U.S. State Department spokesman Philippe Reines talked with with paidContent about the "request for a proposal" tendered to Amazon to provide Kindle Touches for the DoS's overseas language-education program.
"At this point the ball is in Amazon's court to come back with a proposal to us based on the request we gave them. We basically said, 'We'd like your proposal to reflect the possibility of it being a five-year deal, with the total amount spent over this five years as $16.5 million,' " Reines observed, adding "that's not an expression by State of an intent to spend all that money and certainly not an obligation to spend all that money."
According to Reines, the DoS would spend $2.29 million in the first year of the program, and "the $16.5 million over five years includes a maximum of 7,000 units per year for a total of 35,000 over five years, and content and to a lesser degree, shipping and some other associate costs." That "guaranteed obligation" in the first year is "broken down by an obligation to purchase, at minimum, 2,500 units, which would be roughly half a million dollars."
PaidContent ran the available numbers and noted that the total "leaves $1,814,750 for content, shipping and other costs. It's a lot of money for content, especially since it appears that many of the e-books will be public domain.... If the contract goes through and is renewed after the base year for a total of five years, and if State purchases a total of 35,000 Kindle Touch 3Gs each priced at $170.10 during that time and each with a case and adapter valued at $20, that leaves $9,846,500 for content, shipping and 'associate costs.' "
"Are the non-device costs justified?" asked paidContent, noting the difficulty of calculating "the value of those services with the information that's available publicly. "I don't know how much it costs Amazon to provide a dedicated help desk, disable some features on the Kindles and provide data reports on usage, but I remain skeptical that these services are worth millions of dollars."
