Kindle Cost Savings Analysis Update: Reflecting the $259 Price Tag

The Amazon Kindle 2 was lowered in price a while back and I am finally updating my cost savings analysis to reflect the "new" $259 price tag. As I mentioned in the previous cost savings analysis, there are plenty of other non-tangible reasons to purchase a Kindle (or any e-reader) including wasting less paper, convenience of book access, and size. I created a spreadsheet that can be easily modified to book reading preference which will illustrate some rudimentary cost savings with some basic assumptions. The previous Kindle cost savings analysis can be found here.

Photo courtesy of Kindle 2.0 product page

Cost Savings Analysis One:
Assumptions:

Hardbacks purchased at Amazon
List price: $27.95
Hard Back discount: 40%
Kindle 2.0 start up cost: $259.00
Equivalent Kindle book price: $9.99
Shipping cost: $3.99
Break even point (without shipping): 15 books (previously 53)
Break even point (with shipping): 12 books (previously 34)

Cost Savings Analysis Two

Assumptions:
Paperbacks purchased at Amazon
List price: $7.99
Kindle 2.0 start up cost: $259.00
Equivalent Kindle book price: $6.39
Shipping cost: $3.99
Break even point (without shipping): 47 books (previously 65)
Break even point (with shipping): 162 books (previously 255)

One thing to keep in mind is the numbers proposed should be considered averages or assumptions. Obviously, it also depends on book buying patterns. I, for one, rarely buy hardback books. I may work on my spreadsheet more if I have nothing better to do than create Excel formulas that would project semi-random purchases of hardbacks (or paperbacks).

Food for thought.

As a side note, AMZN stock is currently at $133.52, thus my hypothetical investment would have yielded me a net profit of $8,512 so far.

Good reading,

Plants and Books

Amazon Stocks Through the Roof

For those of you have been following this blog, you'll remember back in January when I suggested to invest in Amazon stock (this was right around the time that Amazon was making a big announcement, which many correctly assumed would be about the Kindle 2.0). At the time, Amazon stock (AMZ) was trading at $48.40 per share. For the past month or two the price has been hovering around the high eighties/low nineties. I checked today, and Amazon stock is trading for $124.63!


That means my hypothetical investment of $4,840 would now be worth $12,463! I net gain of $7,626... Getting close to twice my initial(hypothetical) investment. I can only imagine that it will continue to go up with the holiday seasons coming up. However, the recent announcement of the Barnes and Noble Nook (the B&N electronic reader) it will be interesting to follow along the success/shortcomings of each business venture.

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View the full AMZN chart at Wikinvest

Good investing,

Plants and Books

Amazon Stock Soaring

Over the past couple of months I have not been checking the Amazon stock (AMZ) too often. Between those interludes, the stock was hovering around $73.00, with a couple of spikes and a couple of declines. My hypothetical investment on January 27, 2009 of 100 shares (at $48.40/share) would have cost me a whopping total of $4,840.

Fast forward to today, where Amazon stock is at $85.52... That's a net profit of $3,712! Not bad for six months work.

Six months of ups and downs... but mostly ups.

What's next? Time will tell. I would be halfway tempted to cash out now, wait for a big dip which is sure to come, and then reinvest.

Good investing,

Plants and Books

Kindle: A Cost Savings Analysis

Update: 1/10/10: I have updated the cost analysis to reflect the lower Kindle 2 price tag of $259. That post can be found here.

With Amazon's new Kindle 2.0 having such a heavy start-up cost ($359.00), one might wonder if it is a sound financial investment. Exactly, how many books will be necessary to read in order to "break even" compared to purchasing physical books? Of course, financial concerns aside, there are plenty of other non-tangible reasons to purchase a Kindle (or any e-reader) including wasting less paper, convenience of book access, and size. I created a spreadsheet that can be easily modified to book reading preference which will illustrate some rudimentary cost savings with some basic assumptions.

Photo courtesy of Kindle 2.0 product page

Cost Savings Analysis One:

Assumptions:
Hardbacks purchased at Amazon
List price: $27.95
Hard Back discount: 40%
Kindle 2.0 start up cost: $359.00
Equivalent Kindle book price: $9.99
Shipping cost: $3.99
Break even point (without shipping): 53 books
Break even point (with shipping): 34 books

Cost Savings Analysis Two

Assumptions:
Paperbacks purchased at Amazon
List price: $7.99
Kindle 2.0 start up cost: $359.00
Equivalent Kindle book price: $6.39
Shipping cost: $3.99
Break even point (without shipping): 65 books
Break even point (with shipping): 225 books

One thing to keep in mind is the numbers proposed should be considered averages or assumptions. Obviously, it also depends on book buying patterns. I, for one, rarely buy hardback books. I may work on my spreadsheet more if I have nothing better to do than create Excel formulas that would project semi-random purchases of hardbacks (or paperbacks).

