NYT: Jeff Bezos: Kindle Books and Readers Are Separate Businesses

[Alisa]

Originally Posted by Gideon

I think Amazon is hedging its bets. It didn't get huge by being stupid regarding trends - the market is moving towards digital media, and Amazon has been hopping on that train pretty aggressively. They sell music, video and ebooks now. Amazon is diversifying and solidifying its edge in a new market.

Just because something is digital in no way means that the old systems of 'the big store' no longer works. iTunes proves this - Amazon almost always has cheaper prices and almost a good a selection, and for a long time sold higher quality MP3's without DRM - and iTunes was STILL beating them. Being the first big merchant is an enormous economic advantage and I think Bezos sees where the wind is blowing and wants to make sure Amazon gets in on the ground floor.

As to razors/razorblades there are different marketing strategies to be had here. Just because we're used to this model doesn't mean it is what Amazon is pursuing. Amazon might not be terribly interested in the hardware market, when they can make a lot of money with simply the ebooks. You can make razors for one brand, but what if you're the biggest seller of razor blades for ever razor?

I think Amazon's playing a long game, and there's no reason to call Bezos a liar. Not because Amazon or Bezos is necessarily virtuous but because there are a number of routes to take.

And it might not be on any eInk devices simply because eInk devices might not be around for a terribly long time as a relevant market. But we'll have to see. I think there is space to imagine Bezos isn't lying and yet is still making sound business decisions.

Yep. I think part of their long-term strategy for opening up to other devices depends a lot on the kinds of profits they can make on the books. With the $9.99 new releases losing them money, they couldn't very well open up to just any device without careful planning and a bit of control. I'm sure they're still trying to beat the publishers into submission on price, but until they can do that, they have to make money on back catalog and periodicals if they want to sustain the business. If you have the total Kindle store buying experience (samples, wireless delivery, synching) regardless of device, you're more likely to buy your content at Amazon. You read the sample and there's the handy link at the end to get the rest of the book. If you have to load via USB from your computer, you might just take advantage of Amazon's samples and cheaper new releases but buy your other content somewhere else. Back catalog prices are pretty much the same everywhere. If you don't have wireless delivery, you're far less likely to subscribe to the periodical content, too. This would not be a good long-term strategy for them.

A few other questions raised in this thread and my not-so-educated guesses at answers:

Why did Amazon not just use Mobipocket format? Mobipocket (owned by Amazon) has an agreement with their retailers not to undercut them on price. Ever check out the prices at mobipocket.com? There's a reason they're the highest around. It's been my assumption that this was a way of distinctly separating the two brands to avoid being sued. Amazon isn't directly competing for sales on Mobipocket hardware platforms. I think this is also the reason you can't read them on your computer.

Why doesn't Amazon sell Kindle books in other countries? As others have said, if they want to preserve the Kindle store experience, that means either lots of wireless partnerships or making you pay for access. In addition, there are serious digital rights issues. Just because the publisher has the digital rights in the US, doesn't mean they have them everywhere. Bezos has expressed his interest in opening up Kindle stores in other countries and has said they're working on getting a big enough catalog together. Yes, there are other ebook retailers that don't rigorously check where you live before selling to you. They're small targets. Amazon has deep pockets so they have to follow the rules more closely.

[Gideon]

I also imagine Amazon is using the US as a test case. They want to get the model right before dealing with the nightmare of other countries markets (and all that entails. Hell, just selling in France can be a problem.)