
The Kindle 2 ($359) is expensive. The Apple 3G (now reduced! $99!) is cheap. Right?
Lots of people have been criticizing Amazon for the high price tag they put on the Kindle, a nice and important device but no iPhone–including yours truly.
But the iPhone price decrease caused me to look again at the pricing model of the two devices and belatedly recognize that behind both prices are two different structures that influence both the upfront price and, perhaps most importantly, the total cost of ownership. Let’s break apart the pricing, then.
Kindle: $359 (no contract), wireless service (free), content ($9.99 per book).
iPhone: $99 (2-yr contract), wireless service (min $70/month), content ($0-$20 per app).
Let’s assume that content pricing cancels out–both seem like pretty good deals to me. Let’s also assume, to be fair, that the iPhone customer is replacing another cellphone, and that she would be paying $45 per month for voice access. This leaves the iPhone-only service charge as $25 per month.
Now the 2-year comparison price looks like this:
Kindle: $359
iPhone: $699
This isn’t meant to compare the value of the two devices. The iPhone can do a lot more than the Kindle, ...
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