Amazon finds a new use for 3G with Kindle reader

Online retailer wraps cost of wireless access into content price Inc. isn't the first company to sell an electronic book reader with an easy-on-the-eyes electronic ink display, but its method for delivering those books may have opened up a whole new use for mobile data networks.

Users of the Kindle, introduced today for a list price of $399, can select and buy books with the device and download them in less than one minute, according to the company. They can also buy the day's newspaper on the spot or subscribe to daily newspapers, magazines and blogs for a monthly fee. Newspapers are delivered overnight, and blogs are delivered several times a day.

To deliver all this data, Amazon is using Sprint Nextel Corp.'s 3G (third-generation) cellular network. But Kindle owners will never see a bill for that service because the cost will be included in the price of the content. It's a rare move that might be repeated as content providers and mobile operators look for successful formulas for making money off high-speed data networks.

The Kindle is always connected to Sprint's EV-DO (Evolution Data Optimized) network unless it's outside the coverage area, in which case it switches to Sprint's slower 1x system. Users can also turn off the radio with a switch on the back of the device, said Charlie Tritschler, director of Kindle at Amazon. That extends the battery life from about two days to one week. Books download quickly because they aren't very big: 500KB to 800KB on average, depending on length and the number of pictures. A newspaper is about the same size, he said.

Users can also buy books online and "sideload" them to the Kindle. In any case, every book is backed up on Amazon along with any bookmarks or notes the user added, Tritschler said. Books cost $9.99 unless otherwise marked, and newspaper subscriptions will start at $5.99 per month. There is a small music player on the device for background music while reading, but Amazon isn't selling music over EV-DO, he said. Users will have to sideload their own songs.

When it started developing the Kindle, Amazon planned to use Wi-Fi instead of 3G, Tritschler said. But that would have required users to find a hot spot and in many cases manually log in to it. EV-DO, which is available across most of Sprint's nationwide network, is more widely available and easier to use, he said.

Amazon's wireless business model for the Kindle seems to be unprecedented, according to Yankee Group Research Inc. analyst Phil Marshall. It's somewhat like Research In Motion Ltd., which popularized mobile e-mail using its own servers and device, the BlackBerry, except that even BlackBerry users needed a contract with a mobile operator, he said. Other companies might follow Amazon's lead, but to succeed, they would have to be established those, like Amazon, with other sales channels such as online, Marshall said.

There are book-reader applications available for most smart-phone systems, though not for Apple Inc.'s iPhone. However, the Kindle, like the Sony Reader, has an electrophoretic display from E-Ink Corp. that is designed to look like paper. A phone's LCD display is not only smaller but also causes more eye strain, Tritschler said.

Sprint, struggling in third place among U.S. mobile operators, already sells wholesale access to its network to several mobile virtual network operators that resell voice and data services on conventional phones and mobile devices. Like other mobile operators, it makes heavy investments in network infrastructure. Sprint has recently upgraded its EV-DO network to a faster version of the technology, in addition to planning a separate, faster network using WiMax at a cost of about $5 billion.

About 19% of U.S. mobile users download content such as ring tones, games and applications to their mobile phones, according to analyst firm M:Metrics.

Copyright © 2007 IDG Communications, Inc.

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