Wednesday, June 17, 2009

Kindle's One-time cost vs Subscription-plan costs

After the news yesterday that Jeff Bezos had considered the option of selling the Kindle at a low price while subsidizing that with a monthly plan of about $60/month for two years -- but deciding against that for reasons he gave -- I remembered an earlier blog entry here after the announcement of the iPhone 3G's now lower pricing and higher monthly subscription price.

It compared that iPhone 3G's lower device-cost and higher subscription cost with the pricing of the Kindle on a one-time basis.

Since a subscription plan is something that Jeff Bezos actually said was not out of the question later if customers want it, though he still doesn't like that approach, here's an example of the REAL cost involved with subscription plans as opposed to the one-time payment for the Kindle, a device which includes free unlimited wireless 24/7 (not limited to the Amazon store) in most areas of the U.S.

iPhone 3G Pricing
  A plus for new iPhone users is the drop in price.  Barely a year ago, the 8-gigabyte iPhone would have cost $600, but the new 8-gigabyte 3G is only $200.

  However, as David Pogue points out:
"The basic AT&T plan — unlimited Internet and 450 minutes of calling — now costs $70 a month instead of $60 (plus taxes and fees), and comes with no text messages instead of 200.  (Adding text messaging costs at least $5 a month more.)"
Those who don't understand how the Kindle's price can be so high should note that the actual one-year cost of the iPhone with Internet data access (before taxes and without text messaging) is:
  $70/month x 12 months = $840 + $200, or a total of $1,040.00 for that first year.

Kindle-2 pricing
  The Kindle 2 with its free 24/7 wireless access to the web is $360.
  Adding up the monthly Net charges, the total cost for the first year is ... $360.

  In the 2nd year, the monthly cost of Kindle wireless use adds up to $0.00,
  while the iPhone cost is $840+ for the 2nd year.

Kindle-DX pricing
  And now an extra $130 total cost for the Kindle DX brings a reading screen that is 2.5 times the surface area of the Kindle 2.

Although the iPhone's subscription price includes phone service, video, and apps galore, the basic phone charge per month, if separated out, would probably be about $35/month and the wireless Net data charge about $35/month also.
  Multiply $35 x 12 for the wireless access, and that's $420 per year for the data access alone, not including the cost of monthly access for the basic phone service and the initial cost of the device.

  As it is, a non-phone device like the Novatel MiFi 2200 needs a wireless subscription, and that one is $60/mo. with either Verizon or Sprint for the same type of always-available wireless access.

  While some may not want a clear, 6" e-ink screen reader with 24/7 free wireless access to the Net, it's irrational to say, when understanding the costs of wireless and the e-ink screen, that a total cost of $359 is "too expensive" as is regularly said by columnists and even technology reviewers.  Pogue stepped away from that idea himself after his initial review of the Kindle 2 and now explains the high cost of always-ready wireless access, in the column cited above.

Tip:  For better results with the Kindle's experimental web browser through the choice of 3 different modes of Net access ('Advanced' mode in the Kindle 2 is 'Desktop' mode in the Kindle DX), try my Tips on using the Kindle web browser. Below are ways to Share this post if you'd like others to see it.
-- The Send to Kindle button works well only on Firefox currently.

Send to Kindle

(Older posts have older Kindle model info. For latest models, see CURRENT KINDLES page. )
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  1. Note that from what I can tell buying a Kindle doesn't guarantee free wireless access to the web for any amount of time. They could at any time remove the "experimental" browser or start charging for wireless access. Hopefully normal functioning (Kindle store, wikipedia) requires the browser enough that it stays or improves and a wireless access charge that kept wikipedia and the store free would be too complicated to implement.

  2. Anonymous,
    That's exactly right, but Jeff Bezos has recently been pushing this concept quite a bit saying that the wireless is free, so it shouldn't be anytime soon that they do any kind of tiered pricing because it would remove their current advantage and also go against how he's been selling the device in recent interviews and conferences.

    Another article I included involves an estimate that the actual cost of the deal with Sprint, with leftover broadband, is about $2 per customer monthly.

    That's opposed to an average $56/mo under normal circumstances. If it's that low, maybe our hopes will be met :-)

    I use it only when out of the house normally, except that if reading a blog at night and not wanting to get up, I will sometimes turn on wireless and follow the links... They encourage use with their preset bookmarks and a video I featured (an Amazon rep talking to a partner university) shows the representative stressing that accessing google and wikipedia is free. So we should have it for probably at least a year.

  3. thanks for the tip about the web browser, I do use it every now and then so I'll how it works in advanced mode.


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