amazonfire98Amazon introduced three new e-ink Kindles: a $79 low-low end model, not touch-sensitive and with minimal physical controls (about akin to what the Kobo and other such non-Kindle readers have had up to this point), a $99 Touch WiFi model, and a $149 Touch 3G model (both of which have no physical controls at all). It also introduced the Kindle Fire tablet at the remarkable price point of $199.

Amazon Moves Price Point Goal Posts

Something that is important and worth mentioning, and that I haven’t seen in the other reports I’ve looked at, is that Amazon has quietly moved to change the default prices for its devices. Formerly the default price was for the ad-free version, and the “Kindle With Special Offers” version was presented as a cheaper alternative.

However, in the presentation of these new Kindles (save for the Fire), the default prices given are for the “special offers” versions: if you check the $79, $99, and $149 Kindles’ order pages, you discover that the prices for the ad-free versions are $109, $139, and $189, respectively. The Kindle Fire pre-order page just says $199, and there’s no mention of special offers at all, so it’s not clear whether that’s with or without. My money’s on with, though, and on ad-free costing the $249 price point that had originally been expected for the device.

So Amazon has changed from being ad-free “by default” with ads a way to get the devices cheaper, to being “special offers” by default and you pay extra for no ads. Not that I can really blame it, I guess; being able to trumpet lower price points makes for great marketing copy—especially since Barnes & Noble’s Nook doesn’t have an ad-supported version. So Amazon will always look cheaper in a straight “default prices” comparison, even though the price of the ad-free version will be about the same!

To be fair, I gather Amazon has managed to implement the ads in a way that is less obnoxious than it might be, and that gives customers offers local to their own geographic areas and interests. Still, when you look at it in that light, the new prices aren’t quite so impressive. In comparisons to the “default” price of the previous Kindle generations, be careful not to compare apples and oranges.

Device Features

Looking at the Kindle Fire, its noteworthy features include a custom web browser, Amazon Silk, that uses a client-server model to offload much of the work of rendering pages into Amazon’s cloud. It will learn from users’ browsing habits in order to preload and prerender content they are likely to want to view. (Privacy advocates may get up in arms about this.)

Another noteworthy feature is that Amazon’s Whispersync, previously used for keeping your place in e-books, will also keep your place in an Amazon Prime streaming movie you start watching on your tablet then continue on your TV. Also, the Fire will fully interface with Amazon’s cloud and not require a physical connection to sync. (Bezos showed a picture of the iPhone’s USB connector cable at this point, a none-too-subtle jab at a feature missing from the competition.)

But the Fire is only the flashiest new device. Perhaps even more important are the touch-sensitive Kindles, which use IR sensors to avoid the necessity of a blurry touchscreen layer on top of the e-ink. The WiFi model managed to break that magic $99 price point, something Bezos himself noted during the event with a slide quoting Dan Frommer from Business Insider saying, “Imagine how many Kindles amazon will sell when it’s even cheaper next year—say, starting at $99.”

And of course, that was right before Bezos shattered expectations by introducing the teeny-tiny $79 non-touch Kindle. Imagine that: access to Amazon’s e-book ecosystem, including library checkouts and possibly an Amazon Prime library down the road, for just $79.

While the $79 Kindle is impressive, make no mistake, I suspect it may exist not so much for itself, but to drive sales of the $99 touchscreen model. Plenty of people will buy it, of course, but others will look at it, and its puny little controls, and say, “For just $20 more, I could have a touchscreen,” and buy that one instead.

The touchscreen also means we’ve seen the last of physical keyboards on the Kindle, which enabled them to make their devices that much smaller. (Of course, the $79 non-touch one lost the keyboard, as well, though I suspect that means it also lost a lot of the flexibility of input that its predecessors or the touchscreen models have.)

And also worth mentioning in passing is the new “X-Ray” feature that comes with these devices, in which they will pre-cache information from dictionaries and Wikipedia pages that people can view without having to switch out to a browser. It might be a relatively minor feature, easily lost amid other bells and whistles, but often minor convenience features like that can count for more than the flashier stuff.

Expectation Setting

I wonder just how many of the leaks that have come out about the new Amazon stuff in the last few days were intentional, meant to set expectations so Bezos could blow them away? After watching the liveblog coverage of the Amazon press event, it seems to me there was a lot of that going on, even during the show itself.

For instance, on Gizmodo’s liveblog, at the beginning of the show one of the correspondents breathlessly announced “Holy holy holy. Amazon is launching a $79 Kindle too!” The linked article at that point announced the Kindle would be $79. Then during the show a few minutes later, when Bezos introduced the new Kindle Touch and said it would be $99, the article mysteriously changed that price point back to $99. (I checked.) Then later in the show, when Bezos introduced the non-Touch Kindle, that was $79 after all, and the article got changed again!

In the end, after you strip away the price point goalpost movement and the theatrics, Amazon has still produced an impressive crop of new readers, and an impressive new tablet. If it can get people to swallow the advertising pill, Amazon’s new Kindles could explode across the market in a way that makes its previous inroads look tame.

B&N and Apple better have some impressive new tricks up their sleeves if they want to compete with this.


