Report: Amazon looks to substitute textbooks with Kindle

Fresh analysis indicates that Amazon's popular Kindle device may eventually serve a second purpose: as a provider of college texts and other materials for students. For that reason, Amazon may be marketing the device towards students.

For many college students, a walk between classes is the equivalent of ROTC basic training. The reason, of course, is textbooks. They're too numerous, they're too heavy, and they're too expensive.

McAdams Wright Ragen analyst Tim Bueneman told the Seattle Post-Intelligencer on Friday that Amazon's second version of the Kindle may be marketed to college students with those precise grievances. Behold: a single device that weighs a meager 10.3 ounces and has the capacity to hold every textbook you could possibly need.

Since the e-reader's launch, by some estimates, Amazon has shipped 240,000 units, and Citigroup's Mark Mahaney believes the device will end 2008 with sales around 378,000. These numbers, however, are purely speculative, as Amazon has not released any sales figures yet. Further, the retailer has said next to nothing about Kindle design updates, speaking out only to dismiss everything that is not an official statement as rumor.

Amazon has dealt in college textbooks for years already, a market generating an estimated $5.5 billion annually in the US alone, according to the National Association of College Stores.

Judging from existing market breakdowns, 32.7% of a textbook's cost comes from paper, printing, and editorial costs; 10.2% goes to college store operations and related taxes; 11.6% goes to retail personnel; and 1% covers freight. If published in the all-digital format, as much as 55.6% of textbook production costs could be reduced, and 100% of the physical resources would be eliminated.

In the 2006-2007 school year, the average new textbook cost $53. Stripping out the previously mentioned expenses would drive down the average to $23.54.

Michael Arrington of TechCrunch suggested this morning that the real benefit to Amazon would be in allowing third parties to manufacture their own devices that ran Kindle software and accessed the Kindle Marketplace. Each manufacturer, he posits, could competitively market their own designs and ultimately drive sales of Kindle books up.

Marrying Bueneman's information on a Kindle college marketing push with Arrington's third-party ideas, one begins to contemplate the benefits of a purpose-oriented, university-branded Kindle that can only be purchased in campus bookstores.

If one thing drives journalists to dream, it's a less-than-transparent company. Amazon may have not only adopted Apple's iTunes business model for the Kindle, but also Cupertino's predilection for nondisclosure that keeps the public wondering.

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