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It's possible to build a $99 reader. It probably isn't possible to build one using eInk. A teardown by industry research outfit iSuppli had the eInk screen and controller accounting for about $80 worth of a Kindle's cost to manufacture. Other suppliers besides PVI have licensed the technology, so we can expect costs to drop, but I don't see them dropping enough to hit a $99 retail price point and break even, let alone make money on the deal.
And there's no real reason for Amazon to bother trying. For Amazon, it's not about the reader, it's about the books. Amazon was already the largest catalog retailer of paper books. eBooks are a logical extension. The infrastructure required to display the catalog and take orders already existed, and adding fulfillment in the form of downloads was trivial. eBooks have no warehousing or shipping costs, and fulfillment can happen at the time the order is placed.
I see the Kindle as essentially priming the pump. Amazon doubtless makes money on them, but the real goal is to boost the market for electronic books. With the Kindle app for the PC and iPhone, and the recently released Kindle app for Android, you don't need a Kindle to buy and read Amazon ebooks. But use of the Mobipocket format and a custom DRM scheme means you are looked into Amazon as the supplier.
Amazon wants you to buy ebooks, and only buy from them. If you do it from a Kindle, that's a fringe benefit.
Would you buy a $99 Kindle that didn't use an eInk screen?
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Dennis
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