Kindle and America’s Decline?

I am always fascinated by technology and change. I often think about one of Kranzberg’s laws of technology, one of which is:

Technology is neither good nor bad; nor is it neutral.

Along these lines, there’s an interesting article from the Brookings Institution on how Amazon’s Kindle is manufactured:

…$40 to $50 in manufacturing value made off of every one of the 700,000 or so Kindles so far sold isn’t bad, and Amazon seems well-positioned to capture the retail mark-up on the device and sell a ton of e-books, while Kindle’s wireless data service, which uses Sprint’s data network, resides in the U.S. Well, here’s the problem: Because E-Ink could not control the low-temperature polysilicon and the fabrication of the display, it could not perform the system integration required for it to capture the majority of the value-add at that stage. And because it could not manufacture the display, as Shih notes, the U.S. will likely miss out on the future industries that may spring from shop-floor tinkering with the display and its production–“things like large flexible displays, future generations of electronic signage, and plastic electronics.”

Amazon needs to go to countries that can produce e-Ink at the lowest possible cost. Don’t we consumers demand this? I’ll bet you a coke that the company sells more Kindles at $139 now compared to the Kindle 2’s original price of $359.

Simon Says

I have mixed feelings about this piece. The article omits the fact that many companies and industries intentionally take losses on products. Perhaps the best example is the razor. Manufacturers have been known to give them away because the profits on blades more than offset the “loss” of free razor. If this article’s breakdown of the Kindle cost structure is accurate, then the same thing is happening with books: Amazon can lose money on the Kindle because it will make it up–and then some–by selling books.

This begs the question: Does any of this matter? If Amazon.com makes $5/book on the Kindle (and that’s probably a fair estimate), then what’s the problem? For Amazon.com, probably none.

For the US, that’s a different story. However, the Kindle is hardly the only example of a product not entirely made in the USA. I went to school in Pittsburgh, a city decimated by the deinstrialization of the US. It has since rebounded–sort of.  Without getting all philosophical, with Capitalism, the fleas come with the dog. What’s good for a company may not be good for the country. How is this different?

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5 hopefully intriguing thoughts:

  1. Interesting timing as I’m writing a white paper on technology and the growth of emerging markets (China, Latin America, India, Africa, etc.).
    As global barriers break down, so will the power that the US has held for so many years. Technology is becoming the great equalizer. While the US GDP was three times that of China just last year, China is expected to match the US in this next decade. Just this year, it surpassed Japan to be the world’s second largest economy.
    As it becomes easier to build facilities in foreign countries, particularly in the emerging markets, the US and it’s labor force are going to need to retool to remain competitive on a global scale. Many US companies have already realized they cannot claim “made 100% in the USA” and stay in business anymore.

    Reply
  2. I’m still on the fence about the Kindle, and “eReaders” in general.  On the one hand, the Kindle is a novel [pun intended] device, its lack of fidelity means that it falls way short of a real book.  The fidelity of the iPad, however, makes it a compelling alternative, in that you can carry an entire “library” much easier than carrying around a cartful of books, which makes it a no-brainer for replacing college textbooks.  And, as long as it’s not stolen, dropped, etc., et pays for itself in one semester!

    Reply
  3. Thanks for the comments, all. I’m not a fan of the Kindle–at least yet, anyway. As for college textbook argument, I’ve been hearing more and more about open source textbooks. Of course, that would have saved me hundreds back in the day!

    Terri- looking forward to that white paper!

    Reply
  4. My younger sister is able to get some of her text books this way.
    I would have been thrilled to pay 1/3 the price and carry tens of pounds less in books across campus.
    I’m not sure how I feel about the kindle for my leisure time reading (I’m on a computer all day long, real paper and ink is nice at the end of the day). As for college text books or other thick, expensive and heavy REQUIRED texts, I think I’m a fan.

    Reply

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