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 fall from $359 to $299. The Kindle 2 was launched in February 2009. The Kindle DX, launched in June 2009, is unaffected and its price remains at $489. Amazon have stated that customers who had their Kindles shipped to them within the thirty days prior to the price cut announcement would benefit from a $60 credit based on the price difference.
This is the first price cut for any of the devices in the Kindle reader family. According to Amazon, an increase in sales volume now allows them to pass savings on to the customer. This explanation is being queried by many industry analysts who feel that it may be a little early for price cuts of this nature given that the Kindle 2 was released only five months ago.
Increased competition from other ebook reader manufacturers is considered by some to have been a major influencing factor in Amazon’s decision. In addition to Amazon, Sony, Apple and a host of smaller companies seem eager to secure their share of what is now widely predicted to be the future of reading.
The Taiwanese manufacturer Netronix is currently making reduced functionality, low cost, ebook readers for vendors such as Elonex and Interead. These may not have the wireless connectivity of the Kindle – but prices are very much lower. Possibly even more significant than the price is the speed of development. The Netronix readers were brought to market in less than six months.
Amazon is clearly motivated to sell as many Kindles as possible – even if it does mean a price cut. The repeat business from Kindle users – many of whom will quite naturally be heavy readers – represents a very profitable 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 figure below $200 has been put forward by many as being the necessary price point.
Whatever the true reasons behind Amazon’s decision to drop the Kindle 2’s price, it’s probably fair to say that Amazon know a thing or two about setting price levels. It’s pretty much been the foundation of their business for a number of years now.
After the pricing announcement, Amazon shares firmed up by 2.3%.
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