Problem:
Amazon is one of a number of companies (Sony is another) which have developed electronic devices which deliver books, newspapers and other printed matter without using paper. This is a growing market, with technology evolving rapidly. In the not too distant future it is thought that mobile phones and other devices will perform a similar service. How though are such devices priced?
Write a 2 page paper, double space in which you answer the following case question:
Amazon's Kindle 2.0 was priced at $359 and delivery started in February 2009. The price was dropped to $300 in July after a newer model with a larger screen, the Kindle DX, was launched, priced at over $400. Explain what factors could have been taken into account in deciding on these prices. Then assume that you are responsible for deciding the future pricing of Kindle models over the next year. What prices would you recommend Amazon charge? Why?
Article 1:
JEFF BEZOS, Amazon's boss, pays attention to symbolism. He named his e-commerce company after the world's largest river to suggest a flood of books and other products. He named Amazon's e-book reader, launched in 2007, the Kindle to suggest that it would spark a fire (and not of the book-burning sort). This week he unveiled the Kindle 2, an improved version for the same $359, against the backdrop of a library that was once the private collection of John Pierpont Morgan. Assisting him was Stephen King, a popular author who has written a novella that will be available only on the device. The Kindle 2, Mr Bezos means to say, is about preserving a great tradition--book reading--and improving it, not about replacing it.
In many ways, this is true. The Kindle is an unusual gadget in that it does not obviously target young people, or early-adopting technophiles. Instead it appeals to passionate readers, who want no fiddling with cables (the Kindle works without a computer) or complicated pricing plans (Kindle users pay to buy books and other content, but do not have to pay wireless-subscription fees). It is, in short, perfect for older people. The Kindle is a surprisingly "conservative" device, says John Makinson, the boss of Penguin Group, a large book publisher, so it is an additional distribution channel and thus "good for us". (Penguin is an arm of Pearson, which partly owns The Economist.)
Steve Kessel, a member of Amazon's Kindle team, says that Kindle owners seem to read more. "It's the convenience--they think of a book and can be reading it within 60 seconds," he says, thanks to the instant wireless downloads, and "they're now carrying all their books around with them all the time." The Kindle 2 can hold about 1,500 books, and one battery charge allows two weeks' reading. And since the screen is not backlit but imitates real ink and paper, Kindle owners can read for hours without straining their eyes.
So far, says Mr Kessel, this does not seem to spell the end of paper books, since Kindle users buy just as many bound books as before, so that their total consumption of books goes up by 2.6 times. That may change as more titles become available. More importantly, the Kindle and similar devices made by Sony and others represent only one side of the evolving e-reader market. They are for aficionados, since paying $359 for a device makes sense only if you read quite a lot of books, newspapers or magazines on it.
For everybody else, such as infrequent readers and the young and cash-strapped, the mobile phone may become the preferred e-reader. A popular software application on Apple's iPhone, called Stanza, already turns that device into a book reader, with one-handed page turning that is ideal for public transport. A backpacker who consults his "Rough Guide" for snippets of up-to-date information in a dark tent is unlikely to tote along a Kindle and a lamp, or a paper book, if he can get the e-book on his backlit phone.
It is now only a matter of time until absolutely all books become available, and properly formatted, for mobile phones. Google, an internet giant that has been scanning and digitising books for inclusion in its search engine, now offers thousands of books that are in the public domain free on mobile phones. It seems likely that, eventually, only books that have value as souvenirs, gifts or artefacts will remain bound in paper.
Newspapers and magazines are on the same trajectory. Their paper editions are in decline in most of the developed world, as readers opt for the web versions on their computers and laptops, or on smart-phones such as the iPhone. The Kindle could accelerate that shift since it also lets users subscribe to news publications, which are automatically delivered.
All this has led to a new phrase in the book and newspaper industries: Is this the "iPod moment"? It is a layered and loaded analogy. On the one hand the iPod, Apple's now legendary music-player, and its associated iTunes store opened up a new market for legal digital-music downloads. On the other hand, the iPod accelerated the decline in CD sales and shifted power from record labels to Apple. Will the Kindle similarly put Amazon in a dominant position, while weakening publishers?
