Kindle 2 – BooksAhead: Mitch Ratcliffe’s Notes on Digital Reading

Pirated e-books now readable on pirated e-reader!

founder-intl-ebook-reader.preview From China comes the Kindle 2 clone, a $210 rip-off of Amazon’s hot-selling e-reader device that will ship in China latter this year or early in 2010. Made by the Peking University Founder Group Corp, which changed a few features of the Kindle 2, using “Page Up” and “Page Down”—in English—to label navigation buttons (when cadging designs, it is always a good idea to look to the IBM PC keyboard for UI inspiration), for example. And the keys are a slightly different shape than those on the Kindle. The device’s name was not disclosed, apparently, though the pictured unit is labeled “WeFound.”

It will likely display e-books in a proprietary format developed by the Peking University Founder Group, called “Apabi.” Hopefully, the company will respect the rights of authors in making e-books available in the format and not simply copy a file and call it their own.

It has a roughly 6-inch E-Ink display (the company is reported to have described the size as “unclear”) and uses some form of wireless cellular data to transfer purchases to the device, according to Nikkei Electronics Asia. The reporter could only find out that a “SIM card” is required, so it is hard to say what the connectivity actually is, though readers will purportedly be able to make purchases and download e-books to the device itself, just like Kindle.

Kindle 2 for $299

At its release, Kindle 2 was estimated by iSuppli to cost $185.49 to manufacture. Amazon’s top-line margin was $173 at the Kindle 2’s $359.00 list price. Today, the device has been repriced to $299, breaking a price barrier, $300, that’s still too high for many people. The change is significant, because it will force already profit-challenged competitors to price their hardware lower. The move could strangle some competitors before they find traction with readers.

The price of components is likely falling, because of the rising demand for E-Ink displays and growing volume of Novatel EV-DO modules sold for Kindle and other devices. For the most part, though, this is simply an offensive move against “less expensive” readers, such as the $250 Cool-ER and Borders £189 ($314) UK’s Elonex reader.

Amazon is in an excellent position to put price pressure on hardware competitors, reducing the competition it faces in e-book sales from formats the can be read on these devices. It can sacrifice hardware margin to drive content revenues. The danger, from publishers perspective, is the control Amazon seeks to exert over e-book pricing, which Bloomberg reports is increasing.

Unless Kindle opens up to other formats, I think the combined market power Amazon wields will backfire on Jeff Bezos. The publishing industry could shift their support to an alternative e-book device (Plastic Logic, for example) or channel (Scribd or Apple’s AppStore) in a stand against Amazon’s requirement that all books be priced at less than $12.50.

Of course, pricing is a powerful market lever, but it’s not the only factor in the creation and promotion of creative and intellectual works. At some point, quality and features—extending the book beyond the replication of a page in digital form—will become critical factors in the success of a work, and that will shift the entire market’s attention away from the cost of e-reader hardware.