Apple Inc (AAPL)

[Tex]

re Kindle

The Kindle deal is really an odd duck. Amazon apparently wanted to create a screaming, category-killing deal and offered free internet service with the hardware, with no apparent cutoff date. Amazon hopes folks will buy Amazon content, and it's apparently willing to subsidize some service while waiting for the eReader to produce.

For Apple -- a hardware maker which has found a way to take a cut of third-party IP revenues deployed on the device -- there's little incentive to subsidize the price of content or service. Thus, I don't see Apple producing Kindle competition (in the sense of free connectivity service on a reader) until service costs become so slight that Apple's cut of browser-generated revenue (remember, search revenue kickback is Mozilla's principal funding source) is enough to at least cover the cost of the service.

I can think of a few other ways to fund it, but they don't suggest to me that Apple would be producing devices with "free service" any time soon.

Take care,
--Tex.