Amazon’s low price for ebooks is irrelevant to its dominant position, just as the low price for digital music that Apple set is irrelevant to its dominant position in the e-music market. What’s relevant is that they (Apple, Amazon) can control the price.
That Apple & Amazon have ‘low’ pricing on their e-products has more to do with their desire to exploit their first-mover advantage and strengthen their dominance, and not because they care about the customer. It’s a variation of dumping: selling products below cost to drive competition out of business. Amazon is indeed selling e-books for below what they pay to the pubs.
Consumers who measure vendor ‘goodness’ by their ‘low’ pricing will no doubt cheer on Apple & Amazon, as many do. But if Apple and/or Amazon can cement their gain and potentially become the Microsoft of their respective markets, then the true loser is indeed the consumers.
From an author’s view of the Amazon-MacMillan fracas:
http://www.antipope.org/charlie/blog-static/2010/01/amazon-macmillan-an-outsiders.html
Re: Pricing - Whether an e-product should be priced less because of smaller costs of production & distribution is also irrelevant, as pricing is normally a function of demand, not cost of production. Should a Lexus be priced the same as a Civic, since their production costs are similar?
Re: Physical vs e-book - There is something to be said for the tactile component of bookreading, as well as the convenience of not having to deal with DRM. WRT the first, I think it is outweighed by e-book’s superior accessibility where you have virtually unlimited number of works at your fingertips. Students: no more heavy backpacks. WRT the second, I think there’ll be ‘unofficial’ solutions to DRM that will influence official solutions, just as has happened with digital music.
The crux of your view I suspect is whether book/music publishers have any place in the new networked world. The disintermediation of the supply chain is a valid issue, and I think is one that will take place over time. But there is always going to be a pipeline between producers and consumers–even if one shorter than before–and there will always be companies who are manuevering to be the gatekeepers of that pipeline. Rest assured that none of them are doing it for the consumer’s benefit.
Anyway, this part has gone OT, so I’ll stop here. I’m more interested in Sandisk’s direction for their PMP products. Since that we have Sandisk employees here in the forums, then it would be good to hear of their insights. I wouldn’t expect any nuggets like “we’ll have product X on Y date,” but a general outlook wouldn’t be any more revealing than what Sandisk regularly provides in its 10Q filings. Hmm, maybe I’ll look that up on Edgar…