The Kindle Is So Hot, It's on Fire Sale

Is there money to be made in selling $400 paperweights?

"In five and a half hours, we were sold out of our initial inventory," (Nasdaq: AMZN  ) CEO Jeff Bezos said yesterday on FOX Business Network's America's Nightly Scorecard show, suggesting that the company's Kindle electronic reader is a success.

It's true. Orders placed after that time period have been tagged with a Nov. 29, 2007, shipping date. However, in a move that a cynic like me has to interpret as desperate, the website is still devoting the lion's share of its landing page to pitching the $399 device.

Funny, isn't it? Amazon is gearing up for the start of the telltale holiday shopping season and it's promoting a product that has been out of stock for nearly a day? That is so unlike the country's leading e-tailer. The landing page is usually earmarked for an assortment of hot-selling items, and Amazon is giving up that precious chunk of real estate to a somewhat endearing letter by Bezos detailing how the Kindle will make bookworm purists happy.

Something's not right here. Was the company's "initial inventory" intentionally meager? If it sold out in less than six hours, why is the next batch holding up so well through the next 18-20 hours despite the full-court promotional press?

Keep in mind that those brown Microsoft (Nasdaq: MSFT  ) Zunes sold briskly at $250 last year when they first hit the market. Amazon is now clearing them out at $90 a pop. The first batch of Sony (NYSE: SNE  ) PS3s also flew off the shelves last year. A few price cuts -- and hardware upgrades -- later, they are readily available.

Sorry, Bezos. No matter how hard Amazon tries to tug at the country's heartstrings, the Kindle won't be this year's Tickle Me Elmo. You can't orchestrate demand for a product just by holding back on the supply.

And what's with the name, anyway?

A Kindle by any other name is not as cheap
"We are hoping that this is the beginning of something," Bezos told FOX Business Network last night, "that we're starting a kind of fire."

Nice one. You'll never appeal to diehard readers with book-burning imagery. You'll also never appeal to research hounds when the only website that's accessible on the Kindle -- other than the Amazon digital-book storefront itself -- is the ceremoniously unreliable Wikipedia. Really, now. Put a little research into your research next time.

In short, I'm calling your bluff, Amazon. I smell a small springtime price cut, and I predict that I can wait to get a Kindle for $199 after an even steeper price cut before next year's holiday season. Heck, Apple's (Nasdaq: AAPL  ) iPhones were selling well, and it still slashed prices by $200 just a couple of months after it rolled them out. You may have priced the Kindle optimistically high, but I think you realize that you will ultimately have to subsidize the hardware to turn the spigot that is holding back the digitally delivered gusher. If you don't believe me, check with your Unbox partner, TiVo (Nasdaq: TIVO  ) . 

I may as well go further out on the limb
I also predict that the price of Kindle books -- especially those that are already available in paperback for a pittance -- will be slashed significantly next year. Book publishers stand to profit from the inventory-free platform, which is free of returns for them to stomach; they won't make the same stupid mistakes that the greedy record labels have made in the past.

Will the Kindle still be a failure at more mainstream-palatable price points? Probably not, but I predict that evolution will save your hide, Amazon.

That EVDO connection through Sprint Nextel (NYSE: S  ) will have importance well beyond its function as a way to serve up digital book downloads, iffy Wikipedia entries, and the occasional text-messaging email. Stock quotes? Sports scores? Breaking headline news? There will be more to the Kindle than the current choices of print publications. How about learning from Nintendo's (OTC BB: NTDOY.PK) DS or the iPhone and going with a touchscreen on the next version? If you're going to appeal to those immersed in print, offering up crossword puzzles, word games, and Sudoku will be easier that way.     

All of this won't happen overnight, though. It's going to take patience, humility, and a fire sale or two to make it happen.

I'm sure that your marketing department is ablaze -- pun intended -- with material, but try these new slogans on for size:

  • Why rekindle your romance when you can read Kindle your romance novel?
  • The Kindle is so hot, it's on fire sale!
  • Kindle 2.0: Next-of-Kindle

Jeff be nimble. Jeff be quick. Jeff jump over the Kindle schtick.

A look at the best of Bezos:

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Comments from our Foolish Readers

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  • Report this Comment On October 27, 2008, at 11:27 AM, jimbo1776 wrote:

    Prices haven't exactly plummeted, have they.

    The unit is priced at $359, and most books look to be $10.

  • Report this Comment On May 31, 2009, at 10:39 PM, jwest94 wrote:

    Yeah good call there buddy. Wanna come out and eat your crow now or later???

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