Business Books

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 ticket price Kindle DX, which started shipping in June 2009, is unaffected and remains at $489. Amazon have advised that customers who had their Kindles shipped to them within the thirty days prior to the price cut announcement would receive 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, increased productions volume now allow them to pass savings on to the consumer. 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 generally felt to have been a significant influencing 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. Whilst these lack the wireless connection facility of the Kindle the prices are very much 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 business from Kindle users – many of whom will quite naturally 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 reasoning behind Amazon’s decision to cut the price of the Kindle 2, it’s probably fair to say that Amazon know a thing or two about 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%.