Amazon’s Kindle 2: Money Saver? Cool Gadget?

As regular readers of Well Worth It know, one of my favorite publications is Forbes Magazine.  There are interesting nuggets in almost every issue, and Rich Karlgaard’s Digital Rules column is typically one of my favorites.  His column in the June 22 issue caught my eye.  In one of the sections, Karlgaard discusses three “joy-giving” products.  One of them is Amazon’s Kindle 2.  When the original Kindle came out, it seemed, well, interesting.  But it also looked clunky, inconvenient, and reviews were suspect.  The Kindle 2, by contrast, looks sleek and has gotten great reviews.  EBook sales are way up, and sales of the Kindle 2 are brisk.  I’m not much of a “gadget guy”, but even I think it looks pretty neat.

All that being said, I won’t be buying one (at least not at its current $359 price) because I doubt that I’d get value from it.  I love to read, but I’m also very cheap and I just don’t think that it would be worth it at $359.  So it was interesting to me that Karlgaard gave a brief description of the Kindle 2, then followed it with this: “Kindle 2 costs $359 but in the long run saves you money.  I recently bought and read on my Kindle 2 First Family, a thriller by David Baldacci.  The Kindle version costs $9.99.  The hardcover version is $16.79.  So you see, the Kindle 2 pays for itself within 50 books or so.”  He goes on to cite another less tangible value – the ability to have your library at hand…can’t disagree with him there.  But for purposes of Well Worth It, it was Karlgaard’s comment that it “pays for itself” and the math behind it that caught my eye. 

Karlgaard’s estimates that the Kindle 2 pays for itself after 50 books.  Of course, his assumption is keying off the math that people are paying $16.79 for books on a regular basis, and that they’ll save $6.80 per book.   It got me wondering whether Karlgaard is the rule or the exception when it comes to how much people spend on books.  After all, if Karlgaard buys a hardback book per week (at discounted price of $16.79), then the Kindle 2 pays for itself in a year.  A book every two weeks and it takes two years.  But that also assumes that he’s spending the $16.79 for every book.  The problem with the math is that there are also readers like me.  I love used book stores.  I visit the library.  I’ll buy from sellers on Amazon Marketplace.  My point is I almost NEVER buy a book at full price.  I can’t remember the last time I spent $16.79 for a book.  And then, of course, there are plenty of people who don’t really read much at all anyway.  So the question in my mind is how much do most people spend on books per year?  Would the Kindle 2 really pay for itself?  Do most people really spend that much in books?

I found this site on which the aggregated research looked fairly solid.  Midway down the page, it identifies North American book-only sales at major book retailers at $13.7 billion.  Add in non-book sales (questionable for our purposes) and they come to $16.9 billion.  Then add in book sales from other retailers (including Amazon.com) and including textbooks and it adds another $10 billion.  So if we take the biggest possible number, we get to $26.9 billion in annual book sales.  There are roughly 300 million individuals in the U.S.  If we use round numbers, that’s $90 in book purchases per person.  Clearly some people will spend more (Karlgaard) while others will spend less.  But if that’s the average, and if we use Karlgaard’s $16.79 as a benchmark, people are buying somewhere in the neighborhood of 5+ books per year.  At that rate, and at $6.80 in savings per Kindle 2 book, it would take 10 years for the Kindle 2 to pay for itself.   “Pays for itself”?  Undoubtedly true for some people.  But for most of the population, it seems very unlikely.  So is the Kindle 2 “well worth it” for most people in terms of paying for itself?  Unlikely at best. 

But is it a blockbuster product, or as Karlgaard calls it, a “joy-giving” product?  Looks like a yes on both counts.  Is it finally the gadget that fulfills the decade-long promise of eBooks?  I think it may be.  Might it turn the dynamics of the publishing business upside down?  I think so.  Look at this chart: after eBook sales crept up by mere hundreds of thousands, or a million, or two million per quarter for seven years, in the first quarter of 2009, eBooks sales jumped by $9 million over Q4 ’08.  Kindle 2 became available in February ’09.  Coincidence?  I think not.  It’s still a blip on the overall radar in terms of total book sales, but this feels like a revolution coming.  At $359, I’m hardpressed to view it as a money saver for most folks.  But it sure is a way cool device.  And as the price falls, it will go much more mainstream.  But even today for book lovers who want books immediately when they come out, yep, this looks like a winner AND a money saver.