In case you missed it, Amazon debuted not one (or even two) but FOUR new Kindle models this week. Even more shocking, only one of them was rumored! Apparently, Amazon has hired Apple’s rumor crackdown team; either that or everyone was so excited for an Amazon tablet we didn’t see the signs of new Kindles right under our noses.
So here’s the new Kindle family:
-Kindle: $79 [eInk]
-Kindle Touch Wifi: $99 [eInk]
-Kindle Touch Wifi+3G: $149 [eInk]
-Kindle Fire (Android tablet: $199 [color]
Note that the three eInk Kindle prices are the “special offers” versions. Non-subsidized Kindles are available for $109, $139, and $189 respectively. Essentially, you receive a $40 discount if you are ok with unobtrusive ads on the screen saver. Without the discount, they fall in slightly cheaper than or right in line with the competitor’s offerings.
Of course, the competitors are probably really concerned right now. Amazon is playing for keeps. No more price games or back and forth, Amazon is intent on showing everyone they are the big dog in the ebook space. Rumors are flying about the Kindle Fire and whether it’s a loss leader for Amazon, but look at it from a different angle-Amazon is selling their ebook devices for an unsubsidized price that’s right in line with the competition, then subsidizing the difference with ads. Chances are, Amazon is breaking even, if not making a small margin, on every eInk Kindle in their lineup. If the Kindle Fire costs them a small amount per device, but locks in their ecosystem, it’s a worthwhile tradeoff, especially if the eInk devices are making up the difference.
In any case, debates about loss leading aside, Amazon has definitely changed the ebook game, again. How will the competitors respond, and how will this change their offerings? Read on to find out my thoughts!
Amazon dealt a pretty serious blow to B&N with these releases. Both companies have been in a tit for tat price war, where B&N dropped prices, then Amazon dropped prices, and when B&N had new releases, Amazon had new releases, or at least new prices. But with these new Kindles at ridiculously low price points, B&N is going to have a very hard time competing. The real victim here is the NOOKcolor, especially if it stays at $249. B&N is going to have to really sweeten the updated NOOKcolor 2 to compete. Maybe a deal with Netflix to combat the Prime streaming content? And certainly, it will help to court more Android developers, or even just break down and offer the Android marketplace entirely. The real issue here is that Amazon has been encouraging users to build a library in the Amazon Appstore. It moves across phones and tablets, and will follow them to the Fire. NOOKcolor can have a great bench of apps, but they only live on…the NOOKcolor. It’s a big achilles heel, and it just piles on top of the price issue to hurt the NOOKcolor’s chances against the Fire.
Then there’s the regular NOOKs. Price for price, they lose to the Kindle with Special Offers, but they are well matched if you opt for the unsubsidized version. The problem B&N is going to have here is that people are going to hear “$99 Kindle” and immediately dismiss the NOOK offerings as being overpriced. It backs B&N into a corner where they need to spend somewhere to fight back; marketing dollars to educate consumers, or price cuts to generate buzz.
Finally, there’s the rumor that B&N has a NOOK coming out at $349. It’s way too early to speculate, but if I had to guess, this NOOK might actually buck the odds and be a success. $349 is a huge break from the downward pressure that’s been on ebook readers for some time, but it fits well with the general pricing for 10-inch Android tablets. And B&N has put a great deal of money into NOOKstudy, so a 10-inch, education focused tablet has a lot of potential. Of course, the timing is all off, since this should have been released in August if it’s for schoolwork, which does bring that theory down, but the point still remains. B&N has been remarkably savvy, so if they feel they can price this at $349, they have a reason, and it might be the bright spot against Amazon’s pricing attack.
I like Kobo, but their reaction to Amazon’s announcements was weird. The @Kobo Twitter account spent all day retweeting comments from people who were happier with their Kobo Touch devices, which struck me as a bit of an insecure response. But to be fair, this probably hurt Kobo even more than it hurt B&N. In the last year, Kobo lost a major American retailer/investor, and even with high points like appearing at F8 and releasing some highly praised ereading apps for smartphones, they’re still a very distant 3rd. The Kobo Touch is now $49 more than the leading touchscreen competitor, and that’s going to be tough to overcome.
On top of that, Kobo has a tablet coming out soon, and The Digital Reader is reporting a leak indicated the price will be $249. Again, Kobo doesn’t have the brand recognition or marketshare to command a major premium on a me-too tablet, so their hopes and dreams are hinged on how the software shakes out. And it needs to be flawless out of the box, because frankly, most people looking for an ebook tablet either already own a NOOKcolor or iPad, or have pre-ordered the Kindle Fire. Kobo Vox is likely to be too little, too late.
