July 21, 2010 – Amazon Conquers All With Kindle

Featured Trades: (AMZN), (KINDLE)

 


1)  Amazon Conquers All With the Kindle. I knew Jeff Bezos back in the eighties as this always cheerful quant in Morgan Stanley’s bond department who had this incredibly annoying laugh.  He blew us all away when he took off on his own, used innovative technology to discover the immense profits to be found in long tale markets, and built Amazon (AMZN) into the world’s largest book seller, practically overnight. Now I learn that the alpha male of internet distribution is selling more Kindle books than old fashioned hard copies, at a ratio of 1.8 to one. I expected this, but not for another five years. Once again, the rate of technological progress has caught me flat footed. This development is the result of a brilliant strategic move by Bezos to slash prices of his Kindle eReader from $259 to $189, thus, under-pricing Steve Jobs’ cheapest competing IPad by a stunning 62% (click here for Apple’s Next Stop: $1,000). Kindle books are vastly cheaper than hard copies that range from $20-$40, carry no shipping cost, and are delivered instantly. Some 81% of Amazon’s Kindle book offerings cost less than $9.99, and 1.8 million pre 1923 published books are free.  Kindle books are even price competitive with paperbacks. Some analysts believe that the 3 million new IPad owners are buying more ebooks from Amazon than Apple, whose offerings are pricier. I will miss the musty smell of an old, hand tooled, leather bound tome almost as much as my wooden slide rule, six track tapes, and manual adding machines. In order to get the new price for a Kindle at Amazon, please click here.

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Amazon.com, Inc.