Last week I reported on Amazon announcing their Amazon Prime members would have free access to their Amazon Instant Video service but somehow I missed a story that had come out a week or two before that.
TECHCRUNCH reported a while back that they had a source claiming that Amazon wants to give a free Kindle to all Prime members.
A lot of people have taken a crack at this story for being fanciful but at the same time there have been many, many people who have called for Amazon to do just this to lock people into the Kindle and skyrocket sales of e-books.
Right now the price point on the Amazon Kindle is $139 for the WiFi unit and $189 for the 3G+WiFi edition and a lot of people feel that Amazon is actually losing money on the hardware makes this give away story harder to believe.
At the WSJ Blog DIGITS, Dan Gallagher said:
… it looks likely that Amazon makes little to no money on the device itself. A study by market-research firm iSuppli last year estimated the total cost of materials for the 3G Kindle at $155.56 – about $33 less than the $189 selling price for the device. Since iSuppli’s estimates do not include the cost of software, licensing, royalties, manufacturing expenses (Amazon outsources production of the Kindle) and a cut for the wireless carriers, analysts suspect Amazon likely sells the Kindle at a slight loss.
Selling the unit at a loss is one thing but giving it away would be a VERY bold move. Would it work? I think it could help but I doubt giving every Prime member who pays $79 for free shipping and streaming TV and Movie access a $200 ebook reader would add up VERY quickly to the bottom line.
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