Amazon Lowers Price on Kindle eReader

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.