Will the Ad-Supported Kindle Sell? Probably Not
Amazon announced recently a new version of their popular e-reader, the Kindle. This new version will be $25 less than the current version putting it at $114. There's a catch though: this cheaper Kindle will display advertisements on the home screen and in screensavers. May an angel come down and bestow many blessings upon Amazon for displaying advertisements that will not interrupt the reading experience. But at only $25 less than a Kindle 100% free of ads, is this new device going to sell?
Well, probably not. $25 less is beneficial to people on a budget, but the only problem with the price is... well... the price. MG Siegler of TechCrunch wrote an excellent article about how the killer price point for an ad-supported Kindle should be $99 and I couldn't agree more:
"Imagine a Kindle for $99. There would be a frenzy. Amazon would sell so many of them.Even though the $15 price difference may not seem like much on paper, the psychological importance of losing that third digit cannot be downplayed. It’s the very reason why many items are often sold for $9.99 instead of $10.00. And $0.99 instead of $1.00."
Compared to $114, $99 seems like such a tiny number. It's perfect. There's no question that Amazon would increase the sales dramatically if they dropped the ad-supported Kindle down to $114.
Amazon could definitely do it too. Let's look at the facts. A Kindle without ads is $139. A Kindle with ads is $114. This means that the ads will account for the $25 missing on the ad-supported version. Does anyone really believe Amazon is only going to make $25 off of the ads on each Kindle? Even if not by much, they are still going to make more than that during the lifespan of a particular device.
There is one last point to make. As I stated above, $25 is beneficial to people on a budget--this is true. But anyone willing to shell out $114 on an e-reading device probably has another $25 to spare, especially if it means avoiding advertisements even if they aren't disruptive. People don't like ads.
So who is going to buy this? Students on a major budget. Many students right now are probably trying to make the choice between an iPad or an e-reader. With an e-reader starting at $114 and an iPad starting at $499, well, that decision just got a little easier to make especially if they already own a netbook or MacBook Air. For the average consumer that has the extra $25 to spend, why not?