March 17, 2011

Are free Kindles around the corner?


Yesterday Shelf Awareness pointed to a story on by Ingrid Lunden that speculated that there is a future of free Kindles is just around the corner.

Why is that? Well, in its mission to dominate the e-reading market, Amazon has struck a few deals with cellular providers in the UK and is offering free Kindles (or nearly free) to people who sign up for phone subscriptions. Carphone Warehouse and Best Buy UK are the participating retailers involved in the new marketing rollout. Amazon’s thinking, the story opines, is that this arrangement will help Amazon reach consumers who would not have bought a Kindle over their website. And free Kindles means more ebook sales. And if you’re already hanging out on Amazon’s site and need, oh, a new clock, shoes, or chamois to wash your car, you’re just as likely to do it there. And Amazon likes that.

All well and good, but is any of this news?

Not really. The general trend should have been apparent to anyone who’s paid attention to Amazon’s general tendency to be a loss-leader. Or anyone who follows pricing trends in popular electronic devices for that matter.

For instance, last August in a piece for Slate Farhad Manjoo predicted that we would see a $99 Kindle before Christmas. And while that didn’t happen, here’s an observation that stuck out to me:

Last year a Forrester Research survey found that fewer than 20 percent of “U.S. adults online” would consider buying a reader priced at more than $100. When asked about a reader priced under $100, however, nearly 65 percent said they would consider one, and almost 40 percent said they’d buy it within six months. In other words, $99 is a magic price—the threshold where a huge number of customers who are on the fence about e-readers decide to jump in.

If 65 percent of respondents could have their minds changed by a $99 Kindle and 40 percent said they’d go out and buy one, you can imagine what these people will do if the price of entry is $0. They will get a Kindle and they will buy ebooks and other things. Lots of others things. Or so Amazon hopes.

What was of real interest to me about Lunden’s piece was what she said about the iPad:

In a poll of those buying the iPad 2 over the first weekend of sales found that 24 percent owned a Kindle, compared to 13 percent of original iPad buyers having a Kindle. And only 6 percent use their iPad 2 as an e-reading device, down from 19 percent of those surveyed during the launch of the first iPad.

So what I’m wondering is, is this indicative of the future? Is the iPad really not a threat to the Kindle? And, if not, why is Amazon taking such a nosedive on price if they don’t have to? Perhaps Amazon is being agressive here to sew up the ebook market before other device makers have a chance to really compete with them on price. Who knows.

Either way, sounds like we’re all going to be getting free Kindles soon. Like it or not.