There is a lot of buzz over Amazon’s plans to put its own tablet on the market. Today Lance Whitney put up a post to his Digital Media blog on the CNET Blog Network concerned with the price point for this yet-to-be-released device. He cites a column in PC Magazine by technology industry analyst Tim Bajarin, which estimates that the device will cost $300. Bajarin then recommends a retail price of $249, under the argument that Amazon would quickly (i.e. on the order of months) make up the gap through the sale of content, as they have been doing with the Kindle.
This follows a precedent that is far earlier than the Kindle, however. Back when I was first learning to shave, Gillette realized that their major income came from the sale of razor blades. The razors were pretty durable, meaning that they could last for quite some time (probably years) before needing to be replaced. Eventually, Gillette recognized that they could give away the razors with almost no impact on their overall revenue.
It will be interesting to see how close current technology manufacturers come to the same position. Cell phones are pretty close to that state of affairs, since almost all the value comes from the service provided through the device, rather than the device itself. I doubt that it will be very long before we see tablet promotions (perhaps from Amazon) that basically offer the device for free in return for advance payment for content to be provided.
Then again, razors with replaceable blades are no longer on the market. Now you buy the razor with the blades built into it and throw away the whole thing when the blades are worn. What would that tell us about the future marketing of personal technology?
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