New Kindle Has Lower Price and Ads
Amazon has come up with a way to make its Kindle e-reader
more affordable — advertising. The company’s new Kindle with Special Offers
is priced at $114, $25 less than its base model.
In a letter to consumers on
Amazon’s website, CEO Jeff Bezos wrote, "We
took our bestselling Kindle and made a version with special offers and sponsored
screensavers. Companies sponsor the screensavers, you pay less for the Kindle. Plus
you receive offers directly on your Kindle that can save you more money, such
as a $20 Amazon Gift Card for $10, 6 Audible Books for $6, and an album from
Amazon MP3 Store for $1."
Offers presented to consumers either appear
on a screensaver or at the bottom of page to not interfere with reading.
Companies
sponsoring the first group of screensavers includes Buick, Chase (Amazon Visa),
Buick, Procter & Gamble (Olay) and Visa.
"The opportunity to offer custom-designed Kindle screensavers was a natural
fit for Buick because Kindle is such a unique device surrounded by a community
of intelligent, passionate people," said Craig Bierley, director of advertising
and promotions, Buick, in a press release. "Kindle’s high contrast e-ink
display eliminates glare and is perfect for emotionally engaging and impactful
brand imagery, allowing us to connect with Kindle readers wherever and whenever."
"This is about making sure anyone who wants a Kindle can afford one," Jay
Marine, director of Kindle products, told Bloomberg News. "Every
time we’ve been able to make Kindle more affordable, we’ve seen
huge growth in demand. We expect the same to happen here."
People won’t
hesitate to buy the cheaper device because advertising is everywhere we look," Richard
Curtis, a literary agent and digital book publisher, told The
Wall Street Journal. "People will think it’s a good trade-off."
- Amazon Introduces New Kindle Family Member: Kindle with Special Offers for
$114 – Amazon.com - Amazon.com Will Sell Kindle Digital Reader With Advertisements for $114 – Bloomberg
News - Amazon Launches Ad-Supported Kindle For $25 Cheaper – Business Insider
- Cheaper Kindle in Works, But It Comes With Ads – The Wall Street Journal
Discussion Questions
Discussion Questions: What is your reaction to the new Kindle with Special Offers? Do you expect competitive products to adopt a similar approach to reduce the cost of purchase?
Reading a book may be the only form of entertainment left beyond the reach of advertising–at least in its dead-tree form. So the e-book reader needs to make a choice: Save $25 and deal with (hopefully unobtrusive) sponsorship, or spend more for the ad-free $139 Kindle with WiFi? Personally I think this is a good way for Amazon to continue driving the price of the Kindle down and capture more market share vs. other e-readers and tablets. (Not to mention driving more e-book purchases to its own site.) The key is to present sponsors’ ads in a way that doesn’t disrupt the immersive experience of bookreading.
Not sure how “big” an option this will be for consumers. But I do think it does provide an option which can only bring more people into the channel. The key in my mind will be to make sure there continues to be a “non-ad” version which if not provided, would be more of a negative impact than having the ads as a positive.
I admit it took me a while to get on board with ebooks (still like paper books that I can lend to some one without worrying if the have an ebook reader or which one they have). I also admit I have found my Nook to be handy allowing me to carry a lot of reading material on planes, etc.
Will the consumer find that a $25 savings worth it to have ads on their Kindle? I have to agree with Roger in that is will depend on how it’s done. Done right, I expect consumers will opt to save the money.
This “cheaper” opportunity is unattractive to me. How much am I really saving over the life of the Kindle? How much of my relaxation am I giving up over the life of my Kindle?
I suspect that Kindle will have to adjust some of the programs to give the advertiser more opportunity to engage me. For example, currently I can open my Kindle and go directly to the page I was reading. Will advertisers insist that my Kindle must first bring me to a page that has their message? If not, I could consistently avoid their advertising.
Now if you wanted to give me the Kindle at no cost to me, but the opportunity to communicate with me, that would be another kind of “deal.” How would that work? I save $139 and own a Kindle, while giving advertisers the right to reach out to me on the Kindle. Why would I give them that opportunity for $25? But that’s just me.
Reaction to adding advertising to the Kindle will probably end up as a mixed bag. A already noted, reading is about the only pastime that is beyond the reach of ads, although many new users will be attracted by the lower price.
As e-readers travel along the price curve of Moore’s Law, my guess is that the sellers will increasingly adopt the Gillette model–sell the razor at a low margin and make up the difference in the cost of the blades.
My first reaction was that I would gladly pay $25 to avoid Kindle ads. Then I read what Bezos wrote, “you receive offers directly on your Kindle that can save you more money, such as a $20 Amazon Gift Card for $10, 6 Audible Books for $6, and an album from Amazon MP3 Store for $1.” I said, not so bad.
