Amazon.com announced its third-generation Kindle e-reader July 28, in a bid to leapfrog competing products such as Barnes & Noble's Nook and to maintain a viable alternative to the Apple iPad. In addition, Amazon.com is also introducing a WiFi-only Kindle for a lower price.
The third-generation Kindle features a 6-inch e-ink screen with 50 percent better contrast, a body that's 21 percent smaller and 15 percent lighter, an advertised battery life of up to one month, and double the storage capacity. Those with an aversion to white can order the Kindle in a graphite gray color.
Amazon.com has also worked to increase the Kindle's capacity as a personal-document device: In addition to highlighting, note-taking, Wikipedia access and dictionary lookup, the Kindle now supports password-protected PDFs. In what the retailer terms an experimental feature, the device also includes a WebKit-based browser, free to use over WiFi.
Both the third-generation Kindle, which retails for $189, and the new Kindle Wi-Fi, which retails for $139, will ship on Aug. 27.
In the hours leading up to Amazon.com's announcement, the retailer's Kindle page listed the device as "temporarily out of stock." Speculation abounded as to whether Amazon.com had indeed sold out of Kindles, following its recent price drop, or if the decks were being cleared for a hardware refresh. Amazon.com claimed early in July that Kindle ebooks have been outselling hardcover books at an increasing rate and that the Kindle's price drop had resulted in similarly accelerated sales.
The Kindle Wi-Fi's $139 price point undercuts that of the Nook Wi-Fi, which retails for $149.
Amazon.com faces a variety of competitors in the space: from Google and its plans to launch ebook rival Google Editions, from e-readers such as the Nook, with consistently upgraded software and hardware, and from publishers, which could use those competitors' presence as leverage in negotiations.
But Amazon.com's biggest challenge could be the iPad, which at least one analyst estimates as having a larger ownership base than the Kindle.
"Last night, Apple stated it has shipped 3.27 [million] iPads since the April product launch, surpassing our estimate for an installed base of [around 3 million] Amazon Kindles to date despite supply constraints," Marianne Wolk, an analyst with Susquehanna Financial Group, wrote in a co-authored July 21 analyst report. "As [Apple's] supply constraints ease, Apple iPad shipments should ramp and it could ship as many as 12 to 15 [million] iPads in 2010-a compelling base for publishers to consider."
Although Amazon.com has argued that the Kindle's e-ink screen offers a better reading experience and battery life than backlit tablets such as the iPad, it has also been aggressive in pushing a Kindle e-reader application for the iPad, PCs and a variety of mobile devices.
Despite the Cold War between e-readers over added features and lowered costs, some analysts suggest there may be a limit to how low Amazon.com and Barnes & Noble can take their devices' prices.
"With these cuts, ebook readers from Barnes & Noble as well as Amazon now are priced at about the break-even level with their Bill of Materials ... and manufacturing costs," William Kidd, director of iSuppli, said in June 24 statement following price dips for both the Nook and Kindle. "With zero profits on their hardware, both these companies now hope to make their money in this market through sale of books."