The Secret of the Kindle
One of the most popular gadgets of the past few years is the Kindle eBook reader, a device that comes in Wi-Fi and 3G versions. Looking very much like a calculator crossed with a tablet, the Kindle is designed as an eye-friendly eBook reader and uses an e-ink solution to avoid the sort of glare-induced headaches that desktop monitors, phones and iPad/Android tablets can cause.
The real beauty of the product, however, is in the use of its capacity. Books can be distributed in files just a few hundred kilobytes in size, which means that a typical Kindle can store thousands of titles. Even when space runs out, new books can still be added to your account and synced to the Kindle when space becomes available.
In short, Kindle is to eBooks what iTunes was to music, which is why Apple is so keen for its iBooks service to do well. The difference is that while Apple makes expensive hardware, Kindle sells for under a couple of hundred dollars, while many books (although not bestsellers) can be bought for a just couple of dollars.
So how does Amazon make money from eBooks? After all, a percentage has to be paid to the author, and in the case of people like Terry Pratchett, the publisher. With such cheap hardware it seems unlikely that the device is anything but a loss-leader, putting the focus firmly on selling as many devices as quickly as possible so that the owners then purchase as many eBooks as they can read (or not, as the case may be).
Remarkably, such a business model has been shown in the past to be sustainable.
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