Tuesday, May 06, 2008

Amazon Kindle e-book reader return over investment

I've fallen in love with the Amazon Kindle e-book reader the first time I heard of it, several months ago. I believe it hadn't even been available for ordering yet. But alas, I live in Brazil so I wouldn't enjoy one of its best features: downloading books wirelessly and instantly without paying for bandwidth or messing with wireless providers. All of that at any time of day or night and at any place in the country (no WiFi required).

Today I just came across a great Kindle review and noticed that the author did mention how cheap Kindle e-books can be compared to dead-tree versions of it, but he didn't do a back-of-the-envelope return over investment calculation for it:

A brand new Kindle costs you around $410. Hardcover book releases cost on average $27 (shipping included), which you can get on Kindle for $10. So for each new book release you buy on Kindle you save $17. But wait, you're not going to buy only new releases. Let's say you buy a few backcatalog items, which sell at Kindle for $6. So let's mix those two together and say you save on average $19 for every book you buy.

That means Kindle pays itself after 22 books. Which for many book lovers means 2 years or less of usage. If you consider all the added value of not carrying heavy books around and keeping many books on its internal memory available for you to reference or skim at your convenience, then that return comes even earlier!

Side-note 1: Actually, maybe this is exactly the math Mr Bezos wants us to do: he doesn't really want us to buy Kindles, but to buy these 22 e-books to make Kindle pay itself. Profit margins for paper books are probably ridiculously low (compared to e-books) so he wants to get away from it as soon as possible.

Side-note 2: If, like me, you're outside the USA, here are some reasons why it may take some time for it to become more widely available:

It uses Sprint to download books, which is only available in the US. This is one of the main features of the Kindle over all other ebook readers, and it is truly a wonderful feature.

Another answer is that many of the publishers whose works they are offering do not permit Kindle to sell them abroad, as they often have contracts with vendors in those other countries who do not want to see competition coming from the US.

A third answer is payment. It is true that you can use a credit card issued in another country for payment of a US bill, but it imposes some overhead on their operations, which being brand new most likely doesn't have full support for such things yet, including the problems of currency conversions.

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