Then I read the first group of sponsors and quickly retreated to my original position. Funny how the PR and the reality of this program diverge. If Amazon is paying me 5 to 10 per day to look at ads, one wonders how much Amazon is being paid to broadcast the ads? My position…give me a Kindle for free and I will accept ads.
There are two challenges Amazon is facing with the Kindle. The first is that electronic devices will continue to increase in features and decrease in cost. The second is that personal devices will continue to merge. People are not going to continue to carry a different device for every function. Kindle will be left in the dust. (Note Cisco’s decision on the Flip camcorder and why.)
It is becoming more and more clear that given a choice, people will reject advertising. Consider, no TV show has ever averaged more than 3 million DVR viewers for a whole season, but now four shows are close to or over that number. The same data shows that these people are largely skipping the commercials. Why? Because they can!!!
The $25 discount offer is sort of beside the point. Does Amazon really think it’s going to make its money on the Kindle? Or on the content? The razor? Or the blades?
I remember when I bought my first Nook and had problems with it (it turned out to be a lemon). I was talking to their tech support guy and he was saying “Look…we want to sell you the content, the reader is almost besides the point.” B&N has been pretty consistent with that philosophy–as the Nook turns out to be a very nice half-price Android tablet.
Because Amazon was early to the game, it had strong margins in the Kindle for a relatively long time. I think those days are coming to an end. If the Kindle remains a single purpose device, it will HAVE TO come down in price, and basically just be a delivery vehicle for Amazon’s content. Because as soon as it opens up, I’ll toss a Kindle reader onto my Nook.
As books become more a part of the digital content stream, advertising and sponsorship will eventually become the norm (will a bourbon company sponsor the works of Faulkner?). The casual reader probably will not mind too much, but I don’t think a $25 savings is enough to draw people in. The discount should be at least $50 to make it attractive to consumers, although I don’t know if Amazon can do that and still make a profit.
Fortunately for the trees still in the forest this will again spare them from the paper mills. I have a question: Did anyone not foresee this happening, both as to price and the advertising? Surely the price had to drop. Next day technology dictates it is going to happen. Amazon simply found the way to lower the consumer cost while continuing to drive profits up by selling advertising. Now the consumer has a decision. purchase the advertising model and save $25.00 while being bothered when reading (even if the ads are in an obscure place). Or spend the additional $25.00 and enjoy reading uninterrupted. Ahh, decisions….
From my perspective, we all need a bit more margin in the day, i.e. peaceful time when we can think and regroup. Reading can be a “margin” activity and I am not ready to trade a one-time price savings for sharing my margin time with advertisers.
If the ongoing offers are of sufficient value to the sponsors, then why not just give away the Kindle?
As always, one person focus groups often lead to faulty predictions. I am sure that many people will take advantage of a lower priced device and won’t mind the ads. I wonder if this will benefit advertisers as the purchasers may buy the device with full intention to ignore the ads. Self selection at work?
Put me in the camp that says $25 isn’t worth the hassle of being subjected to ads. That said, I’d lean to the school that holds this is a razor/razor blade problem redux.
Sony manufacturers have learned to create a value proposition around the device (think iPod) but I’m not so sure Kindle is in the same league.
It also seems to be a slippery–although possibly unavoidable slope. As the line blurs between e-readers and tablets what is the likelihood e-readers will survive?
Ad content won’t be enough to save the Kindle so will Amazon innovate or concede the battle to Apple, et al.? That’s the real question here.
Discounting the price won’t change the fact that people don’t need all these devices. I marvel when I see fellow travelers juggling an iPod, iPad, Kindle and a laptop. Something has to give.
$25 for a lifetime of ads and then the consumer is committed to purchasing their content (as it’s Amazon’s reader) for the lifetime of the device. Not what I call incentive.
Imagine a young junior executive walking in to the boardroom on West Grand Boulevard in Detroit around 1967. The room is smokey and filled with some paunchy guys in pin-stripped suits. The jingle playing in the background is “Wouldn’t you really rather drive a Buick…a Buick?….”
The young exec says, “Hey, there’s this great new device that will deliver our ad right into the hands of a buyer in seconds!” He goes on to explain they can update it daily, and reach millions at very little cost. Can you imagine the reaction? My vision is a tremendous amount of laughter and some other guys in blue blazers escorting the young exec to the parking lot with a hastily packed box from his desk.
The fact is–it’s real. It was unimaginable. The hints to the plan show real value in return for the price savings not only on the device–the savings potential to the consumer through offers on the Kindle is incalculable. Amazon already has dominance in the eBook market. This will further put downward price pressure on the devices and expand the market.
Our minds being what they are, this wasn’t imaginable even 5 years ago for most of us. Imaginations being what they are, it’s hard to comprehend what the next five will bring. It certainly wasn’t in the vision of Buick and Amazon as business partners. The possibilities are astounding. It’s a mega-opportunity for a mega retailer. It also creates a potential base of loyalty in the transition for what we all know will be the next generation of the Kindle that will certainly deliver far greater capability than we imagined as well.