This is unlikely. Books, says Penguin's Mr Makinson, are different from music. Sales of CDs were harmed because iPod users could "unbundle" the albums that record labels had forced on them, and download only the songs they wanted. By contrast, there is no obvious reason to unbundle narrative books into individual chapters or paragraphs. A book sold via a Kindle thus has no marginal cost, but adds revenues. Another difference is that music was being widely pirated before Apple made legal downloading attractive. There is no such crisis in the book business.
Nor is Amazon likely to achieve anything near Apple's power over the music industry. True, when a newspaper or magazine reader drops his paper for a Kindle subscription, he enters a billing relationship with Amazon rather than the publisher. (Neither Amazon nor its partners will reveal how the revenue is split.) But for record labels, Apple was the only viable and legal route. For the news industry, says Craig McKinnis at USA Today, a large American daily, the Kindle is "just one of the splinters" among many new distribution channels, from the web to mobile-phone applications to e-readers. What happened in music "I cannot imagine taking place" in news, he says.
Indeed, the Kindle and other e-readers could be a boon to newspapers. With rare exceptions, newspapers have accustomed their readers to expect digital editions to be free. As circulation revenue has declined, this made them dependent on advertising, just as the recession hit. On the Kindle, by contrast, the news has no ads. Instead, readers seem happy to pay for it--just as they pay for services in any other industry that offers something worthwhile.
Article 2
Amazon's introduction of the Kindle 2 had all the makings of a product launch by consumer electronics wunderkind Apple. [But] As much as some might try to draw parallels between Amazon's approach to books and Apple's take on music... the latest generation of Amazon's sleek, white little electronic book reader is no iPod for the book world... The company is... reluctant to push too aggressively - most noticeably, by pricing the Kindle 2 at $359, the same price as its predecessor... Amazon is in something of a catch-22. Lowering Kindle's price too much might threaten Amazon's print book business."
Douglas Macmillan
(businessweek)
"During the presentation Jeff Bezos asserted that Kindle's 'vision' was to have 'every book ever printed in any language available in less than sixty seconds.'.... The event was attended by publishing's elite, many of whom left with some real concerns".
Philip Jones
(thebookseller)
"Although we haven't found any information about the materials used in the Kindle and its packaging, this has to be one of the greenest products there is. Whatever they use for making them, it's outweighed by the savings on trees, chemicals, and water used in the production of real books, printed on both new and recycled paper."
Article 3
2009 FEB 25 - (VerticalNews.com) -- Amazon.com, Inc. (NASDAQ:AMZN) today introduced Amazon Kindle 2, the new reading device that offers Kindle's revolutionary wireless delivery of content in a new slim design with longer battery life, faster page turns, over seven times more storage, sharper images, and a new read-to-me feature. Kindle 2 is purpose-built for reading with a high-resolution 6-inch electronic paper display that looks and reads like real paper, which lets users read for hours without the eyestrain caused by reading on a backlit display. More than 230,000 books are now available in the Kindle Store, including 103 of 110 current New York Times Best Sellers and New Releases, which are typically $9.99. Top U.S. and international magazines and newspapers plus more than 1,200 different blogs are also available. Kindle 2 is available for pre-order starting today for $359 at https://amazon.com/kindle2 and will ship February 24.
