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Micro-Kindlenomics: My cost benefit analysis

By | March 2, 2009, 2:09am PST

Summary: Amazon’s Kindle 2 cures all of the ills that afflicted the e-tail giant’s first e-book. It has better navigation, a handy definition feature, a five-way controller and a text-to-speech feature that has raised a ruckus. But the decision to upgrade to the Kindle 2 comes down to the microeconomics: Are the features good enough to [...]

Amazon’s Kindle 2 cures all of the ills that afflicted the e-tail giant’s first e-book. It has better navigation, a handy definition feature, a five-way controller and a text-to-speech feature that has raised a ruckus. But the decision to upgrade to the Kindle 2 comes down to the microeconomics: Are the features good enough to entice users of the first Kindle to upgrade to the new one at the same price–or more if you include a new cover?

That decision is a bit of a tough one for me. I have the first Kindle and acknowledge that it is clunky in spots. I turn the pages too easy, the resolution isn’t as good as Kindle 2 and it has one button that navigates pages. The Kindle 2 is sleek–even the charger is well designed. Next to the Kindle 2, the first Kindle is kind of homely. 

Kindlenomics: Keep publishers and authors happy (cave once in a while)

Review: Amazon Kindle 2 5-way controller more significant than form factor improvement

The problem is that the Kindle 2 is $359. A new Kindle cover, which is a vast improvement over the first version, is another $30. The big question: Is the latest Kindle sleek enough to convince existing owners to toss what they have today and shell out nearly $390 for a new one with a cover?

If you don’t have a Kindle yet, the latest version makes it a no-brainer to get off the fence. I have no problems recommending the Kindle 2 to anyone buying an e-book. However, you should read Matthew Miller’s review and check out the Sony e-book comparison gallery. 

For me, the Kindle 2’s price is a barrier. If there were a discount for current Kindle owners–or a rebate for recycling the first version–perhaps the price would be more palatable. A price of $199 would be a no-brainer for me. I’d upgrade to the Kindle 2 in a heartbeat at that price point. A price of $250 may also do the trick including the new cover that secures the Kindle 2 nicely. Anything more than $250 is seriously pushing it. 

Based on my Kindle 2 review unit I created the following evaluation, which weighs the new features and what I’m willing to pay for them (click to enlarge). 

 

Add it all up and I’ll stick with my homely Kindle for now. However, should my old Kindle fall apart, get lost or fall from a building I won’t weep too much with the Kindle 2 on the market.

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Topics

Benefit, Analysis, Amazon Kindle, Amazon Kindle 2, Kindle 2, E-books, Personal Technology, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

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Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

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Not worth it
abarten 3rd Mar 2009
I just don't see this as being worth more than $25 to me. Having said that, I will admit that I like my Sony Clie as a book reader. It's small and light and I can change pages with the thumb wheel.

Bart
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I Just Bought a Kindle 2
jpr75_z 2nd Mar 2009
Should get it today. I agree it is pricy, 420.00 with the leather case and tax, but I am doing my part to help the economy happy and its benefits will provide a ROI in no time.
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RE: Micro-Kindlenomics: My cost benefit analysis
Bruce Lang 2nd Mar 2009
Not a Kindle owner myself (yet) but I'm under the impression the unit cost this much to "subsidize" whispernet. Yes/No? In my opinion, the price of the Kindle should be much lower while book prices, and such, should be increased (a little) to cover the transmission cost.
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RE: Micro-Kindlenomics: My cost benefit analysis
bigbigboss 2nd Mar 2009
Is Kindle 2 showing what the new form factor for netbooks ?
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If you are willing to pay $250 . . .
cor412@... 2nd Mar 2009
then you are willing to pay $400 in most cases. Are you really going to turn down all that wonderful new stuff for a mere $150? Probably not. But thsn I did not even know what a Kindle was untill this year some time.

Ken
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RE: Micro-Kindlenomics: My cost benefit analysis
darren.meyer 2nd Mar 2009
I agree, if you want an e-book reader but don't already own one, the Kindle 2 is a no-brainer.

I've been interested in an e-book reader for a long time (and even bought a few of the very early, very annoying ones). The Kindle 2 is the first reader that is actually a suitable replacement for keeping a book in my briefcase.

