Amazon isn’t a hardware company, it’s a bookseller. Online books promise prodigious profits for Amazon—look Ma! No print-publishing costs! No shipping costs! No warehousing costs! That ain't peanuts: Last year Amazon's net shipping costs rose 35 percent to just shy of $850 million.
The company introduced the Kindle in November 2007 because no one else would; no one had yet done a good enough job designing a bookreader we liked to use. Amazon pulled it off, to the raves of legions of new online-book fans.
Kindle debuted at $400, pricey for what it was: a two-tone LCD screen, some chip memory, a simple keyboard and a few plug-in slots (some reports had it costing $185 to make). Soon as the iPad sashayed into place, the Kindle looked like an old Wang word-processing machine that just got one-upped by the more versatile IBM Personal Computer. (And yes, I know I’m dating myself.)
The handheld razor is priced cheap—so they can sell you the high-profit blades. Many cell phones come free of charge, so long as you sign a two-year carrier contract. Amazon could do the same with the Kindle: Start a new book club, and give away the Kindle in exchange for buying a $20 book each month for two years.
Or team up with print-media companies that would subsidize the cost of making Kindles and give ’em away free as the new distribution platform for their newspapers and magazines. Another ally: big brands that could hand out the Kindle as part of their customer service—banks, retailers, bookstore chains, Wal-mart.
More than 2.5 million Kindles have sold in the 31 months since introduction. That compares with more than 2 million iPads sold—in just the first two months. This, despite the far higher price-point for the iPad, which starts at $499 and runs as high as $829. Is there any clearer indication of what the digitally au courant already know: Apple's iPad rules, the Kindle is dead. But free could set the Kindle free.