Amazon dropped the price of its Kindle 2 e-reader to $299 from $359 with little fanfare, though it suggests Amazon hopes a $60 price cut will make the device more attractive in an increasingly competitive market.
Online retail giant Amazon quietly dropped the price of its heavily promoted
Kindle 2 e-reader today, lowering the price to from $359 to $299-a $60 cut.
Amazon issued no release announcing the price reduction, fueling speculation
that the nascent e-reader market isn't reaching enough of an audience. The
Kindle 2, which debuted in February with the help of celebrity horror author
Stephen King, is the successor to Amazon's original Kindle reader.
Amazon spokeswoman Cinthia Portugal
told The Associated Press the price cut
was a permanent move rather than a promotional stunt. "We've been able to
increase the volume of Kindles we're manufacturing and decrease the cost of
doing so," she said. Although Amazon does not release shipping numbers,
reports have stated that some 300,000 Kindle 2 units have been shipped by
mid-April, nearly matching estimates of 400,000-500,000 units shipped for the
first Kindle version.
A recent teardown of the manufacturing process by market research and
consulting firm iSuppli Corporation revealed Amazon spends $185.49 on every
Kindle 2. Some 41 percent of the materials cost comes from the Kindle 2's $60 E
Ink Corp. display module, which supports 16-level grayscale images.The price
does not include the licensing costs for using the ARM
processor or the costs of intellectual property, royalties, licensing fees or
elements such as software loading. In June 2008, iSuppli issued projections of
e-reader sales for the year 2009. The report predicted "enormous growth" for
the market this year, with 3.5 million e-readers sold.
The Kindle 2, designed to download books in less than a minute, allows users
to read pages on a 6-inch gray-scale screen. Pages can be navigated via a
five-way controller. There are currently 230,000 books available for download
from Amazon's Kindle online store. The AP also interviewed ThinkEquity analyst
Ed Weller, who said he was surprised by the price cut following so soon after
the Kindle 2 debut, but added he thought the $299 price point would prove more
attractive to consumers. "They'll sell more of them, and they'll sell more
books," he told the news service.
In May, Amazon CEO Jeff Bezos announced the debut of a larger version of the
Kindle, the Kindle DX, which comes with a 9.7-inch screen and comes with
auto-rotation-tilt it sideways and the displayed page pivots from vertically to
horizontally oriented. The DX was designed to make it easier to read large
format documents like newspapers, magazines and textbooks. As part of the release
promotion, Amazon announced partnerships with The New York Times and two other
newspapers, The Boston Globe and The Washington
Post, to distribute a lower-cost version of the Kindle DX to users who sign up
for long-term subscriptions.
In addition to signing deals with major newspapers, Amazon also announced
that three of the top five textbook publishers-Cengage Learning, Pearson, and
Wiley-and more than 75 University press publishers would be making their
products available to the Kindle Store starting in autumn 2009. Such a move,
Bezos claimed, would make some 60 percent of textbooks available through the
device.
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.
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