If you're balking at the $360 price tag, be sure to check out all the free classic books that Feedbooks offers for the Kindle, recall that the Kindle 2 allows you cell-network access to Wikipedia and other text-centric websites for *no monthly fee*, and think about how much money it costs to store paper books (esp. if you live in a small space).

And don't forget the environmental cost comparison: sending a book over the Internet is so much better than pulping trees and then sending them to you in a series of diesel trucks.
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RE: Micro-Kindlenomics: My cost benefit analysis
qnetter 2nd Mar 2009
If you read periodicals, the 5-way nav is worth at least twice as much as you say. Without having to pop back up ten down to skip an article, I finish the New york Times in roughly half the time.
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RE: Micro-Kindlenomics: My cost benefit analysis
huskermn 2nd Mar 2009
"Amazon?s Kindle 2 cures all of the ills that afflicted the e-tail giant?s first e-book" - I haven't heard that they improved the web browser, which for me, is a major 'ill'. A real web browser would make the benefit (wireless access anywhere for 'no' cost) clearly outweigh the cost (aren't EVDO cards $50 a month or more).
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RE: Micro-Kindlenomics: My cost benefit analysis
PeterHRoberts 2nd Mar 2009
I love this kindle. I squished my first one in a Quantas Business class seat and was lost without it, the 2 is great. But this time I took the two year warranty.
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RE Kindle Browser
PeterHRoberts 2nd Mar 2009
I agree with this, the new screen should be able to support a better browser.
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RE: Micro-Kindlenomics: My cost benefit analysis
Dripps 2nd Mar 2009
Sell your Kindle 1 and put that money towards the wonderful
Kindle 2. Maybe that puts it's price in the right ball park for you.
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Amazon recommended selling Original Kindle
mewoodman 2nd Mar 2009
Actually when I contacted Amazon to see if they are giving any credits/discounts to Kindle Original owners (I bought mine in Dec 2008) they said no and suggested selling on amazon.com to mitigate the cost implications.
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That's Funny!
brianmilke@... 2nd Mar 2009
It sound like asking the Barber if you need a haircut!
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RE: Micro-Kindlenomics: My cost benefit analysis
mewoodman 2nd Mar 2009
I would like to see Amazon have a "charitable spirit" and let those of us who have bought the original Kindle (esp in the last 3-4 months) upgrade at a reduced cost. We can turn back into Amazon our Kindle originals and Amazon can donate them to students et al. Or Amazon can work something with Oprah's Angel Network and acquire the original Kindles back from consumers and donate to people through her Angel Network in support of Reading?
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For anything even *remotely* close to that kind of money..
sullivanjc 2nd Mar 2009
I'd rather buy a netbook and e-read on that. E-books are too big and way too feature limited for me to even think about purchasing anytime soon. Why anyone buys them is beyond me.
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"Why anyone buys them is beyond me."
EdNowak@... 2nd Mar 2009
Anyone who doesn't understand the value of the Kindle is not a reader. Simple as that. You're not part of the target market.

I appreciate the cost benefit analysis of the Kindle 2 vs. the original. I'll keep my original Kindle and continue to enjoy reading books, magazines, and blogs on it, along with the content that I send to it via email. It's a wonderful device that has changed my life.
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Well, I like books.
gypkap@... 2nd Mar 2009
A Kindle might be worthwhile if the purchaser needed to have a huge library along (like a scientist or engineer). However, said person would also want to have technical papers specific to what he/she was working on. Can Kindle import somebody's thesis?

When I read a book for fun, it's typically one book at a time.
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and again..
sullivanjc 2nd Mar 2009
a netbook could all of what you mention for the same price point. It would also typically have a replaceable battery, removable storage, and applications to do other work or entertainment functions beyond those of a Kindle.
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I read plenty...
sullivanjc 2nd Mar 2009
A netbook could be used and be a lot more functional for about the same price. I've been able to read books in Mobipocket format and PDFs just fine on a Palm TX (albeit a small screen) and that device had lots of additional uses and was cheaper.

This device is way, way overpriced for its functionality.
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it's all about the screen
bishofthedump 2nd Mar 2009
"Why anyone buys them is beyond me."

No backlight=less eyestrain=easier to read.

No backlight=lower battery drain=more time to read.

