Why The Kindle E-Book Reader Is Such A Perfect Fit For The Amazon Business Model

Amazon’s Kindle book reader product for Amazon. Bearing in mind that Amazon has such a strong association with both electronics and books the Kindle fits in really well with Amazon’s business model.

During the course of 2009, e-book readers as a whole, and the Kindle in particular, became the cool “must have” personal electronics devices of the year. It looks like sales will keep growing at an almost exponential rate throughout 2010. The market is still very new and is changing and developing rapidly.

Currently, the Kindle is the market leader by a long way. It currently has a 60% share of the U.S. e-book reader market. Sony takes the second place position with a smaller but nonetheless creditable 35% market share. There are a whole host of competing manufacturers who have now developed e-book readers of their own in order to get a slice of the pie in what looks like being a large and lucrative market.

It’s a compliment to Amazon, albeit a slightly back-handed one, that virtually every new e-book reader that shows any promise is immediately given the title of the “Kindle Killer”. However, considering the fact that the Kindle is now Amazon’s number one selling item, you can be sure that Amazon will be fighting tooth and nail to hang on to the lead position.
Amazon has responded to growing competition by reducing the price of the Kindle 2.0 from its $ 359 launch level to $ 259. The price of the Kindle DX remains, for the moment at least, unchanged. There have also been firmware updates, including prolonged battery life and the addition of pdf support for the Kindle 2.0, among others.

Both the Kindle 2.0 and the DX are now on sale in over 100 countries around the world. In reality, Amazon could probably sell Kindles as fast as they can make them just in the USA – but developing a global Kindle presence is a wise long term strategy for Amazon.

In addition to tweaking the Kindle reader itself and expanding into new markets, Amazon continues to increase the selection of Kindle books available on its Kindle store. Right now there are over 400,000 titles available – and this number is being added to at an average rate of over 500 a day.

So, whilst there are a huge number of manufacturers frantically developing e-book readers in order to break into the market, Amazon is probably quietly confident. Rather than simply focusing on the development of the hardware itself, Amazon is advancing on a broad front. They are developing the existing Kindle, adjusting prices, expanding their market, increasing the choice of available books and generally capitalising on their dominant market position. When they decide to launch the Kindle 4 – sometime this year in all probability – they are going to consolidate their leadership position even more.