There surely can’t be much doubt that the main player in the e-book reader market is the Amazon Kindle. The recent release of the new and improved third generation Kindle has underlined Amazon’s dominant position. It’s interesting to note that the only serious competition which the Kindle has seen to date comes in the form of a multi-functional tablet computer which costs three and a half times the price of the Kindle – Apple’s iPad.
However, even the iPad’s entry to the market doesn’t seem to have caused any reduction in demand for the Kindle. The new and enhanced Kindle 3 has been selling like hot cakes since Amazon unveiled it at the end of July. The new Kindle is selling faster than any earlier Kindle reader did in the equivalent post launch period.
One massive advantage which Amazon has over its competition – the Apple iPad included – is their huge collection of Kindle books. There are currently over 670,00 titles available on Amazon’s Kindle store – and that number is growing daily. There are also an additional 1.8 million out of copyright books available which Kindle users can download for free!
In addition to making the Kindle reader a more attractive choice for potential customers, this massive library of e-books means that Amazon can afford to have a slightly reduced retail price for their e-book reader hardware based on the perfectly reasonable assumption that customers will be buying Kindle books throughout the lifespan of their reader. For Amazon, it’s a clear competitive advantage over their competitors.
Amazon has given out a clear signal as to how they see the e-book market developing by making free apps available which allow users to download and read Kindle books on a wide range of devices. They must anticipate that, in the not too distant future, ongoing e-book sales will be more important than the one off sales of e-book readers themselves. So far, this has been a successful strategy for them. They currently enjoy a market share of somewhere between 60% and 80% of the US e-book market (depending upon which estimate you want to believe) and approximately 20% of their total sales of Kindle books are destined for use on a variety of non-Kindle devices.
Bearing in mind the downward price trend of e-book readers in general, and the Kindle reader in particular, you have to wonder whether we may even see Amazon giving Kindle readers away for free in the not so distant future. Of course, it may well be a gift that came with some strings attached. Members of Amazon Prime (Amazon’s premium express delivery service) could perhaps qualify. Perhaps they could launch some kind of e-book club where a commitment to buying a certain number of books in a given period of time would qualify members for a free Kindle – a sort of digital book of the month club. There are a number of different options which could, very possibly, make this a feasible business model for Amazon assuming that e-book reader prices continue to trend downwards.
The simple fact that this option is achievable for Amazon, but not for the vast majority of their competition, must make it a scenario which they will need to give serious consideration to. It’s certainly not beyond the bounds of possibility.