Also, costly though it certainly is (I can't afford one, until the price drops significantly), I'd rather take a Kindle to the beach for a sunny afternoon's reading than a Netbook or Palm of any variety. So that's why people buy them.
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Staff
Netbook vs Kindle
Larry Dignan 2nd Mar 2009
The netbook vs Kindle thing is a classic debate that neither side is going to settle. For some, the Kindle is a book. I'm in that camp, but do appreciate the browser on the beach once in a while. However, the browser is just another distraction from what I'm trying to get away from in the first place.

To others--like Jason Perlow--the Kindle represents what could be the future of computing. That approach will just mess the Kindle up IMO. It is designed to be forgotten just like your paperback.
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I disagree
spycygrl 2nd Mar 2009
"Anyone who doesn't understand the value of the Kindle is not a reader. Simple as that. You're not part of the target market."

I LOVE books. I am an avid reader and I think the Kindle is ridiculous. What's wrong with the book, itself? Why do I need an expensive black and white DIGITAL version? You can still get used books for a portion of the price of a Kindle + $10 book purchase or, heck, better yet, the library has 'em for FREE.

I think the target market is more than just "readers." I think the target is people who love technology more than they love books.
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don't knock it 'til you've tried it
mplee23 2nd Mar 2009
i agree with the sentiment that the target audience is readers. it appears to me that those who compare it to a netbook aren't 'real' readers, i.e., people who curl up for hours with a book to get immersed in a different world.

before i bought mine i encountered plenty of blogs that essentially began 'i love reading books and never thought i'd want an ebook.' within a day or so the immediate advantages of the kindle won them over. so it was with me.

think of it this way, the book is a 500 or so year old technology. are you saying it can never be improved? the kindle makes reading so much more enjoyable that i will only with difficult go back to the medieval technology of paper-based books.

if you truly enjoy reading i highly recommend finding someone with a kindle to see for yourself.
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Imagination
rjcarlson49 2nd Mar 2009
You are not using your imagination. I do most of my pleasure reading lying in bed. Try that with a Netbook. In fact, try it with a paper book. I expect the Kindle to be far better for that use than any paper book. Until I get the Kindle I refuse to buy any more big fat books. What I wouldn't have given for a Kindle when I was working my way through Harry Potter!
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Re Imagination
dougbeer 2nd Mar 2009
rjcarlson49: I can see WORKING your way through Eistein's theory of relativity but WORKING through Harry Potter?
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RE: Micro-Kindlenomics: My cost benefit analysis
shanedr 2nd Mar 2009
What is this about the computer industry that everyone
immediately thinks of upgrading? Kindle 1 is for those
who have it. Kindle 2 is for those who want it and
don't have it.

But why even have a book reader? Why not use a small
notebook or even a Netbook and download books to it?

Our phones now serve the function of phone, camera and
PDA: not to mention having games and whatever else has
been added recently. With software our portable
computers can be a book reader besides its computer
functions.

We really need to seriously concentrate on multi-
function devices instead of a device for every
purpose.
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RE: Micro-Kindlenomics: My cost benefit analysis
mdshamilton1 2nd Mar 2009
It would be a far better buy if it worked via WiFi and would therefore work overseas - rather than just in the USA.
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RE: Micro-Kindlenomics: My cost benefit analysis
rparker009 2nd Mar 2009
PDAs are good for this and you can do other things with them as well.
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RE: Micro-Kindlenomics: My cost benefit analysis
brianallenso@... 2nd Mar 2009
Ever stop to think how long it takes to boot up a laptop much less having a hot sweaty device sitting in your lap. The multi function only goes so far. I don't use camera phones - the cameras are not that good and phones make lousy readers. I am of the opinion that I don't need every function but the ones I do I want a device that does it well.
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RE: Micro-Kindlenomics: My cost benefit analysis
Ian Martin 2nd Mar 2009
I have been looking at the Kindle for ages, when is it to be made available in the UK?
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RE: Micro-Kindlenomics: My cost benefit analysis
d.j.elliott@... 2nd Mar 2009
I am always carrying a book to read and my house is littered with books. I love the idea of an ebook reader--imagine having one at work loaded with reference works, or one on a plane ride with several books, magazines, and newspapers--in one little case, or having textbooks loaded on rather than lugging giant books around.

