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Originally Posted by fjtorres
As you said: hardware margins are thin.
Thin-margin businesses are by definition high volume businesses.
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Well, if you want to survive, they better be...
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Amazon sold 8 million kindles in 2010 because they are a worldwide player and the cheapest connected reader around. And one reason they are so cheap is because they sell so many readers (and books) the world over. Development costs are fixed, so are back end costs; spreading them over a large volume is the most competitive way to beef up margins.
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The decreasing Kindle costs are standard semi-conductor electronics. The biggest cost of such things is the factory to make them, and the service on the debt you took on to get the money to build the factory. The more you sell, the larger a base you have over which to allocate costs, and the cheaper you can price them. The biggest single component cost in the original Kindle was the eInk screen, which was estimated at about $80. But eInk screens are now manufactured by more than just PVI, and component prices have dropped.
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Amazon is not going to stop international operations any more than Kobo is so if B&N is serious about playing with the big boys they need to follow suit.
Kindle 4 is coming so anybody who is serious about staying in the game needs to get within striking distance of K3 before then. Or else.
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More to the point, ebooks will increasingly be international. I think geo-restriction's days are numbered, as publishers will increasingly attempt to acquire world rights for ebook publication. In that environment, to maintain and build market share, you want your customers to be able to get your reader anywhere, and buy from you where ever they happen to be.
If I were B&N, I'd certainly be looking at expanding internationally.
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Dennis