Market Insight

Amazon Releases Kindle Paperwhite

September 04, 2013

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Online retail giant Amazon has introduced its newest ereader, the Kindle Paperwhite.  The Paperwhite will be available in both WiFi and 3G versions, with the 3G available on September 30, 2013 in the U.S.  The device is priced at $119 for the WiFi version and $189 for the 3G version (both prices are with the 'special offers' discount). The Paperwhite will be available in the U.K. October 3rd for £109 (WiFi) and £169 (3G).

Amazon claims the newest version of the ereader offers significant hardware and software improvements over the 2012 version.  Hardware improvements include a 25% faster processor (1 GHz) which allows for faster page turns; the screen has an improved response to touch input; and an improved built-in light.  Software additions include integration with Goodreads, the Amazon-owned social network for readers; a new tool aimed at school aged children called Vocabulary Builder, keeps track of all the words looked up and keeps them in a separate book in the Kindle library for later reference; a flash card tool which keeps track of words and definitions; and new smart lookup which integrates a full dictionary definition with other reference information about words, characters, and topics via X-Ray and Wikipedia.  Additional software to come includes Kindle FreeTime which is geared toward kids and lets kids have individualized profiles, keeps tracks of books read as well as personal reading accomplishments, and rewards kids with badges.

Over the past few years, ereaders have been advancing and this is evident with the Kindle Paperwhite. With a lighter feel, longer battery life, and improved touch-screen technology, the Kindle Paperwhite is certainly appealing.  However, it is far from clear that consumers will find these upgrades compelling enough to justify either upgrading their existing device or buying into the product category, as the ereader market has matured to the point where the devices are now seeing relatively small iterative improvements from generation to generation. In this respect ereaders are proving themselves to be more like classic consumer electronics where devices like TVs or DVD players which typically perform one function and are generally upgraded infrequently or when the previous device is broken. By contrast the younger, more computer-like market for tablets, which are multi-function devices,  is still seeing appreciable upgrades (e.g. smaller form factors, better graphics) while prices continue to fall.

This distinction between multi-function and single-function devices is at the heart of the slowdown in the US ereader market as consumers who buy a tablet can use the device for reading as well as watching video, playing games and, increasingly, for creating content. While the reading experience on a tablet may be sub-optimal compared to an ereader consumers buying behavior has demonstrated the appeal of a multi-function device at a broadly comparable pricepoint (where the WiFi-only Kindle paper white is $119 (with special offers), the Kindle fire is available for $159 and Walmart is selling tablets for as little as $39). In this context Amazon's strategy has been to offer a product line product that escalates the customer experience beyond what a previous ereader might offer giving its customers the choice of an improved ereader or tablet.  What has been difficult is convincing previous ereader owners to purchase newer editions. However, with the recent uncertainty surrounding the future of Barns and Noble's Nook division, Amazon may well be able to capitalize by expanding its share of the mature ereader market.

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