These are the sticking points for me:
1) the costs are too high--even using the $10 price point for books (this figure is too low) that would ordinarily cost 3X as much, I'd have to by 18 books to break even.
Since there are no printing costs associated with e-Books, the pricing of eBooks seems high.
2) I buy a lot of used books. I love the fact that Amazon provides access to used/discount booksellers. I can usually find a cheaper price than 'retail,' sometimes support a charity or library, easily send a book to a friend, or uncover older books no longer generally available--I just got a manual for DreamWeaver 2004 which I needed even though the market has moved on.
3)The Kindle does not natively support downloading DOC or PDF files directly to it from my PC
4) Most of the so-called 'free' books are titles out of copyright and thus of limited interest. I already had to read "Moby Dick" and "Silas Marner" twice in school, I can't think why I'd want to download them on a Kindle
5) Amazon forces authors to charge for his/her book. Amazon should allow authors to distribute their works for free, should they decide to do so.

Until there is a way to 'buy' used Kindle books or 'sell' used titles, I won't buy one.
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Why not just buy a netbook for less?
t0mt0m 2nd Mar 2009
Seems silly to get a black and white Kindle 2 for more than a decent netbook you could even turn potentially into a Hackintosh.
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RE: Micro-Kindlenomics: My cost benefit analysis
tom@... 2nd Mar 2009
I did the cost/benefit analysis and concluded; I want one but can't justify the cost, maybe a netbook would be a better value. Then last week, I receive a Kindle 2 as a gift from my children.

I was reading a good book yesterday. My wife understands that when I really get into a book it is only fair that she does not interrupt with household choirs. So what was the value of the fact that I finished the book, downloaded the second book in the series, and kept reading? ... Priceless!

Let's face it, if reading was about cost/benefit I would have a library card. So thanks to my children for the wonderful gift.
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It all comes down to price!
rolnmrbl@... 2nd Mar 2009
I just can't justify paying $360.00 for an empty book, and then several more hundreds of dollars to fill it. I can buy way too many real books for that price, and I want to scream when people bring up the "Green" value of the Kindle.
It's environmental value is minimal. Sure it saves trees from being cut down, but with proper land management those trees will grow back with minimal damage to the environment. The fact that my books will end up in the landfill is also moot. They will biodegrade in my life time.
The old Kindles that end up in the landfill will be there for 1000's of years, if not longer.
And then the cost to replace it every few years cannot justify the cost of buying one in the first place.
For the price of a Kindle I can buy 18 to 30 paperbacks, or 10 hard covers, or at least 5 tech. manuals with no extra charge.
The only way I see a Kindle in my future is a price tag below $150.00, and it would have to offer a minimum of PDF support off the shelf.
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My cost benefit analysis . . .
pikeman666 2nd Mar 2009
do not buy this uneeded expensive electronic toy.
It's a big waste of money!
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Cost Benefit Analysis...?
bishofthedump 2nd Mar 2009
You value the '5-way controller' at $100? Twice as much as a 25% increase in battery life??

$20 per button seems a little steep to me, but I have an old Sega Megadrive controller I'd be only too happy to sell for $100. I'm sure you could hook that up to your 'clunky' old Kindle 1.

Oh and the K2 will only be a 'thing of beauty' until the K3 comes out. Neither 1 nor 2 look particularly sexy, tbh.
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RE: Micro-Kindlenomics: My cost benefit analysis
Laker123 2nd Mar 2009
I have an Ipod and download
books from Audible.com. The
advantage is that I can get them
anywhere in the world and listen
while I am doing other things.
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What about the SD card?
sgs_z 2nd Mar 2009
I appreciate your analysis of Kindle 1 vs 2. Similar to you, I can't convince myself to purchase the new model - the old one works well enough for me.

The only thing I'd have added to your comparison chart is the lack of an SD card slot. Personally, I'd rather have less internal memory with a card slot, than more internal memory without a card slot.

BTW, to answer the critics who suggest using a Phone, iPod or Netbook to read versus a Kindle, just haven't tried the Kindle, yet. Sure, those other solutions might be cheaper, but if you read a lot, the Kindle does the job much more comfortably; and, Amazon has done a great job getting books into Kindle format.

