Monday, June 15, 2009

Jeff Bezos tells Wired why the Kindle is so expensive

At the same conference (as in the previous entry) Wired reports in better detail what Bezos said about the pricing model of a cheaper device with a 2-year subscription.  Bezos told Wired:
' "We sell a lot of cellphones for a penny, and you know, when you’re buying a cellphone for a penny, there’s got to be a catch — and there is” in the recurring cost of monthly service which is free with the Kindle’s Whispernet service. '
[The Novatel MiFi 2200 has $60/mo. plans being offered with Sprint and Verizon for similar high or unlimited-use plans.]
' Still, if customers preferred smaller hardware cost and higher operating fees he would still consider that approach.  Bezos maintains that Amazon could have sold the DX for $99, but only with a required monthly subscription of $60 or more per month, or by forcing Kindle owners [to] buy a certain number of books each month.

“[The Kindle DX] is $489, and that is an unbelievably low price for something that has inside it a sophisticated computer, a completely new kind of display of that size, and a 3G wireless radio,” Bezos said. '
I'd say it's not "an unbelievably low price" ! except for the fact that the iRex iLiad at that size and without free 24/7 wireless plan does cost abut $860.

Note that in the New York Times's blog piece, Bezos said he's not opposed to one of the subscription plans later if customers want it but that he still doesn't like that approach. Below are ways to Share this post if you'd like others to see it.
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  1. "Bezos maintains that Amazon could have sold the DX for $99, but only with a required monthly subscription of $60 or more per month, or by forcing Kindle owners [to] buy a certain number of books each month."

    So instead of being forced to spend money on _books_ (the reason people buy a Kindle), I'm forced to spend more money on the _device_ to read the books. Exactly how is this a good thing for me?

  2. Anonymous,
    You'd be using the paid-for 24/7 Sprint EVDO wireless access - Whispernet - as well.

    If you'd rather had paid $60 x 12 for the first year ($720) plus the cost of the unit at $99, that's interesting.

    And then there are also other people. Check out the response to someone who did prefer a subscription plan (Amazon forum thread which saw members less at odds for once).

    - Andrys

  3. But, I'm one of those who have written on the forums to wonder aloud why they don't have a lower-cost version without the normally expensive wireless, as people can just transfer files from computer to the device via the USB cable if they prefer to do that to save money. Furthermore, I don't see why they haven't done this in Europe where people want the study tools and bookstore features and don't care about the wireless...

    - Andrys


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