At one point in the presentation Jeff Bezos explicitly spells out Amazon's current business model for the Kindle and Kindle Fire, and it's pretty simple. They sell hardware cheap in order to get you in the door, after which Amazon makes up the difference and all their profit by selling you content. The Kindle Fire is a portal through which Amazon sells stuff; that's why the original sold for so close to the BOM.
Now, this has been Amazon's business model since at least last September, when they unveiled the Kindle Fire and cheap new Kindles. And in fact a number of bloggers figured this out both before and after that launch event. Some even predicted it several months in advance.
With that in mind, have you considered what this business model means for ebook prices? I would think now that Amazon is using ebooks to subsidize hardware sales it means they likely won't be using such deep discounts any more. (Actually, i don't think Amazon ever discounted ebook prices nearly as much as some now believe; the horror of the tale has grown in the retelling. But that's another post.)
But if Amazon isn't going to use deep discounting then all of those fears are bunk. What's more, they were bunk at the time they were first expressed, considering that they were penned months after the Kindle Fire launched. This is one of the issues that Bob Kohn raised in his 5 page comic, and as you can see there's little evidence to support the belief.
So the next question that comes to mind is: When did Amazon decide to adopt this model?
At the very least it had to have happened long enough after the launch of the Kindle that publishers had time to panic of the deep discount pricing model. As one reader pointed out in the comments, Amazon launched the Kindle with $9.99 best sellers as a selling point.
It's my guess that Amazon happened upon the idea in 2010. I'd pin the date down to some time right after Agency Pricing was foisted upon them and right before Amazon got into that ereader price war with B&N. Once Amazon had the K2 priced near cost and ebook prices which they couldn't discount, it made a lot of sense for Amazon to use one to support the other.
So yes, I think Agency Pricing is the reason that ereaders are so cheap today. If I'm right then the Price Fix 6 are also to blame for all the many companies who got out of the ereader market in 2010. As a consequence of their attempt to hobble Amazon, these 5 publishers may have been responsible for killing off a number of Amazon's potential competitors and thus making it easier for Amazon to dominate the market.
What do you think?