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Why Amazon's Kindle e-book reader will flop

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Is this the death of paper books?

This week, Amazon (NASDAQ: AMZN) unveiled its new e-book reader, the Kindle. As Beth Gaston Moon reported in her preview, the 10.3 ounce hand-held reader will retail for $399.

I had great hopes for this device, not the first to market but certainly the best. The type appears crisp, promising to be as readable as paper print. The home run here for Amazon is the content delivery system. Through an arrangement with Sprint, Amazon will deliver content to the Kindle on demand anywhere within Sprint cell network coverage, without the need to be a Sprint customer.

Other positives for marketing the device include the availability of newspaper and blog feeds via the same network, as well as free access to Wikipedia and a built-in dictionary. A high-capacity battery and the ability to expand memory via an SD card are also good selling points.


There are, however, some downsides to the device. At $9.99, the price of bestsellers is rather steep considering the obvious cost savings in delivery. I would have expected something in the neighborhood of $7-8. The prices obviously are set to protect hardcover sales at $20+, which I think shows some blindness about the market placement of this device. If it works, it won't work because the few thousand hardcore buyers of hardbacks segue to this reader. It will work because it will capture the wider paperback reading public, and those who don't read a great deal outside of papers and magazines.

The retail price of $399 is also too steep for such a narrow-use device. When the sexy, colorful Apple (NASDAQ: AAPL) iPhone sells for the same price, and offers such a variety of services, I question how Amazon will be able to sell the Kindle for the same price.

For this to fly, I believe the company will need to dramatically drop the price of content and the price of the reader. It has only the slimmest of competitive advantages, as the rapidly improving displays of convergence devices such as the iPhone are only a generation or two away from providing an equally crisp display.

I firmly believe the paper book will be obsolete within ten years, but the Kindle doesn't look like the book killer app to me.

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Last updated: November 08, 2009: 07:38 PM

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