Amazon.com is reporting that its Kindle e-books are outselling hardcover books at an accelerating rate, and that lowering its e-reader's price from $259 to $189 has resulted in increased sales.
Although the online retailer has been traditionally close-lipped about total sales of its Kindle device, it shared a small trickle of data in a July 19 press release. Over the past month, some 180 Kindle e-books have been sold for every 100 hardcover books. Amazon also claims that three times as many e-books have been sold in the first half of 2010 than the first half of 2009-unsurprising, perhaps, considering that e-readers only became a must-have item for many people during the 2009 holiday shopping season.
Amazon also quotes data from the Association of American Publishers, showing that e-book sales grew 163 percent in May.
"We've reached a tipping point with the new price of Kindle-the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189," Jeff Bezos, CEO of Amazon, wrote in a July 19 statement. "In addition, even while our hardcover sales continue to grow, the Kindle format has now overtaken the hardcover format. Amazon.com customers now purchase more Kindle books than hardcover books-astonishing when you consider that we've been selling hardcover books for 15 years, and Kindle books for 33 months."
Unlike a year ago, however, Amazon faces a far wider group of threats in its quest to achieve e-reader dominance. The Kindle's price-drop was preceded by one for Barnes & Noble's Nook, whose cost dipped from $259 to $199 on June 21; Amazon followed its rival that afternoon. Barnes & Noble also offers a WiFi-only version of its e-reader for $149. E-readers such as the Kobo and Sony's Reader Pocket Edition retail within the $149 to $169 price range.
Amazon and these other companies, meanwhile, find themselves with a sizable threat in the form of Apple's iPad, which includes a full-color e-reader application. During Apple's Worldwide Developers Conference earlier in June, CEO Steve Jobs indicated that 5 million e-books had been downloaded through the company's iBookstore.
Amazon has argued that the Kindle's e-ink screen offers a better reading experience and superior battery life to the iPad's e-reader app. For its part, Apple has touted the advantages of having a device where a color e-reader app is but one feature.
But Amazon and Barnes & Noble may be limited in relying on price as a weapon, according to at least one analyst.
"With these cuts, eBook readers from Barnes & Noble as well as Amazon now are priced at about the breakeven level with their Bill of Materials (BOM) and manufacturing costs," William Kidd, director and principal analyst of financial services for iSuppli, wrote in a June 24 statement. "With zero profits on their hardware, both these companies now hope to make their money in this market through the sale of books."
Amazon would argue that last part, at least in its case, is already happening.