Amazon.com was to introduce two new versions of the Kindle e-reader yesterday, one for US$139, the lowest price yet for the device.
Amazon is hoping to convince even casual readers that they need a digital reading device. By firing another shot in an e-reader price war leading up to the year-end holiday shopping season, the e-commerce giant turned consumer electronics manufacturer is also signaling it intends to do battle with Apple and its iPad as well as the other makers of e-readers like Sony and Barnes & Noble.
Unlike previous Kindles, the US$139 “Kindle Wi-Fi” will connect to the Internet using only Wi-Fi instead of a cellphone network as other Kindles do. Amazon is also introducing a model to replace the Kindle 2, which it will sell for the same price as that model, US$189. Both new Kindles are smaller and lighter, with higher-contrast screens and crisper text.
“The hardware business for us has been so successful that we’re going to continue,” Jeffrey Bezos, Amazon’s chief executive, said in an interview at the company’s headquarters. “I predict there will be a 10th-generation and a 20th-generation Kindle. We’re well-situated to be experts in purpose-built reading devices.”
When Amazon introduced the Kindle in 2007, Bezos described it as a must-have for frequent travelers and people who read “two, three, four books at the same time.”
Now, Amazon hopes that at US$10 less than the least expensive reading devices from Barnes & Noble and Sony, the new Kindle has broken the psychological price barrier for even occasional readers or a family wanting multiple Kindles.
“At US$139, if you’re going to read by the pool, some people might spend more than that on a swimsuit and sunglasses,” Bezos said.
Some analysts are predicting that e-readers could become this year’s hot holiday gift. James McQuivey, a principal analyst specializing in consumer electronics at Forrester Research, said a price war could for the first time reduce at least the price of one e-reader to under US$100, often the tipping point for impulse gadget purchases.
Amazon has slashed the price of the Kindle at a speed that is unusual, even for electronic gadgets. By last year, the price of the device was cut to US$259, down from its starting price of US$399 in late 2007. Last month, hours after Barnes & Noble dropped the price of its Nook e-reader to US$199, Amazon dropped the price of the Kindle to US$189. The Kindle DX, which has a larger, 9.7-inch screen, sells for US$379.
With Amazon’s latest announcement, it is again waging a price war. Barnes & Noble offers a Wi-Fi version of the Nook for US$149, and Sony offers the Reader Pocket Edition, which does not have Wi-Fi, for US$150.
Of course, price is just one factor people consider before making a purchase. The quality of the product, adequate inventory and appealing marketing are just as important, said Eric Anderson, a professor of marketing at Northwestern University’s Kellogg School of Management.
However, as the e-reader marketplace has grown crowded, “there are lots of substitutes out there, so the only way they can create demand is by lowering the price,” he said.
Still, the iPad’s US$499-and-up price tag has not stifled demand for that device. Though the iPad does much more than display books, customers often choose between the two, and are willing to pay much more for the iPad because it is an Apple product, said Dale Achabal, executive director of the Retail Management Institute at Santa Clara University.
“The price point Apple can go to is quite a bit higher than the price point other firms have to go to that don’t have the same ease of use, design and functionality,” he said.
Apple says it has sold 3.3 million iPads since introducing it in April.
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