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Amazon prepares the Kindle for Mass Acceptance with a $100 Target price to consumer

Posted in Industry updates by Manas Ganguly on August 1, 2010

Amazon is hoping to turn its electronic book reader Kindle into a device with mass market appeal, by slashing the price of the Kindle. This could be a reaction to iPad’s surmounting challenge. By reducing the price point, Kindle is trying to position itself as a alternative for its “serious readers” distinct from Apple’s multi-purpose iPad and look for volumes.

Amazon, the pioneer of the e-book business, last week unveiled a $139 wireless-only version of the basic Kindle, less than six weeks after dropping the price of the e-book reader to $189 dollars from $259 dollars.

The newest price drop could fuel further growth in sales after growth for the Kindle “tripled” following the price cut to 189 dollars. Amazon is anticipating that the even-lower price will spur further sales which leaves the field open for yet another price drop and a possible sub $100 pricing.

The Wi-Fi only device for $139 dollars clearly targets a mass market audience. At 139 dollars, the Kindle is “edging closer to a tipping point price of 99 dollars” which could trigger widespread adoption. These drops are compelling price points for consumer who are looking for a single purpose device which has a rich functionality

US bookstore chain Barnes & Noble sells a version of its e-reader, the Nook, for 149 dollars while Sony’s cheapest e-reader is 150 dollars and the iPad is going to set a buyer back at least 499 dollars.

Amazon does not release sales figures for the Kindle but says it has been the online retail giant’s best-selling item for two years. Research firms and analysts estimate the number sold at more than three million units. Apple sold nearly 3.3 million iPads in just the first three months since it hit store shelves but the competition from the trendy California gadget maker has Amazon unfazed.

The tablet computer from Apple allows users to watch video, listen to music, play games or surf the Web in addition to reading digital books but the Kindle, as Amazon founder Bezos has stressed repeatedly, is “all about reading.”

“The Kindle device will succeed by being the best dedicated e-reader in the world,” Bezos told Amazon shareholders in May, comparing it to a camera on a phone and a dedicated camera.

“If activities are important, then (people) end up getting dedicated devices because they’re always going to do the job better,” he said. “Serious readers, they’re going to want a purpose-built device.”

Amazon insists that when it comes to reading e-books, the device that does it best is the Kindle and its black-and-white electronic ink screen is better than the iPad’s backlit color LCD display, which Bezos says causes eye strain.
When Amazon introduced the Kindle nearly three years ago it was selling for 359 dollars and industry analysts believe the company may now be selling the devices at below manufacturing cost. Following the razor-blade model, Amazon appears to be taking a small margin on the razor (the Kindle) and planning to make it up on the blades (the e-books)

Amazon’s US Kindle store currently offers more than 630,000 titles and the company announced this month that it was now selling more e-books a month than hardcover books, a trend that Bezos expects to accelerate.

“I predict we will surpass paperback sales sometime in the next nine to 12 months,” the Amazon founder said in an interview with USA Today. “Sometime after that, we’ll surpass the combination of paperback and hardcover.”

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