If you like books as much as I do, perhaps you've stumbled upon the news that Amazon.com
Reading into the new Kindle
The U.S. e-book market is expected to grow threefold to $2.8 billion by 2015. With competition coming on strong, however, Amazon plans to lower the price point on its reading device and subsidize the new Kindle with the revenue that it generates from the ads it places in the device. The new Kindle will start shipping May 3 and will be available at major retailers Best Buy
I think this will be a margin-boosting endeavor for Amazon. First, the ads won't annoyingly pop up just when your hero is about to defuse a nuclear bomb. They'll appear as screen savers and as a thin band at the bottom of your home screen. That's definitely a small price to pay for a significantly cheaper device.
And consider some of the early examples of the advertising: $10 for a $20 Amazon gift card, and $6 for six audio books that normally cost $68.
You want this already, don't you? Well, many of us do, and that means Amazon gets to hear the familiar "ka-ching!" at the cash register. Even better, the price on the ad-supported Kindle might come down even more later on, as advertising gains momentum.
The big boys
Other e-book readers haven't gained as much traction as the Kindle. Competitors Sony
But like the plot of a Stephen King novel, in the dark lurks an ominous underdog: the iPad.
But does Apple's
With the Kindle set to fire up the e-book reader market, Amazon is likely to continue getting a boost to its bottom line. The dropping price is bound to move the device into the hands of those on tight budgets. But the ultimate benefit for Amazon is that the Kindle can source its distribution channels right on the Amazon website. I see a major boost in sales because of this advantage.
With all these roads leading to profit, Amazon's e-book reader and the market it commands are definitely at their kindling point.
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Fool contributor Arunava De doesn't hold shares of any of the companies mentioned in the article. Best Buy is a Motley Fool Inside Value selection. Apple, Amazon.com, and Best Buy are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a bull call spread position on Apple. The Fool owns shares of Apple and Best Buy. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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