Amazon Kindle Rewrites the Book Business

The ability to download books, newspapers and magazines via a cellular data connection (at no additional charge) is the headline news about Amazon's handsome new electronic book. But there are other important features not found in previous ebook incarnations. The Kindle has a keyboard and the ability to annotate text as you read: great for students or grown-up researchers.

A built-in dictionary is just a few clicks away while reading, and Kindle supports downloadable audio books from audible.com. In addition to shopping, you can use the online connection to search Wikipedia and Google and, to a limited extent, surf the Web. (But the lack of JavaScript or Flash support torpedos many sites.)

What may prove most significant, though, is the pricing scheme for downloads. Nearly all the current New York Times bestsellers go for $9.99, even when the traditional versions sell only as hardcover editions at $30 or more. Contrast that with music and movie downloads. When you buy a digital album from iTunes you pay just a few dollars less than the retail price of a physical CD for significantly lower-quality audio. Same goes for the DVD-equivalent movie download pricing at iTunes and CinemaNow, even though there's no manufacturing cost of physical goods, essentially no shipping cost, and no store rent to cover.

Amazon is the first retailer to make buying the bits financially beneficial for shoppers, even if it does take a painfully pricey $399 device to get in on the deal. —Steve Morgenstern

For more on the Kindle, see How 2.0 blogger Dave Prochnow's take here.