Lawrence Gee | Marketing, Internet, Creativity, Strategy

Will You Be Reading This Post On An Amazon Kindle Someday?

The Amazon Kindle is another big company foray into the world of e-books.   Similar to the Sony Reader, Amazon is trying to capitalize on the belief that people are willing to forego the paper version of books and convert to an all digital solution.  There was a time when the publishing industry was extremely worried about their business model dissolving and were thinking about ways to offer digital solutions.  Even my company before business school, Aplia, incorporated digital versions of Economic textbooks into our product offerings.  However we didn’t see them as a full replacement for a physical textbook.  Rather, we treated the online version as a lower cost alternative for students. We certainly didn’t see digital books as transforming publishing as much as the major publishers did.  And as of now, the fear of people throwing away their paper based books have certainly not been realized.

There are several problems that people have generally had with reading text digitally - it’s usually the complaint of eye strain/fatigue, readability and the scannability of digital text, and portability. Amazon’s Kindle seems to have gotten rid of most of the common complaints of digital text.  It has a paper-like screen that acts and feels like you are reading a real book.  The screen is not backlit and actually uses real ink (just displays the ink particles electronically).  There are different font sizes for your reading preference and has an ergonomic design and shape that’s similar to holding a book.  Plus since it’s a stand alone reader that weighs only 10.3 pounds, you can bring it anywhere.  If you watch the video demonstration of the Kindle, it looks pretty impressive.  Definitely much better than I initially thought it would be.

The only issue right now I have with the Kindle is it’s price point.  The reader itself costs $399 with Kindle formatted books for $9.99 each.  Subscriptions to newspapers like the NY Times and The Wall Street Journal range from $9.99 to $14.99.  Magazines cost $2-3 an issue.

I think the price of the Kindle itself is prohibitive to the mass market and mass acceptance.  While early adopters will gobble up the Kindle (as evidenced by the fact it’s already on backorder), I think in the long run Amazon will need to take a “razor and blades “or “cell phone and service” model.  This means essentially giving the Kindle away with a large subsidy or as close to free as possible.  Where they will make their money is on the books, magazines, and newspapers that I presume they get a cut of due to Kindle’s proprietary format and specific networks. 

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Give Me What I Want, When I Want It

I spent part of the past couple of days trying to find this album - Dave Matthews and Tim Reynolds, Live at Radio City Music Hall.  You would think that a release from a major artist would be easier to find.  However it took 4 stores (1 online and 3 brick and mortar) to get it done.

For the past few weeks, I’ve been seeking out new music to play on my commute to work.  On Tuesday, I knew the new Dave album was coming out so I made a visit to Target during lunch.  It was priced at $11.99 but was totally sold out.  Instead of driving to another store, I decided to wait until later that night to just purchase the album on iTunes.

When I got home and checked out the iTunes store I was annoyed to see the album selling for $12.99.  For the same music and less product and packaging, it costs more?  Of course out of principle I didn’t buy it.

Today, during lunch I visited Wal-Mart and low-and-behold it was not in stock there either.  It wasn’t until I visited Best Buy next store was I finally able to purchase the album (btw- for $11.99).

Selling is a simple concept - provide a timely solution to a customer’s need that is greater than or equal to his/her willingness to pay.  In the cases of Target and Wal-Mart, they missed the mark on being timely.  They simple didn’t provide the product when I wanted it.  iTunes missed the mark in that it was charging a price that was more than I was willing to pay.  I simply didn’t feel the product they were offering justified the price.  Best Buy won out because they gave me what I wanted, when I wanted it, and a price that I felt was fair.  Simple concept, not always done correctly.

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