Back in June of 2010, CNBC commentator Dennis Kneale proposed something that might have seemed farfetched at the time: Amazon should give away the Kindle for free.
Flashback to that time period, when the iPad had been released only months earlier and was widely being hailed as a "Kindle-killer". The Kindle was suddenly no longer hip with its primitive looking black and white display and no touch capability. Even the Barnes & Noble nook debuted with some touch functions and with limited color (on the lower browse screen).
Kneale's statement was in response to the populist opinion of the time that the Kindle was on its way out in favor of the superior experience provided by the iPad. In other words, Amazon would have to give away the Kindle for free in order for them to save the product. While it's true the iPad provides a much wider array of functionality, the Kindle is far from dead and, in fact, is now widely considered a far better device for reading than the iPad.
Still, Kneale's proposal doesn't seem all that farfetched, especially in light of some recent happenings. The first and most significant is Amazon offering free TV and movie streaming to Amazon Prime members. Amazon Prime started as a premium, member-oriented service that offered free 2 day shipping at a cost of $79 annually. Suddenly Amazon Prime is much more than just a free 2 day shipping gimmick. The potential is huge.
Let's take a quick step back to June, 2009. John Walkenbach of the J-Walk Blog posted an interesting chart showing a linear decrease in the price of the Kindle. After Kneale made his "free Kindle" comment one year later, Walkenbach posted again, updating his chart with the then latest Kindle price cut. Here it is for reference:
Walkenbach predicts that at this rate the Kindle "will be free in the second half of 2011". This sounded ridiculous at first. Sure, the Kindle is at best a break-even product. Possibly even a loss-leader, with Amazon making most of its profit from the sale of eBooks. Considering the cost to manufacture the Kindle 2, how in the world could they ever give it away and still make money? This is where Amazon Prime comes in.
Imagine Amazon charging the same $79/year (or more, most likely) for free 2 day shipping and free TV/movie streaming whilst topping it off with a free Kindle. I'd foresee a time commitment similar to a cell phone plan or a commitment to purchase a certain number of eBooks/month, sort of like a Book of the Month club. This would be nothing for an avid reader, most Kindle owners fitting into that category quite nicely I would think.
Suddenly the whole notion of a free Kindle for all doesn't seem so farfetched. Bezos himself when queried about the possibility by The Technium said,
In August, 2010 I had the chance to point it out to Jeff Bezos, CEO of Amazon. He merely smiled and said, "Oh, you noticed that!" And then smiled again.
Bezos is a smart guy. It wouldn't surprise me at all if this wasn't his master plan all along.
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