Amazon cuts Kindle price, adds global version

Friday 09th October, 07:02 AM JST

CUPERTINO, Calif —

Amazon.com Inc is cutting the price of its Kindle electronic-book reader yet again and launching an international version, in hopes of spurring more sales and keeping it ahead of a growing field of competitors.

With Wednesday’s $40 reduction on the Kindle, the device now costs $259. It debuted in 2007 at $399 and started this year at $359, before another price cut in July.

In hopes of stimulating even more growth, Amazon also will start selling a $279 version of the Kindle that will work in 100 countries and be sold to readers outside the U.S. This Kindle will begin shipping on Monday in such countries as Australia, Japan, India and Germany.

The current Kindle can wirelessly download content in the U.S. over Sprint Nextel Corp’s network, but outside the country you must connect it to a computer with a USB cable to add content. The international version will be able to wirelessly download content over AT&T’s network around the world.

In an interview, Amazon CEO Jeff Bezos said the company can now afford to reduce the price of the Kindle sold in the U.S. because of the increased number the company is making—and selling.

Bezos called it Amazon’s best-selling product, but Amazon has not disclosed sales figures for the Kindle, which has a 6-inch (15-centimeter) screen that displays shades of gray, room to store 1,500 books and the ability to download books wirelessly.

The price reduction also shows Amazon is trying to maintain a lead in the nascent e-reader market as the field gets more crowded.

According to a report being released Wednesday by Forrester Research, e-reader sales will total an estimated 3 million this year, with Amazon selling 60 percent of them and Sony Corp 35%. Sony offers a $199 “Pocket Edition” e-reader and larger $299 touch-screen model, and in December it will offer a $399 model that can wirelessly download books rather than needing a connection to a computer.

Lesser-known companies are moving in, too. IREX Technologies plans to release a wireless-enabled $400 e-reader this fall, and Plastic Logic Ltd intends to sell one with wireless capabilities as well.

According to the Association of American Publishers, e-books accounted for just 1.6% of all book sales in the first half of the year. But the market is growing fast. E-book sales totaled $81.5 million in the first half, up from $29.8 million in the first six months of 2008.

And Bezos said Amazon sells 48 Kindle copies for every 100 physical copies of books that it offers in both formats. Five months ago it was selling 35 Kindle copies per 100 physical versions.

Bezos said that increase is happening faster than he expected.

“I think that ultimately we will sell more books in Kindle editions than we do in physical editions,” Bezos said in the interview, which was held in the Cupertino offices of Lab126, the Amazon subsidiary that developed the Kindle.

Seattle-based Amazon also sells a larger version of the Kindle, the DX, which was released this past spring and is geared toward textbook and periodical reading. It costs $489.

Having sub-$299 price tags on the U.S. and international Kindles could help Amazon this holiday season—a period that the National Retail Federation is expecting to be sluggish. The trade group forecast this week that retail sales in November and December combined will fall 1 percent from last year.

Forrester analyst Sarah Rotman Epps thinks that e-reader prices need to come down even more if the devices are going to become mainstream products, however. She suggested $99 as a price that would be much more likely to lure consumers.

She said people “have somewhat unrealistic expectations of how much consumer electronics in general, and e-readers in particular, should be.”

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Latest 15 of 20 Total Comments Show All

cadmium at 01:07 PM JST - 9th October

Competition is good, it'll make Amazon and Sony produce better and (hopefully) cheaper e-ink readers in the future.
wibble at 03:53 PM JST - 9th October

I ordered my Kindle when it was announced. Had been hovering on eBooks for a while and $279 was too good to pass up. I buy many books each year and shipping from the States is expensive, but not as expensive as buying here. I believe I'll save a lot of money given the eBook version is usually 40% cheaper than the paper one and I don't pay shipping.

Also the ability to read newspapers and magazines is very attractive. These devices are so different from NetBooks and Laptops it isn't worth comparing them. From a functionality, battery life, speed to operate and ease of use perspective they win hands down - and you have Amazon with the content....
Yelnats at 03:56 PM JST - 9th October

I like having a real book in my hands, not an electronic device.
sk4ek at 05:23 PM JST - 9th October

As a resident of Japan, I've been curious about when and how Amazon would start making this device available to overseas users (I travel to the U.S. often enough that I could, perhaps, just buy one there, load it up with books, and bring it back here, but it would just be a "dead" storage device, defeating the attractiveness of the Kindle's real-time connectivity and download features).

