Amazon has attracted a fair deal of criticism regarding the price of its Kindle reader and has now stated that the price of the Kindle 2 reader will drop from $ 359 to $ 299. The Kindle 2 was launched in February 2009. The price of the Kindle DX, launched in June 2009, is unaffected and remains at $ 489. Customers who had their Kindles shipped to them within the thirty days prior to the price cut announcement will receive a $ 60 credit based on the price difference.
This is the first price cut to date for any of the devices in the Kindle reader family. According to Amazon, an increase in production volume now allows them to pass savings on to the consumer. This explanation is being queried by many industry analysts who feel that it may be just a little early for price cuts of this type bearing in mind that the Kindle 2 was released just five months ago.
Increased competition from other ebook reader manufacturers is widely believed to have been a major factor in Amazon’s decision. In addition to Amazon, Sony, Apple and a host of smaller companies seem anxious to secure their share of what is now widely predicted to be the future of reading.
The Taiwanese manufacturer Netronix is currently producing lowerfunctionality, reduced cost, ebook readers for companies such as Elonex and Interead. These do not have the wireless connectivity of the Kindle – but prices are considerably lower. Perhaps even more significant than the ticket price is the rapid speed of development. The Netronix readers were brought to market in less than six months.
Amazon is certainly motivated to sell as many Kindles as possible – even if it does mean a price cut. The repeat ebook sales to Kindle users – a high number of whom will be heavy readers – represents a very lucrative market for Amazon. Some industry watchers have suggested that the $ 60 reduction isn’t enough for the Amazon Kindle to make the break out into iPod type status. A value below $ 200 has been proposed by many as being the required price point.
Whatever the actual reason behind Amazon’s decision to reduce the Kindle 2’s price, it’s probably fair to say that Amazon know what they’re doing when it comes to setting price levels. It’s been a key element of their business strategy for a number of years now.
Following the pricing announcement, Amazon shares firmed up by 2.3%.
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