Food for thought.

As a side note, AMZN stock is currently at $63.86, thus my hypothetical investment would have yielded me a net profit of $1553 so far.

Good reading,

Plants and Books

Update: Kindle 2.0

Note: I was on vacation for the past week and thus unable to post when the following event occured (since I chose not to pay the $0.55/minute internet cost on the cruise I went on).

In a recent post I proposed (along with 90% of the world) that at Amazon's February 9 "mystery" press conference, Jeff Bezos (Amazon CEO) would announce the release date for the Amazon Kindle 2.0. The following may come as a shock; but, I (we) were correct. The Amazon Kindle 2.0 will be available on February 24, 2009.

Photo from Amazon Kindle 2.0 product page

Since I am not planning on getting one anytime soon because of the $359 sticker price, I get to sit back and watch the show and see if it grabs hold of the reading world and revolutionizes the way we read. In my opinion, it is inevitable that e-reading devices take over, just as the iPod has nearly put the nail in the coffin for Compact Disks. No matter what camp you are in ("electronic reading is the wave of the future" versus "reading without a physical book is insane") one thing is for sure: in a climate geared more towards sustainability and with businesses pinching every peeny, publishers will be selling more electronic documents and less physical books. A publisher can produce (and sell) a book electronically for a fraction of the cost of a physical book AND increasing revenue exponentially. Sometimes the bottom line forces innovation.

I suggested on January 27 to purchase Amazon stock (AMZN) at $48.40 per share. My hypothetical investment (since I was unable to convince my wife of the coming revolution in the book world) of 100 shares at the time would have cost me $4840. Approximately a week and a half later I checked back and my hypothetical investment would have yielded me a net profit of approximately $1,800. AMZN stock is now selling at $61.67, yielding me a profit of $1327. Obviously it is slightly down now from my initial check, and this could be for several reasons, including the Author's Guild's concern that the text to speech infringes on author and publisher rights, the high sticker price which was rumored to be around $250 months ago, and the troubling market in general.

As I mentioned, my wife was not convinced by my argument. She responded something along the lines of "Now is not the time to be gambling in the stock market." And of course, her logic is solid, but for the sake of sensationalism, I simply responded, "It's not a gamble if it is a lock!

Amazon stock over the past month

I've said it before and I'll say it again, buy AMZN stock. Stay tuned.

Good reading (and investing),

Plants and Books

Amazon Kindle 2.0? The bee's knees?

Amazon.com released an electronic reading device, the Amazon Kindle, in the spring of 2007. If you review the customer reviews of the Kindle you will see that it was overwhelmingly met with positive comments. If you read closely many of these stated that it was not perfect, but definitely a good "first step" and when the fabled second version is released that many of the bugs or annoyances will be worked out.

People have been talking about the Kindle 2.0 for a long time now, and there are countless people on the waiting list for the original since months before Christmas time in 2008. USA Today reports that there is an "important press conference" on February 9 with no details about the nature of the press conferences. Is it time to move into the next generation of electronic reading? Is the Kindle really going to be the iPod of the book world? It is hard to say since there is a legitimate attitude that you cannot replace the experience of holding a paper tome in your hand.

View alleged Kindle 2.0 images at the Boy Genius Report blog.

I keep telling my wife that we should buy some Amazon stock. Amazon (AMZN) is currently selling at $48.40. I'm going to imagine that I bought 100 shares today and see what happens in the next month or two. Will we see a huge increase in Amazon as we did when the iPod exploded on to the market?

There is one huge difference between the Kindle and the iPod, and that is functionality. An iPod can be used anytime, during any activity. People use them while walking to class, working out, or plugged into the car, whereas it is difficult to read and do other things at the same time. The iPod has become an integral part of many people's lives since it can be used anytime. The Kindle will not be as big because it cannot be integrated into everyday life except by people wanting to read, and only read.

This being said, it is important to look at the direction society is heading. We are becoming a more "green" population and paper conservation is going to become more important. Furthermore, it won't even matter since publishing companies will be able to sell books at half the cost and make twice as much profit since materials and overhead will be eliminated. There is also serious discussion going around about the Kindle 2.0 being designed with school textbooks in mind, where students will not have to buy (and carry around) $500 worth of paper and utilize highlighting functionality, text searching, and note taking capabilities. Instead of carrying 25 pounds of books, students will carry 2.6 pounds of electronic equipment.

The new Kindle 2.0 may not be the next iPod, but it may very well be the closest thing we will see in the next decade or two. Amazon is already a powerhouse in the book world, and if the Kindle 2.0 is rolled out correctly, Amazon will have a stranglehold on the literary world.

Go buy your AMZN stocks now.

Good reading,

Plants and Books