Amazon launches ad-supported Kindle for $114: A milepost on the way to free

Amazon on Monday launched a Kindle that'll run you $114. Why so cheap? This Kindle packs along a few ads for the ride.

Amazon on Monday launched a Kindle that'll run you $114. Why so cheap? This Kindle packs along a few ads for the ride.

In a statement, Amazon unveiled "Kindle with Special Offers." This Kindle has sponsored screensavers that run along the bottom of the home screen. The ad-armed Kindle will go along with the $139 Wi-Fi Kindle and the $189 Kindle 3G.

The Kindle with Special Offers---with ads from the likes of Buick, Procter & Gamble, Visa and Chase---will ship May 3. A few observations:

  • Will a $25 savings attract people to a Kindle with ads? I'm not so sure.
  • Amazon is making sure "anyone who wants a Kindle can afford one" so rest assured that $99 is the next price point.
  • It's clear that Amazon's monetization of the Kindle has little to do with the actual device. It's about the store and now sponsorships. Amazon is pursuing the subsidization model for the actual device.
  • There's even a data angle here. Kindle with Special Offers will feature AdMash, an app where customers can vote on ads. Now the Kindle base is a big focus group. That feedback is worth a bundle.

Add it up and the trend line is being established---the Kindle will be "free." By free, I mean the Kindle will be part of an Amazon Prime subscription. It will be a conduit to get you to download content. The Kindle is an ad-vehicle. Apply these experiments to a tablet and you see why Amazon could be very disruptive to the Android market.