Free Kindle anyone? How Amazon can dominate ebooks

Everyone says that the Kindle and the Nook are dead because of the iPad’s iBooks. Not so. There is a way for the Kindle/Nook to win the ebook market from Apple and basically turn Apple into a non-competitor.

First, we must look into how Amazon and Apple make their money. Amazon makes a profit from the sale of each item (and in this case: books). Apple on the other hand makes very little profit off of iTunes or the App store. These exist solely to complement their hardware products such as the iPods, iPad and iPhone which they sell at humongous margins.

Now, the regular consumer is probably going to go get an iPad cause of all the additional functionality (movies, game, the INTERNET!!!). But most people who own a Kindle still use it cause Amazon has a much better selection of books and better prices.

So, here is what Amazon needs to do to dominate the ebook market – Give the kindle away for free. Ya, you read that right. Let’s see, the 3G Kindle retails for $189. Keep the price the same. Even a freshmen Economics major will tell you that giving something away for free means you are kinda gonna be broke soon. Sell the kindle for $189 and everyone who buys the kindle gets $189 to buy books from the Kindle store.

Now, you are giving all those avid readers out there a really big incentive to buy the Kindle. They all want one. And once they have it in hand, they aren’t gonna stop buying books. Amazon knows this already. They call it Amazon Prime. And guess what, they started giving it away for free this summer (to college students).