Fully Equipped: Why people won't pay for e-books on the iPhone

For what Houghton Mifflin is charging for the iPhone version of Philip Roth's latest book it should be called Chutzpah.

(Credit: ScrollMotion)

I'm not sure why, but some analysts seemed a little surprised about Amazon's Wednesday announcement that it would begin offering Amazon e-books on the iPhone and iPod Touch and move beyond the confines of the Kindle.

First off, the company had effectively confirmed off-Kindle reading access in February, so it shouldn't have surprised anyone. Second, anybody who knows anything knows it's all about the razor blades (the e-books) and not the razor (the Kindle).

Like the game console world, the real profits aren't in the hardware but the software. Yes, the Kindle 2's hot now, but to reach a larger audience Amazon will eventually have to lower the price for the reader and shrink its margins. By contrast, the margins on e-books should remain pretty beefy and you can imagine all the cost savings involved when you don't have to deal with warehousing and shipping physical books. It's a great business model.

But there's just one problem. While Amazon might be able to find a market for $9.99 books on the Kindle, the iPhone/iPod Touch world is a very different place. Very few people are willing to pay that kind of money for any sort of application, let alone an e-book.

In the Apple app world, the sweet spot for selling anything seems to be less than $4.99--and more like $.99 or $1.99. Sure, you're going to get some best-selling series with almost cult-like followings (read: "Harry Potter" and "Twilight"), but the vast majority of books being "sold" on the iPhone are very cheap--and rightly so because the overall iPhone reading experience doesn't justify spending $10 (or even $5) on an e-book. (See Nicole Lee's in-depth piece on comparing the Kindle 2 reading experience with that of the iPhone's.)

Read the full column.

[lacykemp]

Do you think that Amazon would consider lowering the price on books for the iPhone? Because, as you said, I would likely not pay more than 5 bucks for a book, like I won't for most apps. Amazon has a chance to really reach the masses with this. I would hope they'd come down in price a bit.

Luckily you aren't buying a book for your iPhone using the Kindle iPhone App - you are buying Kindle content for any Kindle device (of which there are now four - Kindle, Kindle 2, iPhone and iPod Touch). For most people, they'll get free samples on the iPhone and maybe read a few pages when stuck in a line and not carrying their Kindle. Then resume reading on their Kindle later on. Essentially, Kindle users can now read on their iPhone for free, while non-Kindle users have access to Kindle content at Amazon prices (which are often much, much lower than prices at other ebookstores).

I've posted a quick overview of the limitations and one added feature of the Kindle Iphone App on my blog:

http://booksontheknob.blogspot.com/2009/03/kindle-marries-iphone.html

Along with pictures of all three Kindle devices, open to the same book, comparing fonts and graphics between them:

http://booksontheknob.blogspot.com/2009/03/kindle-iphone-pictures.html

[donmcdonald--2008]

Here is the real question:

Would someone with an iPhone, who was planning to read a particular book, rather pay $25 for the bulky, POB (plain old book) version or $10 for the Kindle version? Give me the free extra book and half I can get for my iPhone anyday!