If I had no money, I'd use the library or Half-Price Books. Otherwise, the Kindle is the way to go.
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Kindle alternative
TurboDiesel 2nd Mar 2009
Wireless, no concern about battery life, decent contrast and readability, portable and inexpensive. Thousands of titles. I've been using my public library to check out hard cover and paperback editions. For road trips, I check out books on tape. Works for me!
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Kindle 2 Search in Book
mcgonigloo 2nd Mar 2009
Another valuable feature is the new search in book capability. Its nice to have all your books searched, but often you only want to find something in the one you're reading.
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RE: Micro-Kindlenomics: My cost benefit analysis
mwagner@... 2nd Mar 2009
After seeing my sister-in-law's Kindle 1, I decided to wait. Now I love my Kindle 2. Not quite a light as a paperpack but I an getting used to it. Have no plans to go back to paper.
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RE: Micro-Kindlenomics: My cost benefit analysis
xgi 2nd Mar 2009
They still have not fixed the biggest problem with Kindle. I buy mostly techical books and there is no provision to supply the CDs and DVD that often come with the hard cover book. Why not make them an online download? The cost of the Kindle book is only slightly lower for the Tech books than the hard cover so the lack of the CD or DVD makes the Kindle less desirable. I sold my Kindle six months ago because of this problem.
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Still, is it possible to "share" ...
Too Old For IT 2nd Mar 2009
Still, is it possible to "share" your kindle-enabled e-book with all 10,000 of your new-best-friends for free (and taking money out of the pocket of the authors)?
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RE: Micro-Kindlenomics: My cost benefit analysis
dandi01 2nd Mar 2009
The first kindle peaked my interest but didn't seem to be something I would use. But the Kindle II forced me to buy it even at the high price. Why you ask! Because of the text to speech feature. I can actually do things while the kindle reads to me. I'm not talking about a novel but about information which doesn't require any vocal emotion. The text reading is actually not too bad, it pauses at commas, even though chapter titles tend to merge with the first paragraph sentence.

I know not being able to sit and read hindered my book learning, but now with the kindle reading to me I can do what needs doing and continue to receive input.
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RE: Micro-Kindlenomics: My cost benefit analysis
barrywms 2nd Mar 2009
I bought my Kindle 2 because I'm a reader, and there are a lot of books that I want to be able to access without having to search through my way too cluttered book shelves. BTW, I love it.
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OMG
nicey1966 3rd Mar 2009
This has to be the most rediculous reason I have ever heard for buying a Kindle!

You're seriously expecting us to believe it is easier to:
1) buy a Kindle, wait for it to be delivered, buy a book you already own, download and instal the book on the Kindle, then lug a heavy, small screened, battery powered device around
rather than:
2) find a book that is already sitting on a shelf in your home

You have gone Kindle Krazy.
0 Votes
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You're kidding me, right?
Crogon 2nd Mar 2009
Just about any phone with a 2 inch square screen can install some sort of ebook reader. For a nearly $400 price tag, I could buy a snazzy new netbook which would allow me read books, play solitaire, browse the internet and read email.

I think when you say 'no brainer', it doesn't quite mean what you think it does. wink
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right on!
nicey1966 3rd Mar 2009
There can be no cost benefit analysis between Kindle 1 and Kindle 2 that doesn't first start with accepting that both are way over priced.

Any comparison between the price/functions of a Kindle and almost any other $300-$400 consumer device (mobile phone, PDA, netbook, PSP, etc) will come to the conclusion that it should either be half the current price, or play movies, browse the web, edit Word documents and a whole range of other features that would also benefit from a non back-lit screen and a long battery life.

Kindle 2 is a wasted opportunity. A better case and a better screen are not keeping up with progress in other devices. What have they been doing in their R&D lab? Too many distractions reading books I suspect.
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RE: Micro-Kindlenomics: My cost benefit analysis
RodinUK 3rd Mar 2009
Kindle is destined to remain a product in long term beta until Amazon introduces world wide support. When Its finally released to other markets then we'll know that its reached maturity.
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Not worth it
abarten 3rd Mar 2009
I just don't see this as being worth more than $25 to me. Having said that, I will admit that I like my Sony Clie as a book reader. It's small and light and I can change pages with the thumb wheel.

Bart

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