Business Insider this week asked a question that raised a bit of ire (or at least should have): "When will Kindles be free?" Vexing for sure to hardware folk that could not imagine giving away such an elegant device; if anything, it should command a premium. Software folk are also put off, but they could care less whether the hardware gets a premium. The value is in the application, not the "machinery" that enables it.
Into this strange dichotomy emerged a third, disruptive entity; one born from the software/applications camp but quite aware of the real costs of hardware. These offspring were the video service providers who brand, enable, deliver, manage, and service a hell of a lot of hardware and software in the name of provisioning a specific service. In this model, the consumer pays almost nothing for the hardware and software - at least not upfront, instead billed as a small incremental monthly fee.
While effective, this model exposed its own fault. For consumers, hardware and software became but means to an end. To PayTV operators, they are simply the cost of doing business. It was not until the early 2000s that other service providers (in this case, mobile phone operators) clued into the logic of the PayTV strategy: do not let the costs of hardware and software stand in the way of service revenue, especially as spending a small fortune to roll out 3G and 4G networks. Instead, figure out a way to put advanced h/s in the hands of your users in such a way that they actually "fund" their placement.
Now a retailer - in this case, Amazon - is using this strategy to shake up the market. Is Amazon a "traditional service provider"? No. In fact, it is not considered a "traditional retailer." It is, however, an Internet powerhouse with tons of cash on hand and the ability to sell a whole lot of books, music, and video. As well, Amazon has launched its own branded physical platform to help spur the use of digital versions of said media (i.e., Kindle). Now it invades the micro-pad space with Fire, while introducing more powerful and less expensive Kindles.
So what is Amazon thinking? Simply, this is just the latest iteration of the razor/razor blade strategy: I'll give you the razor (the Kindle) if you "promise" to keep buying the razor blades (the electronic media). For those that do not want to buy the razor, it matters little: most razors are compatible with Amazon razorblades, meaning the razorblades fit just about any razor, widening Amazon's appeal beyond its own hardware and (hopefully) expanding its retail presence (which is the ultimate goal).
When will the Kindle be free? Not soon enough, but all good things come in time.
ShareThis