With Kindle, why is Amazon blind to Wi-Fi?

Amazon's love affair with its Whispernet means the company has overpriced its big Kindle DX--to pay for wireless service--and may leave growth on the table.

This was originally posted at ZDNet's Between the Lines.

Amazon has unveiled its much-hyped Kindle DX , an e-book with a 9.7-inch screen designed to raise a ruckus in the textbook market, but also has delivered a $489 curve ball that seriously alters the return on investment calculation for academia.

On the surface, the argument for the Kindle DX (Techmeme) in academia holds somewhat but that price tag makes the case much harder for your average student. Amazon is asking students to learn a little about total cost of ownership over three years before they pick up a book. What is this? Enterprise software?

Jeff Bezos and Kindle
Amazon's Jeff Bezos introduces the Kindle DX -- bigger, and more expensive. Sarah Tew/CNET

The Kindle DX runs you $489 as an upfront investment, and the average student spends $488 on new and used course materials a year. In a nutshell, Amazon is asking the average student to fork over more money for the Kindle and then buy the textbooks too.

Add it up and the average student is losing money on the Kindle DX in that first year. Let's say Amazon can halve your textbook costs to $250 a year--you'll still be shelling out nearly $750 in year one.

Over two years, a student will still be behind on the Kindle DX return. Going the paper route on textbooks yields a two-year cost of $976. But the Kindle still runs you $13 more over two years.

In year three, that student will start saving money via the Kindle ($1,464 on paper textbooks vs. $1,239). The big caveat here: I didn't include the used-book market and assumed that the Kindle DX still functions well. Another big assumption: All the textbooks you'll need will be available on the Kindle (not likely). If Amazon can cut a student's textbook costs to $100 a year, the case for the Kindle DX would obviously look better.

In a nutshell, Amazon is trying to make a four-year total cost of ownership case to an audience that just doesn't have the attention span. So-called "super seniors," or those on the five and six year college plans, may find some return.

As Andrew Nusca noted:

Books at college can run up to $400 per semester. The Kindle DX is intended to last longer than that, of course, but this is under the assumption that the student won't break or damage the device quickly and all a prospective student's material is available through Amazon's service.

What happens to the return on your Kindle DX if it gets damaged during a close beer pong match?

So what caused Amazon's big disconnect? Simply put, it is Amazon's love affair with Whispernet, its 3G download network.

In its statement about the Kindle DX, Amazon boasts:

Just like Kindle, Kindle DX customers automatically take advantage of Amazon Whispernet to wirelessly shop the Kindle Store, download or receive new content in less than 60 seconds, and read from their library--all without a PC, Wi-Fi hot spot, or syncing. Amazon still pays for the wireless connectivity on Kindle DX so books can be downloaded in less than 60 seconds--with no monthly fees, data plans, or service contracts.

Who cares? The Kindle DX is tailored for students that happen to have Wi-Fi in every campus corner. This miscalculation means Amazon has overpriced its big Kindle--to pay for wireless service--and may leave growth on the table. A cheaper Kindle DX that only uses Wi-Fi is the student ticket. Amazon missed the mark.

Consider this chart detailing where your textbook dollar went. Now you can include costs for Whispernet.

Textbook costs
National Association of College Stores, via Larry Dignan/ZDNet

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About the author

    Larry Dignan is editor in chief of ZDNet and editorial director of CNET's TechRepublic. He has covered the technology and financial-services industries since 1995.

     

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