wall map with the Kindle bubble slowly growing to encompass all of Publishing.

Once the Kindle began to show it was more than just an eReader, Amazon probably realized a few things -

  1. Kindle owners bought nearly all their books from Amazon.
  2. Kindle owners became Amazon customers and bought lots of things from Amazon – pots and pans and cauldrons and brooms.
  3. Kindle owners would buy any other device Amazon produced.
  4. Amazon/Kindle could become the platform for all of Publishing much quicker than Amazon had thought.
  5. A Kindle owner had an Amazon store in her hand.

Just like the iPod helped turn iTunes into a monster and helped lay the foundation for the success of the iPhone and the iPad, Amazon had found a means to build a Publishing Platform and start something truly big.

Of course, since Amazon sells EVERYTHING, the Kindle is far more important to it than the iPod was to Apple. Imagine if Apple also sold shoes and jeans and kitchen sinks and wireless plans. How much more important would iPod and iTunes be?

Kindle is potentially that important.

The wall map was probably updated soon after Kindle 3 was released – the Kindle bubble was now slowly growing to encompass all of retail. At this point the wall map probably became an exact match of the 2003 Kindle blueprint in Jeff Bezos’ journal.

What the Kindle is turning into

The Internet with $1 books. A store that isn’t yet fully defined.

Longer Version:

Here are just a few of the Publishing related things Amazon probably neither expected nor is prepared for -

  1. The Race to $0. It starts with The Race to $1.
  2. The Democratization of Publishing. The speed and extent of this have probably taken Amazon by surprise. It doesn’t have Encore ready. It doesn’t have the right controls in place.
  3. The impending destruction of the $9.99 price point. It’s truly stunning that from $15 hardcovers we are going not to $10 ebooks, but to $1 and $3 ebooks.
  4. Competitors willing to kill themselves and books. If you consider the moves competitors have made, i.e. supporting library books and lending and browser-based books – it’s madness.
  5. Users constantly raising their expectations. Everyone seems to have forgotten the world we were in just 2-3 years ago. Now, $1 and $3 and $5 ebooks seem like a birthright to readers. On top of that readers also want lending and reselling rights.

When an existing power structure gets destroyed there’s always the chance the void will be filled not by a kinder, gentler power structure, but by utter chaos.

In terms of the Kindle being the Trojan Horse that helps Amazon take over all of retail the possibilities are still strong. In fact, Amazon might stick with books even if the book market goes to $1 and $3 books – solely to keep its millions of tiny, powerful storefronts humming along.

Kindle as Store is still mostly undefined. The direction Amazon takes the Kindle in will be very, very interesting. Will there be a Kindle Tablet? Will the Kindle become something you get free with Amazon Prime? Will a Color Kindle be added on as the premium, non-free Kindle?

If Amazon really is thinking of the Kindle as a direct, powerful channel to customers, it’ll make nearly all of the following moves -

  1. Release a Kindle Tablet that addresses music and movies and games.
  2. Drop the Kindle WiFi to $99 soon. Six months after that – bundle it free with Amazon Prime membership.
  3. Drop the Kindle 3 black and white model to $125. Release a color Kindle at $199.

Companies regularly pay $100 to $300 per customer in customer acquisition costs. If a free Kindle translates into an Amazon customer who buys books, ebooks, movies, digital movies, kitchen sinks, games, clothes, diapers, carpets, car tools, and garden chairs from Amazon – then giving away Kindles makes a ton of sense.

Every Kindle owner’s path of least resistance is buying from Amazon – not just ebooks, everything. Amazon will probably realize in a few years that the book market is likely to be destroyed. However, it knows that the Kindle is its golden channel to customers – a direct channel so lucrative and important that the lost book market will be a trivial price to pay in return for an excellent shot at taking over all of retail.

12 Responses

  1. “… an excellent shot at taking over all of retail.”

    Apple’s short-range wireless protocol (I forget the name) and merchant stations, coming soon, gives it the edge in that field.

    • NFC: Near Field Communications. Other phones have had NFC built-in — even from Nokia — but it’s gone nowhere so far.

      • But Mike, Apple will do it right. It’ll be magical and revolutionary.

        Users won’t even have to do anything – the iWhatevers will realize there is a hidden desire in your mind for that bar of chocolate and it will fly over via NFC and you can eat it. And it’s so convenient for the vendor – they will just have to give Apple 30%, and make sure the price is as cheap as at any other store the chocolate is sold at.

  2. Some good points in your argument, but it is not correct to imply that all e-books are so cheap. Books by established authors, published by established publishers, are not cheap in e-form, in the main (of course there are some marketing cheap offers). Certainly not in the UK Amazon anyway, where in addition e-books are not exempt from VAT (unlike print books).
    There are a lot of free and very cheap e-books on Amazon UK, but many of them are self-published, or extremely niche (eg sci fi). Or, of course, out of copyright older books. The “mainstream” ebooks are priced pretty close to the hardback or paperback (if available) editions, sometimes an ebook is actually more expensive than a print version of the same book (presumably because of the additional taxes in conjunction with the publishers’ agency model).

    • Fair enough.

    • “The “mainstream” ebooks are priced pretty close to the hardback or paperback (if available) editions, sometimes an ebook is actually more expensive than a print version of the same book (presumably because of the additional taxes in conjunction with the publishers’ agency model).”

      Or because of illegal collusion among publishers. The EU conducted a raid on publishers’ offices yesterday because it suspects that is going on, and the UK is holding an official inquiry on the mAtter.

  3. Excellent points, agree with all of it, Amazon is smart and amazing; just dropped some more cash there yesterday!….great prices, free shipping, etc.

  4. If Amazon were to go with a Mirasol display, I doubt a color KTab would go for $199.

  5. “In fact, Amazon might stick with books even if the book market goes to $1 and $3 books – solely to keep its millions of tiny, powerful storefronts humming along.”

    Kindle becomes the ‘loss-leader’ to draw people into the ‘supermarket of everything’ which is Amazon.

  6. How about adding to that the ability to trade in a 1st or 2nd generation for a deeply-discounted newer model?

  7. […] understand it was an Amazon storefront (though we’ve been saying this for years – What the Kindle was meant to be). Despite all the obvious signs, most people don’t realize Kindle Fire HD is just a natural […]

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