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Old 08-28-2008, 12:14 PM   #4
Alisa
Gadget Geek
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Posts: 2,324
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Join Date: Aug 2007
Device: Paperwhite, Kindle 3 (retired), Skindle 1.2 (retired)
Well that's fine and dandy to say but a lot of it hinges around this:

Quote:
I don’t know how much margin Amazon makes on each Kindle sale or how much it makes on average from content purchases. But if it really wants to push ebook adoption by the masses and stay at the center of that universe, I’d recommend a dramatic shift in business model.

Imagine if Amazon launched a licensing program that gave hardware manufacturers the ability to build Kindle clones, along with an incentive to sell them at near-zero margins.
We don't know what the margin is on the Kindle and this business model hinges on Amazon providing other companies with an "incentive" to sell them at near-zero margins. This is all sounding rather expensive for Amazon. I'm not ready to make the assumption that the Kindle business is in the black after so many years of development and with a lot of the sales being $9.99 new releases. I'd be glad to hear they were breaking even.

I'm finding it hard to see how they could increase profit with this business model. I would imagine they'd have to put some sort of process in place to certify that these other devices work well with the system. They would have to manage their Whispernet access and provide support for their customers all while subsidizing the other hardware manufacturers. Also, I wouldn't be surprised if a lot of the appeal for the publishers is Amazon's closed system. They probably think it makes them safer from evil darknet pirates. What happens when someone finds an exploit in one of these other devices and they don't fix it in a timely manner? What if someone hacks it to be used as an EVDO modem? Does Amazon cut off customers with those devices? That would be a nightmare. If this happens with a Kindle, they have the control over fixing it. To me, this sounds like paying other people to make your life more difficult. The position of having the responsibility without the commensurate control is just about the least advantageous place to be.

I think it would be great for consumers to have other devices to choose from but that doesn't mean it's workable for Amazon at this point. I wouldn't be surprised if we see other manufacturer's devices when screen prices come down to where they can offer devices at a good price and pay a licensing fee to Amazon. At that point Amazon will have a bit more experience with this business and a better idea of how to manage quality and security. Complicating a new business with a system like this seems like a recipe for failure IMHO.
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