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Old 01-15-2010, 06:55 PM   #1
kjk
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Free 3G Wireless Feature in e-Readers Question

Does anyone have any idea how Amazon/B&N/etc... can offer this feature without subscription charges? I know they must have SOME deal with AT&T/Sprint whoever..but any clues as to how it is possible?

I have heard that since its just for browsing/downloading books, which don't eat up that much data, but just as a comparison, Verizon just came out with a new phone plan that is $10/month data for 25MB max. downloading..which is what..20-30 books? I know some of you probably buy that many books a month.

I just can't figure out the economics of it (but it is a great feature).
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Old 01-15-2010, 07:02 PM   #2
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I have no idea but I assume some very small amount from each Kindle book sold over the whispernet in America is paid to Sprint. Typical fiction books are somewhat smaller than 1 MB and don't forget that Verizon is making a big profit on that $10 for 25 MB. Don't get me started on the profits from text messages...
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Old 01-15-2010, 07:07 PM   #3
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Remember Amazon is buy in BULK... they are not a single customer that needs to have separate billing, customer support, etc.

Also, the price of each book includes some amount to pay for the wireless.

I'm guessing the bulk of people have their wireless off most of the time.

So, the bottom line, AFAIK is the economy of volume and low per user average since it is spread among all kindle users.

BOb
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Old 01-15-2010, 07:41 PM   #4
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My guess is that this would be similar to the pre-paid phone cards. When they first came out nobody (Joe Average consumer, at least) could figure out how the companies could be making a profit since long distance calls cost at least (just to pull a number from a hat) 20 cents/minute while the phone cards were only charging 14 cents/minute. The answer, as Bob said, is buying in bulk.

I was paying AT&T $30/month for an unlimited data plan (until I dropped it as Internet access from my cell is frustrating-maybe I'll try again now that they've upgraded to 3G here). An alternative, with a limit, was $30/month for 5GB which might give another aspect on the cost. (Why the two rates? The unlimited was cellphone only and the other was for a cellular modem.)

So, if Joe Average consumer can pay $30/month for 5GB then what would Amazon pay for 500GB? Certainly not $3000. But let's say they are. Then that 500GB would allow the download of an estimated 500,000 ebooks/month. Assuming Amazon sold that much at $10/book they'd be raking in $5M/month-enough to afford the bandwidth, I think.

And I don't think it matters if we scale back to more reasonable numbers-the more you scale back the number of books they sell the more the bandwidth they need scales back & therefore the more the cost scales back and it still all stays in proportion.
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Old 01-15-2010, 08:33 PM   #5
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Verizon (and AT&T, also) are actually raising their rates, if you look into the fine print closely. The (internal sales documents) were about increasing revenue and increasing customers, esp. prepaid.

For example, I have US Sprint 500 min/mo voice, unlimited text/data for $69/mo (all my mobile-mobile are free), but I would have to pay $90/mo or more for what they (big blue and att) are offering. Also, Verizon doubled the early termination last month for smartphones, to something like $350 (FCC is complaining loudly, look for this to change).

Verizon is also sending me crawl mail every month to change my 1.5mb dsl/landline for $75/mo (which I got 6 years ago, and absolutely hate) to something like 1.0mb dsl/landline for $90+mo. They actually advertise 3.0mb dsl for my area, but the outside plant (aerial cables on telephone poles) is from the dinosaur era, could barely support POTS (plain old telephone service), and won't possibly work for high speed. I used to be a contract telephone engineering designer for AT&T, GTE, and SW Bell, and worked on the fiber/dsl in my area before and during the 6-7 years when they were trying to get it to just "work", the physical hardware was a disaster (even for POTS). They didn't upgrade then, and haven't made a single upgrade in my area since. They go "where the money is...".

The real reason for this is the new gov broadband plan...
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Old 01-15-2010, 11:29 PM   #6
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The word "free" is one of the words that has lost it's meaning. Of course it is not free. You are expected (and the vast majority will) to buy books. I mean, what did you buy a Kindle for? If you want books you will go to Amazon and buy.

If your local gas station was owned by your local grocery store. And the grocery store offered "free gas". But, if you used that gas you could only go to your local grocery store...... Get it?

I know there are ways around the Amazon/Kindle lock. But, reality is at least 90% of the people using a Kindle will buy all their books from Amazon. That is a marketing reality.

BTW... I have no problem with the Amazon/B&N model. Fact is the majority of people will like the convenience of a locked in store, rather than shopping around. The path of least resistance is the path most will follow. It really is business 101..............

Last edited by Bremen Cole; 01-15-2010 at 11:33 PM.
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Old 01-16-2010, 01:59 AM   #7
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Its a bulk pay as you go plan. Total minutes bought in bulk where every single Kindle are one single account. Then negotiate a rate that buys you blocks of cell time and AT&T gambles that you will use less than the block of time and Amazon gambles they will get more cell time for less money.

Anyway the cell company gets paid even if the air time is not used
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