It seems the new 'international" service still mainly targets U.S.-based users who are traveling abroad, but Japan is shown as being included the wireless service coverage area, and wireless service for downloads is supposedly free of charge (according to Amazon's site information for Japan-based users). However, only English-language publications will be available for download. (No surprise, as Amazon is having as much trouble as Google in dealing with foreign publishers in just about any language but English).

At this price, with free downloads, and a reasonably good library of downloadable content available for a decent price, this is looking more attractive...though I am still basically a BOOK book person.

I agree though, that Amazon should take the razor-and-blades approach (or the printer-and-toner approach, if you like), practically give away the devices and lock in a sustainable revenue stream from content sales.
sk4ek at 05:25 PM JST - 9th October

And as wibble points out above, compared to the premium associated with buying and shipping books from the U.S. (either directly through Amazon, etc. or a Japanese equivalent), this could be a great deal, at least for books and periodicals for which having the physical copy isn't such a priority.
helloklitty at 05:39 PM JST - 9th October

obsolete in two years
Osakadaz at 05:54 PM JST - 9th October

I cannot stand reading text on my Iphone..why anyone would prefer this to a book is beyond me..although I do see the probable environmental benefits.
Beelzebub at 11:07 PM JST - 9th October

I truly love real books. But these things are practical, affordable and FAST. The world is changing. One might even say the writing is on the Kindle....
qazwsx at 11:35 PM JST - 9th October

Ipods would also be $10 if people weren't willing to pay much more, because they enable users to use I-Tunes - Apple's cash cow.

I don't believe this is true. According to Billboard magazine:

"iTunes earned an operating profit between $160 million and $390 million on revenues of roughly $1.7 billion in the year ended September 30, 2007. They believe that the profit is probably on the lower end of that range-"

"for Apple, iTunes is a drop in the bucket, compared with the business of selling iPods. The company garnered more than $8.3 billion in revenue from iPod sales in the year ended September 2007, and teardowns tend to suggest that profit margins are pretty high on iPods"

full article here: http://news.cnet.com/8301-13526_3-9894585-27.html
nightvision at 02:56 AM JST - 10th October

Yup, obsolete in two years at which time Amazon would've milked this Kindle version dry.

Amazon should also focus on the educational capabilities of their device and make a more affordable mass-market version for students.
bdiego at 06:36 AM JST - 10th October

Thank you qaz, people just don't understand the hardware market. Apple makes about 12 cents a song, so if you expect them to lose a hundred bucks on hardware fat chance of them making it back.
IvanCoughalot at 07:30 AM JST - 10th October

Dear Santa...
wibble at 09:23 PM JST - 10th October

helloklitty - Obsolete in 2 years. Yes, so what?

nightvision - the kindles are already very practical for educational texts. What needs to be done is similar publisher agreements for educations texts - which are very expensive - to provide the content.

Potentially in boh price, but more importantly convinience, the kindles beat a backpack full of hardcover educational texts any day.
Seiryu at 12:13 PM JST - 12th October

people just don't understand the hardware market. Apple makes about 12 cents a song

Margins on hardware vs. consumables vary between markets and vendors for various reasons. For Apple, their iPods are their highest margin item, but iTunes is razor-thin.

In game consoles, client hardware such as the Xbox 360 and the PlayStation 3 are commonly sold below build cost. The increased royalties made from the games (ARV $50) offset the revenue loss.

The Kindle allegedly costs about $189 to build (Slattery). Amazon sold it at what the market would bear, $350, to milk the early adopters, and then lowered the price to widen the tie-in market. I don't know the margins on traditional publisher eBooks, but books through Amazon's Digital Text Platform (DTP) net them 65%, with little overhead and the other 35% as royalty.

eBooks can be anywhere from $0.00 to around $9.99 top ARV. There is one for $6000 though - some nuclear physics book o__O...

As for usage, Kindle SUCKS for academic and reference use due to fragility, slow page turning, lack of color, etc. However, it is perfect for reading scanlations and browsing web on BART. So finally you can get caught up on Kuroshituji!

In conclusion, I would expect Kindle prices to be down for the holiday season, and they may be further depressed in response to SONY activity. $199 may be in the works!
nightvision at 09:12 AM JST - 20th October

wibble: that's exactly my point--2 years is a very good run for this Kindle, after which I'm sure they'd have laughed all the way to the bank.

I really, really hope they'd make it more affordable, or a more affordable version... perhaps lose some minor functionalities, but at least put it within mass-market reach.