Ad-supported Kindle announced -- it's not the big story

Summary:If Amazon's goal is to get Kindles in more hands, and sell more ebooks in the process, then it doesn't need ad-supported Kindles that are only slightly cheaper than retail. It just needs to promote the Kindle apps.

Amazon surprised many industry watchers yesterday with the announcement that a cheaper, ad-supported Kindle model would be going on sale. The news got a lot of analysts wondering what is behind the Amazon move, and that perhaps totally free Kindles might be in the cards. I'm thinking not, because Amazon has been offering the equivalent of free Kindles for years.

I'm talking about the mobile Kindle apps that are available on every mobile platform. If Amazon's objective is to get Kindles in more hands, and sell more ebooks in the process, then it doesn't need ad-supported Kindles that are only slightly cheaper than retail. It just needs to promote the mobile app versions of the Kindle reader in a big way.

The retailer understood early on in the Kindle game that the real objective is to sell digital content. That's where the real money is, not in the sales of the Kindle devices. Amazon has never divulged how many Kindle devices it has sold, other than a vague mention of selling millions. That's not that impressive when you consider the ereaders have been selling for a few years. What is more impressive is the number of ebooks the company is selling, which is now outpacing the sale of paper books. That is considerable when the largest retailer of paper books admits that ebooks now outsell them.

The sale of millions of Kindles may be a decent accomplishment, but it's a drop in the bucket when you consider the number of devices with Kindle apps that are in ebook customer's hands. The latest number of Android activations (from last December) indicated 300,000 new devices are activated every day, and this is before the onslaught of tablets have hit the market. Many Android phones shipping today have the Kindle app preinstalled through deals by Amazon, and it is readily available for those phones that do not ship with it.

Looking at the Android numbers alone, and that's only one platform the Kindle app is available for, indicates a staggering potential market for Kindle ebook sales. If only 1 percent of these Android activations resulted in a Kindle customer, that is over a million new customers every year for Amazon content. That's a conservative number, but the size of the Android market is huge. Most Kindle app users probably buy multiple ebooks from Amazon, just like "real" Kindle customers, so it's no surprise that Amazon is selling so many ebooks. It would be very enlightening if Amazon would detail how many ebooks are sold for non-Kindle devices. I suspect a vast majority of them might be.

So this ad-supported Kindle reader will probably get more devices in the hands of new customers, but that's not the real story. I wonder if this is Amazon's first baby steps into developing its own ad network for its future mobile devices that it is probably working on. I firmly believe Amazon is about to disrupt the mobile space by entering into the mobile space with a tablet device, and take Apple on directly. An ad network would be another piece of the ecosystem to go head-to-head with Cupertino.

Topics: Amazon


James Kendrick has been using mobile devices since they weighed 30 pounds, and has been sharing his insights on mobile technology for almost that long. Prior to joining ZDNet, James was the Founding Editor of jkOnTheRun, a CNET Top 100 Tech Blog that was acquired by GigaOM in 2008 and is now part of that prestigious tech network. James' w... Full Bio

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