  1. Very bad news for B&N & Kobo. It is beginning to look like content only companies will struggle to get traction against the technology trinity of Amazon, Apple and Google.

    Best comment I’ve seen so far came from Benedict Evans on twitter:
    ‘The Kindle Fire is a much bigger problem for Google than Apple. It also leaves all the OEMs high and dry’

    Android is starting to resemble a mansion that Google built, only to be forced to live in a hovel next door as the ambitious neighbour moves in. It now has little choice but to enter the hardware tablet market in a big way once it has swallowed Motorala Mobility.

  2. Excellent summary.
    Two points to add:
    1- The existing Keyboard Kindle models are not cancelled. They are being sold side by side the new models.
    2- The new $79/109 model is *not* just a loss-leader intended to bait people before selling them the touch model. Rather it is a compelling product in its own right aimed at the high portability segment currently inhabitted solely by the Pocketbook 360+. At 4.5in wide it is narrower than the 360 and slightly wider than the cancelled Sony 350, both 5in models instead of 6in. Think of it as a Kindle mini. I’m sorely tempted. If it had 3g…

  3. Sure, the existing models aren’t canceled, just as the second-gen ones weren’t when the third-gen ones were introduced. But they’re being marked down. I’ll be posting a story about that shortly, in fact.

    And yes, the $79 reader is compelling in its own right, but I think it’s just as compelling for people to see that for $20 more they can get a touchscreen. It’s like what Apple was suggested to be doing with iPod Touch pricing. Some people will go for the lower-end, but some people will be convinced to tack on less than the cost of a decent steak dinner to get more features.

  4. Why is this bad news for B&N? The Nook STR is at the same price point as non-ad-supported Kindle Touch and uses the same screen. It also has physicals buttons, a great style, and supports ePub. The Kindle brings its own nice features to the table (I need to find out what this X-Ray thing is all about), but I wouldn’t say the new Kindle e-Ink models are a leap above the Nook line.

    The Amazon App store is a huge advantage for the Fire over the Nook Color, and the starting price is a bit lower (although refurbished Nook Colors can be had for $150). Again, it doesn’t seem that much better with similar screen specs and a plastic style. Where B&N really loses out is that the Nook is an e-Reader, while the Fire is a media player. If you want video, then the Nook Color is not it.

    That, and B&N needs to get wireless library content working. Adobe DE is stagnating, and it was never an ideal solution. I don’t think library content is widely used by most readers, but it is certainly an important consideration.

    If one of these guys introduce a feature to sync pages and bookmarks (and, if it weren’t for all the perceived copyright issues, the content itself) for personal content, that would be huge.

  5. I also forgot to mention the SD card on the Nook Color and Touch … a feature that, in addition to content I can swap around between devices. On the Nook Color, it additionally allows me to boot into “real” Android by dropping a card in and rebooting. That’s a pretty handy for watching NetFlix and HBO Go…

  6. For some of us the touch screen is a disadvantage. I like to put my reader in a waterproof bag and read in the pool and I don’t like fingerprints all over the screen. I think the $79 reader is targeted to a specific market that they didn’t want to lose to alternate platforms.

  7. I wouldn’t assume the Keyboard Kindle is absolutely being phased out.
    Maybe it will, maybe it won’t.
    There are a lot of people who prefer physical controls and even a bubble keyboard to an onscreen keyboard; not everybody has touchscreen fever. 😉
    What Amazon has the luxury of doing is keeping the Keyboard Kindle around to see how sales breakdown. If sales justify it, they can order up more or cancel it when current stock dries up.

    It’s like the “goalpost shift”: After introducing the KSO as wifi only, Amazon saw it was good for business so they extended to the 3g. Still good, maybe better. So they made KSO the default.

    The message here is that where some companies have to make do with one basic design, buttons or keyboard or touch, Amazon has enough volume to segment the product line and do all three. Let the buyers vote with their wallet. They can get a keyboard, a touchscreen , or neither and *still* end up with a Kindle. Their choice, just as the can choose WiFi or 3G, ads or no ads. And with 30 day, no question returns, buyers can experiment, too.

    My expectation is the bare K4 will thrive (never bet against “cheaper” ;)), keyboard kindle will survive, and kindle touch will do okay but not kill either.
    We’ll see soon enough how it plays out.

  8. I don’t see this as being bad news for anyone.

    The Tablet/eReader market is a seriously fast-growing one and everyone producing a good product will win.

    I am certain that Apple never ever imagined that their competition would fail so miserably in competing with them for so long. They haven’t even launched an iPad3 because there is no need to. Android as an OS and their competitors lack of innovation and investment in OS’s has held back competition for a long long time.

    The Fire, just another Android product, looks very much to me to be a low power small tablet that will appeal to the middle market buyer with limited ambition and needs.

    Basic eReaders like the older Kindles do have a massive global market waiting for them, as access to eBooks expands in the coming years.

    Amazon’s decision to take such a big hit on every one sold is a huge gamble imho. It doesn’t seem to be tied into the Amazon web site for purchases, afaik. I would be a nervous investor in Kindle in the coming year or two.

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