Kindle opens new chapter, goes global

Online retailer Amazon went some way towards validating the Kindle e-book reader’s nascent business model this week, when it announced plans to launch the device in 100 countries outside the US.

The international version of the Kindle retails for $279 and will be available from October 19. The retailer has presumably wrapped up deals with a number of wireless operators worldwide in order to provide connectivity for the device. The overseas device will piggyback on AT&T’s network in the US, as it needs GSM and WCDMA 3G connectivity to operate internationally.

In the US, the only market the device is available in to date, Amazon has a deal with Sprint to transfer e-books via the carriers 1x EV-DO 3G network. the price of the device has been cut to $259, while bestsellers and new e-books retail for $9.99 although data transfer is included in the price making the Kindle a subscription free business model. And that is what makes the model so interesting – the fact that the mobile network enabling over-the-air downloads to the device is essentially transparent to the user, because the vendor of the device and e-book is picking up the cost of the mobile subscription.

Moreover, the push into new markets validates Amazon’s business model, with some Wall Street analysts, including Citigroup’s Mahaney and Stifel Nicolaus’ Devitt, recently predicting that the Kindle will quickly grow into a $1bn business. As Informa analyst Tammy Parker notes, that is a huge vote of confidence for a consumer-electronics device and related service and, although it’s far from perfect, the Kindle is showing that a wireless product can be a revenue generator even if the end-user is not a direct subscriber to the mobile network that serves the device. “It opens the door to advertising-supported mobile services and many more business models under which customers can enjoy the benefits of mobile connectivity without having to pay a subscription fee,” Parker said.