Unfortunately, I think that sums up Kobo to a certain extent. They’re just not a player in the same way B&N and Amazon are, and they simply cannot compete in a price war to the same extent. Maybe I’m wrong, and Kobo has a huge secret war chest. But I think Kobo is in the wrong business pursuing hardware. Their iOS and Android devices are solid, and their “Reading Life” social integration gets love from Facebook. Hardware is a tough business, and ebook readers just became even more cutthroat. Kobo has already become a default ebook reader for various tablets and smartphones, and if they ran with that market they could sharpen their software and store without mucking around in low-margin and low-price hardware.
Budget ebook devices and (crap) Android Tablets:
They’re all toast. Yes, there’s going to be a following of hardcore people who only want to read non-DRM’d ePUB ebooks. But that’s not a large enough audience to sustain a hardware business. Budget ebook readers have been aimed at budget buyers, and now there’s two ebook readers available below $100, tied into a major store with brand-name recognition and support. Why would anyone buy a Jetbook now?
As far as Android tablets, it’s too early to say if the Fire will harm true Android tablets. But devices like the Next2 that I reviewed are going to find their audience gone. Again, you have a major retailer offering a quality device for $199; there’s suddenly a lot less appeal in snapping up a crapTablet for $149 from QVC. Those devices are aimed at people who can’t or won’t buy an iPad, but now the Kindle Fire (and the NOOKcolor before that) are capturing that audience.
Amazon took the backbone of Google’s Android and turned it into their own ecosystem. Instant hit, just add Kindle books. It’s tough to say this will seriously hurt all Android tablets, but it certainly hurts the lower end ones. If the Fire is as good as the initial reports, it’s also one-upped the Android experience with a very simple but easy to use interface. And it’s generally bad for Google’s Marketplace if Amazon gathers still more users into the Amazon Appstore experience. Especially since this is all based on the “free” version of Android, meaning Google has no affiliation or influence.
Adding insult to injury, this only further strengthens Amazon’s ebook dominance, which is bad news for Google Books. Then again, Google seems to only notice they have Google books once every six months, so it may not make a noticeable impact.
Amazon is not trying to kill the iPad. However, by pricing the Kindles to near-impulse prices, they are working to be a companion to the iPad. Amazon’s Whispersync+iPad with Kindle app+eInk Kindle=everything a reader needs. The Fire is sort of a competitor to the iPad, but let’s be realistic: anyone who really wanted an iPad has probably purchased one by now. The people on the fence may be concerned about price, size, iOS, or a million other reasons. But whatever the reason, there’s no guarantee the Kindle Fire is going to address enough to get any holdouts to whip out their wallets.
I do wonder if it will compete with the iPod Touch, though, especially as an entertainment-driven device for kids. It has games, music, movies, and web browsing, plus a bigger screen. The tradeoff is that the multitouch is not as advanced, and the games bench is not as deep. But if a parent already has Prime, and the child does a fair amount of reading, the Fire is a great fit. I actually talked to someone in my office who decided to pre-order two Kindle Fires for her kids based on the size, Prime streaming, and Amazon support.
As fun as it is to speculate about an Amazon/Apple showdown, it’s not here yet. Apple is a hardware company that uses content to sell devices, Amazon is a content company that uses hardware to sell media. This puts them on a collision course, but this latest stretch of releases, in my opinion, is more about Amazon establishing dominance in the ebook space. By next year…who knows.
This is a really weird one. Sony has the resources to try to fight back in the ebook space, but they seem content to be a niche player. They pump out nice hardware that’s priced slightly higher than the market leaders, and clearly, they are committed since they continue to release devices. With the addition of library integration right on the new device, I think Sony is very happy with their small but devoted following, and if that’s the case they’re not likely to be terribly hurt by Amazon’s moves. Unless, of course, the new Sony device clocks in well above $150, and if that happens I have a hard time believing even the devoted Sony fans will be able to justify spending significantly more than a Kindle (or NOOK, or Kobo) for a very similar device.
On the one hand, we’re all going to benefit from lower device prices. Who doesn’t like to save money? And the Kindle Fire offers a lot of benefits, especially with Prime membership. Hopefully, this encourages competition, so even if Amazon isn’t your personal platform of choice, you’ll still reap the benefits of an improved ebook reader landscape.
There are a few downsides, though. First, Kindle Fire is $199, but if you don’t already have a Prime membership (and want the free streaming), it’s another $79 on top of the tablet. Something to consider when you’re budgeting. More importantly, as I referenced above, those enticing cheaper Kindles are all “Special Offers”, meaning you need to be ok with advertising on your device. Minor ads, sure, but where does it stop? Once you open the door to subsidization with ads, is it all that easy to walk away? I’m not trying to paint Amazon as a villain here, I’m just pointing out that for a small sum of $40, you give Amazon and their ad partners a great deal of valuable data about you. So what will Amazon (or B&N, or Apple, or any number of similar companies) offer for $100? With Special Offers as the default option, this becomes something that we all need to monitor, and remember that we vote with our wallets. If you don’t like ad-filled Kindles, don’t buy them!
What’s your take on the changing ebook landscape? Do you think Amazon has really shaken things up, or is this just a normal evolution of pricing and devices? Share your take below!