Jeff Bezos
said he would consider that approach if customers wanted a lower hardware cost and higher operating fees, but:
Quote:
But, Bezos told Wired’s Steven Levy at Wired’s Disruptive by Design conference in New York, it’s cheaper in the long run for customers to pay something akin to the actual cost for hardware. And fees and minimum purchase requirements create friction.
“We did consider [the cellphone model] for Kindle,” Bezos said in an interview with Wired’s Steven Levy at Wired’s Disruptive by Design Conference in New York. “Instead of driving the cognitive complexity of a two-year commitment, [we] just tell people, ‘This is the actual cost of the device,’” he said.
“We sell a lot of cellphones for a penny, and you know, when you’re buying a cellphone for a penny, there’s got to be a catch — and there is” in the recurring cost of monthly service which is free with the Kindle’s Whispernet service.
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One thing to realize with Amazon-if they subsidize the hardware costs of the Kindle with book sales/book clubs/etc...they are basically using their own income (books) to help subsidize the hardware...whereas Apple is using someone else (AT&T) to pay for the subsidizing of the iPhone. And, for Apple, their iTunes and App Stores are basically a wash income wise, as a way to spur hardware sales.