Amazon Announces Ad-Supported Kindle

Amazon has announced that they will now start selling an ad-supported Kindle. No, it's not free (even if the price trend is edging towards free Kindles), and no it's not $99. Instead, the Kindle (with Special Offers & Sponsored Screensavers, as Amazon calls it) will be available for $114, which is $25 off the current Kindle WiFi price.

The ads are (thankfully) not displayed while you're reading, but rather only on the home screen and screen saver / lock screen. Amazon's stance is that you receive offers exclusive to your Kindle, such as a $20 Amazon gift card for $10, 6 Audible (owned by Amazon) books for $6, or an Amazon MP3 album for $1. Of course, these deals are great, however the issue will be whether other advertisers (i.e. not Amazon) follow this precedent and do more than just throw up a banner or full page screen saver advertisement.

Interestingly, Amazon has also created a Kindle application called AdMash, where users can help pick future screen saver ads. Not only is this sort of input and feedback from consumers incredibly useful, it is also quite valuable. If Amazon can build a feedback base strong enough, they can market it to advertisers as a reason to join their system. In addition, users can indicate their "style and types" for sponsored screen savers in their settings. How can you get more targeted ads then that?

Amazon clearly is putting the brunt of their effort on pushing sponsored screen savers, rather than the smaller banner ads on the home screen, as a huge personal, targeted space to advertisers. The question here however is what happens if the user disables WiFi or isn't on a network. During that time, the ads cannot be updated, nor can any statistics be sent back (assuming Amazon is going to track displays of ads as they should). How does this affect pricing? Or even better, how does this affect functionality? Will a WiFi connection be required to use your Kindle? I certainly hope not.

At the core of it, Amazon's ad-supported Kindle is entirely an experiment aimed at testing the waters with a new model for hardware. If it succeeds, expect to see Amazon further drop the prices of Kindle(s) with advertisements. It's my belief that Amazon wants to release a free Kindle in the end (most likely at the beginning only "free" to paying Prime users), and make all their money off of book sales. The price trends clearly show this, and there are plenty of reasons to make such a move. But I'll touch on that in a future post.

If you're interested in taking Amazon up on its offer of a cheaper Kindle supported by ads, share why in our comments.