Amazon as taken two steps to ensure it has some breathing room between itself and the burgeoning list of competitors in the eBook-ereader marketplace. The company has announced that it is lowering the price of the bestseller Kindle to $259, down from $299 as well launching the Kindle with U.S. & International Wireless. Kindle with U.S. & International Wireless now enables readers to wirelessly download content in over 100 countries and territories. The product will be aimed at U.S. consumers who want the freedom to use their ereaders overseas (to download content and sync) as well as eager consumers outside the U.S. who have had limited ereader choices to date.
Oh, did I forget to mention that the new Kindle “global edition” will be powered by AT&T. That large groan you heard was from Sprint, Amazon’s current wireless partner who powers the mysterious “Whispersync” for current Kindle owners. AT&T has a network of global partners who come together to provide AT&T customers (somewhat costly) global cell phone reach. The difference here is that Amazon foots the bill for the bandwidth (at least they do upfront) used to download books. In the case of downloading newspapers (which are larger files sent daily), the cost is transparently passed on to consumers who pay about $10 per month for each newspaper subscription.
Looking at this announcement through Amazon’s eyes, this announcement has (at least) three missions here:
Ward off the growing list of competitors (iRex, Sony, Plastic Logic) who have announced or plan to announce new ereaders that come complete with wireless partners and who have their sights set on international distribution.
- By gaining a dominant position in ereader sales, establish its proprietary ereader document format, .azw as the standard for the ebook market as it battles against .epub, the open global ebook standard.
- Take some of the steam out of the hype out of Apple’s non-announcement of a tablet device. The latest “public rumors” indicate that a device will be in the market at the end of Q1, 2010. Having the Kindle, which is priced about half of the rumored Apple tablet price, into global channels before the first Apple tablet hits the market would be a strategic advantage to Amazon. Publishers may be pragmatic and lend greater support via more titles to a lower priced globally distributed device than a rumor no matter how cool.
But, things are not that easy. Even a lower cost, globally supported Kindle does not deliver a viable newspaper or magazine experience. Also, powerful global carriers such as BT, Vodafone, Telecom Italia, Orange, Telia, etc.. will not be satisfied with revenue sharing deals with AT&T in supporting its network for Kindle downloads; shortly, we will see major carriers outside the U.S. forge relationships with ereader manufacturers for local or inter-regional support (pan European, for example) as well as retail channel support.
Amazon’s announcement indicates the company is well aware of the market dynamics that threaten its dominance. Will Amazon have the tactical prowess to remain a market leader supporting a proprietary ebook format and offering a device that is a non-starter for newspapers and magazines? At this point, the answer is no, but Amazon often forces us to expect the unexpected, so stay tuned.