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 Kindle DX, launched in June 2009, is unaffected and its price remains at $ 489. Amazon have stated that customers who have had their Kindles shipped to them in the thirty day period prior to the price cut announcement would benefit from 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, increases in production volume now permit 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 multitude of smaller companies seem eager 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. These do not have the wireless connectivity of the Kindle – but prices are considerably lower. Perhaps even more significant than the ticket price is the rapid speed of development. The Netronix readers were developed and brought to market in under six months.
Amazon is strongly motivated to sell as many Kindles as possible – even if it does mean a price reduction. 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 price below $ 200 has been put nominated by many as being the necessary number.
Whatever the true reasons behind Amazon’s decision to adjust the Kindle 2’s price, it’s probably fair to say that Amazon know a thing or two about setting price levels. It’s pretty much been the foundation of their business for a number of years now.
Following the price cut announcement, Amazon shares rose by 2.3%.
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