"Kindle 2 is everything customers tell us they love about the original Kindle, only thinner, faster, crisper, with longer battery life, and capable of holding hundreds more books. If you want, Kindle 2 will even read to you -- something new we added that a book could never do," said Jeff Bezos, Amazon.com Founder and CEO. "While we're excited about Kindle 2, we know that great hardware is useless without vast selection. That's why the Kindle Store offers customers over 230,000 books." New Slim and Sleek Design The new Kindle 2 features a completely new design. At just over a third of an inch thin (0.36 inches) and weighing just over 10 ounces, Kindle 2 is pencil thin and lighter than a typical paperback. New buttons make it easy to turn the page from any holding position. The new 5-way controller on Kindle 2 allows for more precise note-taking and highlighting both up and down and side to side in lines of text. The new controller also makes it easy to quickly jump between articles and sections of newspapers. Kindle 2 comes with a redesigned power charger that is more portable than the previous Kindle charger. The official Amazon.com cover for Kindle 2, which is sold separately, has an integrated attachment hinge to ensure a secure fit and features a leather cover for style and durability. Patagonia, Cole Haan and Belkin also designed covers for Kindle 2 that are available in the Kindle Store. New Crisper, Faster Display Kindle 2's 6-inch, 600 x 800 electronic paper display provides 16 shades of gray versus 4 shades available in the original Kindle, resulting in crisp text, and sharper images and photos. Kindle reads like printed words on paper because the screen works using real ink and doesn't use a backlight, eliminating the eyestrain and glare associated with other electronic displays. With the latest electronic paper display, pages turn an average of 20 percent faster than the original Kindle for an even smoother reading experience. New 2 GB Memory Holds Over 1,500 Books With 2 GB of memory, Kindle 2 can hold more than 1,500 books, compared with 200 with the original Kindle. And because Amazon automatically backs up a copy of every Kindle book purchased, customers can wirelessly re-download titles in their library at any time. 25% Longer Battery Life Kindle 2 customers can read for four to five days on one charge with wireless on and for over two weeks with wireless turned off. New Instant Dictionary Lookup Kindle 2 comes with the New Oxford American Dictionary and its 250,000 word definitions built-in, and with Kindle 2 definitions appear instantly at the bottom of the page. New Experimental Read-To-Me Feature Kindle 2 offers the experimental read-to-me feature "Text-to-Speech" that converts words on a page to spoken word so customers have the option to read or listen. Customers can switch back and forth between reading and listening, and their spot is automatically saved. Pages turn automatically while the content is being read so customers can listen hands-free. Customers can choose to be read to by male or female voices and can choose the speed to suit their listening preference. Using the read-to-me feature, anything you can read on Kindle, including books, newspapers, magazines, blogs, and personal documents, Kindle 2 can read to you. Still Wireless, Still No PC, Still No Hunting for Wi-Fi Hot Spots Kindle 2 uses the same wireless delivery system as the original Kindle -- Amazon Whispernet. Customers can wirelessly shop the Kindle Store, download or receive new content in less than 60 seconds, and read from their library -- all without a PC, Wi-Fi hot spot, or syncing. Whispernet utilizes Amazon's optimized technology plus Sprint's national 3G data network and is expanded to cover all 50 U.S. states. Amazon still pays for the wireless connectivity on Kindle 2 so books can be downloaded in less than 60 seconds -- with no monthly wireless bills, data plans, or service commitments. Automatically Syncs With Original Kindle, Kindle 2, and future devices Amazon's new "Whispersync" technology automatically syncs Kindle 2 and the original Kindle, which makes transitioning to the new Kindle 2 or using both devices easy for customers. Kindle 2 will also sync with a range of mobile devices in the future. Earth's Biggest E-book Store Keeps Expanding, Plus New Stephen King Exclusive The Kindle Store currently offers more than 230,000 books -- up from 90,000 when Kindle launched. Books from numerous popular authors have been added since the original Kindle launched, including John Steinbeck, C.S. Lewis, Beverly Cleary, Martha Stewart, Terry Goodkind, and Spencer Johnson.
Author Stephen King announced that he is releasing a novella, "Ur," which will only be available on Kindle. At the center of Ur is lovelorn college English instructor Wesley Smith, who can't seem to get his ex-girlfriend's parting shot out of his head: "Why can't you just read off the computer like the rest of us?" Egged on by her question and piqued by a student's suggestion, Wesley places an order for a Kindle. Smith's Kindle arrives in a box stamped with the smile logo and unlocks a literary world that even the most avid of book lovers could never imagine. But once the door is open, there are those things that one hopes we'll never read or live through. Ur is available for pre-order beginning today and will be released later this month. For Kindle customers who pre-order, King's new novella will download automatically when it becomes available.
The Kindle Store now includes many additional magazines and newspapers, such as The New Yorker, which is available for the first time on Kindle starting today. Magazines and newspaper subscriptions are auto-delivered wirelessly to Kindle overnight so that the latest edition is waiting for customers when they wake up. Monthly Kindle newspaper subscriptions are $5.99 to $14.99 per month, and Kindle magazines are $1.25 to $3.49 per month.