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Originally Posted by jasonkchapman
Based on what, exactly? You say that the profit margins are gone on the Connect store, and yet Amazon has already admitted to losing money on many titles at the $9.95 price, so their profit margins must be gone, too. That must mean that the Kindle store, too, will be shuttered in less than a year, right? Doesn't Amazon also have a history of abandoning digital customers?
Personally, I hope they both do well. That way someone will eventually be able to put out a really good e-book device. Meanwhile, the Kindle really doesn't offer me anything I want over the Sony to make it worth an extra $100, so I seriously doubt I'll regret anything.
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What was Sony charging for e-books before the Kindle? And what are they charging now that they have some real competition? What I am seeing are huge price drops, in some cases 50% or more. Now they are probably making a buck or two, verses $10 for each ebook. Sony as an elite consumer electronics company like Apple lives off high margins. Do you know what the margin is on a $59.99 PS3 game? A little more than the 10% profit Amazon is comfortable with.
I guess what I'm saying is that as an elite consumer electronics company, Sony will focus on unique high-margin products, not commoditized, low-margin ones. I would expect Sony to slowly leave this market over the next year or two if the profit continues to get sucked out of the market. Amazon is showing that the ebook biz is mostly going to be a battle of services and software and high-volume, low-margin sales. Sony will lose that battle any day and knows it. They can't compete on software or services. Look at how weak the ebook connect store is to this day - or the PS3 store - or whatever they try to do. They just aren't any good at it. What they are good at is building high-quality electronic gadgetry with state of the art functionality.
Amazon is good with services and software. Amazon.com, like it or not, is probably the most successful ecommerce storefront in existence. Just like the Amazon.com web site, I think Amazon sees the Kindle as a platform for selling content and that is what they are really good at. They even subsidize the delivery costs on e-purchases, the same way they do with real products sold on amazon.com. Do you really think Sony would EVER consider something like that? Yes, they are a little weak on product design, but I think the software features and services offset that easily.
Honestly Amazon should have contracted Sony to design and build their ereader. Amazon + Sony might be able to do what only Apple can do today.
And I as well wish that they both do well, but unless Sony starts focusing on their store and the software of their reader, they are going to lose and lose badly. And this I believe based on hours and hours of using each company's products.