iPad Killed Kindlenomics

With falling prices on more advanced multipurpose digital convergence devices such as the iPad, HP Slate and Android tablets, single purpose e-reader devices such as the Kindle face extinction.
Written by Jason Perlow, Senior Contributing Writer
Special Report: Apple iPad

With falling prices on more advanced multipurpose digital convergence devices such as the iPad, HP Slate and Android tablets, single purpose e-reader devices such as the Kindle face extinction.

April 3, 2010 will mark the beginning of the end for Amazon's great hardware experiment -- the Kindle. Faced with inexpensive, multipurpose tablets such as the iPad, which will be able to consume content from multiple sources including Amazon itself, consumer interest in the Kindle will fade into oblivion.

Kindlenomics, the model for cost justification for owning one of these devices just got blown out of the water by the iPad.

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The first casualty in the Great e-Reader Purge of 2010 will be Amazon's 10.4" (9.7" viewable) Kindle DX, which at a $489.00 price point is a non-starter when it is only $10 cheaper than the entry-level 16GB iPad that features approximately four  times the storage capacity and a brilliant color 9.7" IPS (In-Plane Switching LCD using LED backlight) touch screen.

As a content consumption device, the iPad has a display with a much faster refresh rate, a much faster processor  and has access to over 150,000 applications over ubiquitous high-speed Wi-Fi, including the free Kindle for Tablets app that will provide all of the functionality of the inferior, dedicated black & white e-reader, and then some, because it will be able to read Kindle books in color, as shown in a screen shot of the application below.

Why buy a Kindle DX that is limited to reading and buying books from Amazon, when you can get an iPad for 10 dollars more that reads content for Kindle, Barnes & Noble eBooks, Apple's own iBooks, Lexcycle Stanza, and brilliant full-color magazines from Zinio? Not to mention read blogs and websites for free that Amazon otherwise charges for to convert to its proprietary format?

In an initial defensive move, Amazon will certainly try to sell off the  the existing inventory by dropping the cost of the DX unit down to $400.00, or possibly even as low as $359.00 but nobody in their right mind will pay $400.00 let alone $359.00 for the large form factor version which is essentially a one-trick pony. The DX is not long for this world, and Amazon knows it.

It could be argued that some, but not probably not many people, might actually prefer the black and white Vizplex technology over color, and enjoy the superior battery life of the e-ink display as well as the ability to read outside in full sunlight. It's a fair argument, and I won't discount it.

Indeed, there's probably a very small group of people that still want this technology around, and need it for the reasons above, but it's probably not the folks who were in the market for a large format, 10-inch device for reading newspaper content.

As I explained in my original Kindlenomics article, those folks still wanting e-ink are the extreme, voracious readers, who read in excess of 10 books a month. And more than likely, those folks really need something more portable, like the Kindle 2, the DX's smaller 6" sibling.

Also Read: Why Amazon Should Not Be Apple and Jeff Bezos is not Steve Jobs

Of course, this now introduces a number of factors that will send Kindlenomics into a tailspin, even for the voracious readers that genuinely want a smaller and more power-efficient device. If the price of the DX has to be dropped around $100 or more in order to continue to move the product out of inventory, that means that the price of the Kindle 2 will also have to drop to around $199.00 from the $259.00 it is priced at today.

However, is $199.00 a price point that will still allow Amazon to sustain a viable business model for continuing to manufacture and sell these single-purpose devices? Probably not.

Also Read: Kindlenomics Zero, When e-Texts have no entry cost

The Kindle 2 is also facing the Big Sleep, even when sold at a discount price of $199.00. My line of reasoning for this prediction is that I believe that the iPad is going to eventually have a "little brother".

Tentatively, I'm calling this probable device the iPad Mini. This would be bigger than an iPod Touch, but smaller than the current iPad, with a 6" color touch screen, thus giving it the same viewable display area of the Kindle 2.

I estimate that this device will sell at a base price of approximately $349.00, and will be introduced sometime in 2011 when the iPad line is refreshed. The iPad Mini will also likely replace the iPod Touch unless the cost of the Touch is also dropped accordingly.

If you think 2011 is too far away and the Kindle has plenty of time to catch up in technology and sales, think again. Long before iPad Mini ever arrives, there will be other multi-purpose tablets based on Android from other manufacturers that will sell for between $200.00-$300.00 that will have approximately the same screen dimensions as the Kindle, and will be able to run the Kindle for Tablets software in addition to reader software from Amazon's competitors that will give them access to content from a variety of sources.

Dell's "Streak" (shown left) will likely be the first mass-marketed product in this category, although pricing and availability has not yet been announced.

At a $200.00-$300.00 price point for an Android tablet, only the most hardcore readers absolutely dedicated to the black and white e-ink technology will want to stick around with a device like the Kindle 2. That's not enough of a market for Amazon and the other companies making these devices to justify continued production.

You can bet that long before iPad Mini ever ships, $200.00-$300.00 Android tablets will also be sporting inexpensive color dual mode transflective touchscreen displays, which have all the power consumption and readability advantages of e-ink and all the flexibility and screen refresh speeds of LCD. And with that technology, even the remaining Kindle hardcores will be compelled to abandon ship.

For end-users to continue to justify the need for a dedicated e-reader, Amazon will have to DRASTICALLY drop the price of the basic Kindle to around $100-$125.00 per device.

Considering the manufacturing and distribution costs for the unit, it's probably not worth it for Amazon to introduce such huge price cuts because it would likely cause the company to lose money on each sale. Facing such extreme competition from the multi-purpose tablets, the Kindle and other dedicated e-readers similar to it such as the Sony Reader and the Nook will be extinct by 2011.

And why not? If the Kindle for Tablets application and the Barnes & Noble application continues to make Amazon and B&N viable content suppliers on iPad and other devices, then by all means, put a fork in the dedicated e-book readers, they're done.

As the great Yosemite Sam once said, if you can't beat em, join em. Will 2010 be the year that Kindlenomics died? Talk Back and Let Me Know.

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