Amazon.com sells its Kindle books below costs, at a flat $9.99 even though the publishers charge amazon.com the same price for their hardcover books. While the devices are still not priced for the mass market, probably due to high costs, amazon.com is trying to encourage higher adoption for its eBooks. It is my theory that Amazon may not want to be in the Kindle business. There are several reasons:
- It is a low margin business except for Apple which found a way to sell at premium price
- The customers are fickle minded and hard to satisfy with designs, many a hits like Palm and iPaq have lost their traction now.
- The current design, despite being a very well crafted one, is still rudimentary. There are many possibilities. This is just a start. This is a carefully chosen strategy by amazon.com, no one know how the most popular eBook reader is going to look like.
- amazon.com is subsidizing the Kindle books for two reasons. One to reduce total cost of ownership of Kindle devices to customers, second to increase the footprint for the Kindle format.