The Kindle Hardware Tax

There’s a lot of news about Amazon’s new Kindle 2 today, and it does look like a nice upgrade. I still don’t want one, though. What I want is Kindle software. I’m hoping the early suggestions that Amazon is thinking that way prove true.

I use my iPhone for ebooks all the time now. I buy through Stanza, a very nice app, which is backended into Fictionwise. The buying experience between the two is pretty much terrible — syncing down to the phone is painful, and having to enter your full credit card number to “unlock” the DRM makes me angry and frustrated at the same time — but it’s certainly good enough to make me excited about ebooks. I recently found myself wetting my fingers to turn the pages of a Stanza book I was reading — the illusion that I’m reading a book is convincing.

Amazon has an interesting set of choices to make about how to proceed. This market seems like a pretty clear case of Tim’s core Web 2.0 idea of “software above the level of a single device” — do they really believe they can own the ebook device market and the ebook format market? do I really want to buy their hardware to read all the ebooks I read? I’m skeptical. I think if Amazon really makes Kindle books available on any hardware, including their own, they’ll win. If I have to buy a $350 device — or even a $99 device — carry it, charge it, pay for otherwise free blogs on it, and so on, that won’t work for me and someone else will win instead.

My devices have a history of merging or dying. I was an early adopter of the Palm Pilot, but stopped upgrading after the Palm V, which kind of worked for me, until the Treo came out, merging my phone with the PalmOS. That won out until the iPhone, which merged my phone, organizer, and iPod. The Kindle asks me to separate out a merged-in app for the benefit of — well, what benefit? The display? It’s nice, but not nice enough to take on the cost and the bother of a separate piece of hardware.

Amazon has every opportunity to trump the Fictionwise/Stanza book-buying experience — Stanza’s experience certainly isn’t “One-Click.” Worse, the prices in Fictionwise are higher than Kindle — not to mention print — for many of the books I’ve compared. For example: the last book I read on Stanza, The Art of Racing in the Rain, works out as follows (highest price to lowest):

[UPDATE: after posting this, I noticed that the price on Fictionwise for Stanza (stanza.fictionwise.com) is $2.84 more than the main Fictionwise site (www.fictionwise.com) price. Weird! I’ve updated the table and comments below.]

Kindle prices in that one case are beating both new and used print prices, and are trouncing the Fictionwise/Stanza price for apples-to-apples comparison. A number of other books I checked are substantially more expensive on Stanza than they are in
hardcover, paperback, used, or Kindle.

I’m already paying for cell phone service, so it might well cost Amazon less to sell me a Kindle book than it would to sell the same Kindle book to a Kindle owner, assuming their profits aren’t all in the device itself. Presumably they have better price negotiation power with the publishers, based on their existing print book sales, so they might well be able to compete on price for some time. Oh, and: I would totally pay $20 for a well-made Amazon Kindle iPhone app if it gave me access to books at Kindle prices. It seems like costs add up well on Amazon’s side.

While the new Kindle upgrade is nice, owning another device is a kind of a tax. They need to care a lot less about the hardware business than they do about the software service. They’re positioned to win on the latter and lose on the former.