By now, most of us have heard of the new Ipad 2, which was released earlier today. It has been cooking up a storm in the blogosphere for some time now and both bloggers and analysts have been keeping busy by trying to predict its new features or market impact! While there is nothing wrong with this per se, many analysts tend to micro analyze the situation and eventually loose track of the trends in the industry as a whole. Thus, while everybody continues talking about the Ipad 2, I’d like to take the opportunity to take a step back, and discuss the Amazon Kindle.
About two years ago, John Walkenbach a Microsoft excel guru was one of the first people to notice that the Kindle’s price had been dropping at a consistent rate since its release. As Kevin Kelly recently put it in a blog post of his own: its price has been lowering “almost on a schedule”. Walkenbach went on to remark that should this trend continue, the Kindle would essentially be free around July 2011. Since then, several have concurred with his hypothesis. With the summer of 2011 not too far away, this raises some significant questions for the Ipad or any other product competing for some e-reader market share. As Mike Auraz, strategy director at Undercurrent put it on Twitter: “The Kindle doesn't sound so bad compared to the iPad...if it's free”
While many analysts have hopped onto the Ipad bandwagon and called it a winner, I urge them not to preemptively jump to any conclusions. A fulfillment of John Walkenbach’s hypothesis would readily dismiss the numerous analysts that believed that the Ipad would be a ‘Kindle Killer’. In fact, it would most probably have some dramatic effects on the e-book market, increasing e-book consumption (and Amazon revenue) exponentially and assuring Amazon a significant lead as an e-reading platform-note my use of the term e-reading platform rather than tablet. One can also suppose that this would compel many publishers to back Amazon energetically. While it is certain that the Ipad will continue doing well (and it deserves to as it is a pioneering product) I don’t think the Kindle will be disappearing anytime soon!
In fact, should things unfold according to Walkenbach’s predictions, I believe this would drive a systemic shift in the tablet/e-reader market. We would once and for all stop lumping e-readers and tablets into the same product category. There would be an e-reader market dominated by Amazon (and fueled by publishers) and a tablet market dominated by Apple (fueled by apps & programmers). Tablets would be perceived more as computers (that can also read e-books) and e-readers would be perceived for what they truly are_ book-reading devices. I personally think this shift is long overdue, because as Steve Jobs proved (once again) today_ with applications such as Imovie or Garage Band, the Ipad is much more than an e-reader!
While I remain doubtful that the kindle will ever become completely free (as in 0.00$ and absolutely no costs attached), it might very well attain some form of what Chris Anderson described as "20th century free" in his book Free: the Future of a Radical Price. In other words_ some form of agreement that the retailer will provide the product freely if the consumer agrees to certain terms. One of Anderson's examples of this phenomenon was 20th century disposable razors_ the consumer would receive the disposable razor freely and then have to purchase his own blades. A more contemporary example to think of would be cell phone plans (as Kevin Kelly discusses in his post), where one has to sign up for a significant period to get a free phone. Thus, as Anderson points out, it's really about "giving away one thing to create demand for an another". In Amazon's case, distributing the Kindle freely would enable it to generate enormous growth and scale in its e-book sales (thus compensating for the fact that it distributed the technology freely in the first place).
Kevin Kelly suggest that they might propose to give the Kindle freely if if the consumer agrees to purchase X number of e-books. Michael Arrington from Techcrunch thought it could be a plausible gift for their prime customers only. When discussing the subject with a friend, he suggested that they might choose to provide it freely to people that sign up to specific book clubs or packages. While all of this might never happen, one thing remains sure_ a continued downward adjustment in the products price would definitely help it gain valuable e-book market share. What do you think? Does the strategy make sense? Is it realistic, utopian or delusional? As always, your thoughts, comments and feedback are welcome!