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

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.

TOPICS: Amazon

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.

Topic: Amazon

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  • Couldn't agree more

    I find Kindle to be the most enjoyable ebook experience on all of my devices, but after playing around with the actual kindle device I walked away quite dissatisfied. So I fall into this exact group you are talking about, amazon gets my money for ebooks but doesn't get my money for the hardware and they could probably care less.

    On a side note, it is good to find your blog again! I knew something was missing from jkontherun lately and then I noticed you were no longer writing there.
    • RE: Ad-supported Kindle announced - it's not the big story

      @toltz welcome to Mobile News!
  • Why?

    Why would Amazon want to enter the tablet market, and especially the commodity-pricing "bleeding contest" that is the Android tablet space? As you said yourself, the money is in selling the content, not the devices.<br><br>As you also said, the Kindle app is now bundled with many Android devices from many manufacturers. How long would that last if Amazon became one of the hardware competitors? Moto and Samsung would drop Amazon like a hot rock if that happened.<br><br>Amazon has a much better play: hijack Android by offering a better ecosystem (music, videos, apps, credit card accounts -- all stuff it has now) than Google can. Google is reeling from its mistakes with the app store, Google TV, Google checkout, etc. If Amazon hurries, it could grab control of Android right out of Google's hands. If they stay out of the hardware business, they might talk the hardware makers into bundling the Amazon app store right along with the Kindle app.<br><br>People who remember the "Beta vs VHS" wars think that Sony lost. They didn't. They realized the same thing that Amazon sees here: the money is not in the devices, it's in the content. All the Japanese manufacturers were beating each other over the head with sticks to sell VCRs at ever-lower margins. Meanwhile, Hollywood was raking in all the money by selling the movies. This is why today, there exists Sony Pictures and Sony Music: they got into the content business and let VHS "win." So should Amazon.
    Robert Hahn
    • RE: Ad-supported Kindle announced - it's not the big story

      @Robert Hahn Nice thinly veiled Android diss.

      Apple sucks, period.
      • Robert Hahn is right

        and there's no bias in his post. Sorry that the truth hurts.

        Amazon can take over Android and do a much better job than the idoits at Google.
      • RE: Ad-supported Kindle announced - it's not the big story

        "Nice thinly veiled Android diss."

        Where? Do you suffer from schizophrenia, because only you can see the things that you see!
  • RE: Ad-supported Kindle announced - it's not the big story

    If selling content is where the big money is, maybe it would make more sense to sell ad-supported ebooks rather than the devices. Maybe they could use a point system. The more ads you view, the more kindle-bucks you get.
  • RE: Ad-supported Kindle announced - it's not the big story

    I like paper.