Netly: The Third Screen

Archive for the ‘kindle’ Category

I’m not buying the argument put forward yesterday on PaidContent, that Amazon was the winner in its recent dustup with book publisher Macmillan. Like his neighbor Bill Gates, Jeff Bezos is an awesome games player, but for reasons that I can’t yet understand, he’s been making some bad moves lately.

Forrester Research Analyst James McQuivey argued yesterday that Amazon “is secretly pinching itself right now” because, by capitulating to Macmillan, it actually gets the better side of the deal. How? Under the previous terms, Amazon sold the publishers’ e-books at $9.99 and would frequently lose money on each transaction. But now, with Macmillan setting its own prices as high as it wants, no one loses money on any sale. So even though Amazon’s cut is only a third of the price, versus two-thirds before Macmillan rebelled, Amazon won’t lose a dime. In other words, it’s better to take a third of something than two-thirds of nothing.

While I am innumerate, even I can’t fault that math.

But I do know my history (my undergrad degree!) and I can tell you that this particular event had nothing to do with who’s making money now. It has everything to do with Amazon’s long-term vision of the Kindle as the dominant platform for reading digital texts. Bezos plays the long game, not the day-to-day game, and for his long game to work here, books have to be cheaper on the Kindle than they are anywhere else. Period. Full stop.

Remember when analysts used to lambaste Amazon, quarter after quarter, because it was losing money on every sale? Amazon would never be profitable, we were told, because it offered free shipping and was taking a bath by also charging the lowest prices for goods.

Amazon is trying to do the same thing now, with e-books: It wants to guarantee the lowest possible price to consumers, and will happily take a loss on each transaction for the moment, while it builds up good will over time. Customer loyalty is what Bezos was banking on. It’s worked splendidly so far, right?

The problem is, right now you’ve got two companies that customers love to an almost cultish degree—Apple versus Amazon—engaged in a massive stare down. And Amazon blinked.

That said, this battle for the hearts and minds of customers is far from over.

Amazon published a press release today asserting that “November is already the best sales month ever for Kindle, even before Cyber Monday.”

That sure sounds like a big deal, but since Amazon has never shared any real numbers on the Kindle, who knows what it means. Perhaps it sold 6 Kindles in November, who knows?

That said, I counted a half dozen of them on the SFO-to-NY plane last night, so it’s a safe bet they sold more than 6 in November. I wish the giant e-tailer would be more forthcoming with data; “press releases” like this make me feel like I’m being played.

The Nook is sold out, Barnes & Noble just announced.   All orders from here on out won’t arrive until January 4th.   Jeff Bezos is laughing, you know the laugh.  There will be a Kindle under every Christmas tree and Chanukah bush!  Another reason Sony should’ve had their new e-reader ready for the holidays.

imagesI was flying to New York yesterday reading my Kindle and, and, as is almost always the case these days, the guy next to me asked, “What do you think of that thing?”

People are super curious about Kindles, and the gamut of e-readers. If Forrester Research’s recent estimates are true, 3 million E-Ink-based devices will be sold over the holidays. I actually think this is a bad thing: many of these buyers will be unhappy.

Which is, sort of, what I told my seat mate. I love my Kindle, as far as it goes. It’s a fine way to read books. But that’s all it is: An e-book reader. If you go out and spend $300 on any E-Ink device this year, be prepared to be enormously disappointed within six months, when all the new color-screen devices come out.

Yes, consumer technology changes fast. But the pace of change on third-screen devices is breakneck, unlike anything we’ve ever experienced. So much cool stuff is in the pipeline that only the folks who love being early adopters will have the stamina to keep up with it all.

This is a new trend. In the olden days, when you bought a desktop or even a laptop, you could get 3-4 years out of the thing without feeling that you were stuck with an antique. Not so with e-readers. In fact, as Brian Lam pointed out yesterday in a Gizmodo rant, they’re already obsolete.

The only good thing you can say about e-readers is, at least you will always be able to read your library of e-books on them.



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  • Josh Quittner: Yeah good points. On Nov 1, 2012, at 8:13 PM, "Netly: The Third Screen"
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