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Analyst: Amazon should drop Kindle to $149 to survive

updated 02:30 pm EDT, Thu April 1, 2010

Piper Jaffray says Kindle should avoid iPad

Piper Jaffray analyst Gene Munster today called for Amazon to drop the Kindle's price to $149 to avoid a collision with the iPad. He told TTD that trying to compete directly with Apple would almost certainly fail and that the best choice would be to avoid it as much as possible. A major price gap, in this view, would calm nervous investors.

"They [at Amazon] should stick to what they're good at," Munster said.

Amazon has already been aggressively cutting the pricing of the Kindle over the past year, bringing it down to $259 this past October. However, the device is not only facing pressure by being too close to the iPad for some buyers but threats from stripped-down but much less expensive readers, such as the Kobo eReader. A price drop could eliminate any profit Amazon might make, but the retailer has often treated the Kindle as a loss leader to help drive e-book sales.

The financial expert added that Amazon doesn't need to be successful in e-readers, as its online retailing business could double or triple in share within the next five to 10 years. It could either afford to take losses or back out of the business but still remain successful as a company, Munster said.

by MacNN Staff



  1. dwoodruff

    Joined: Dec 1969


    a better idea...

    They should expect the same amount of interest consumers have in cassette tapes and floppy disks.

  1. Jonathan-Tanya

    Joined: Dec 1969


    master of the obvious

    price drops in technology? gee, thanks mr. analyst

    The Kindle has been steadily dropping in price, and was going to continue to do so, on towards its ultimate goal of being sub-$99.

    Apple really has nothing to do with that, other than the fact, that Amazon was losing money on e-book bestsellers, the new agency model - don't forget, ironically forces Amazon to make a profit.

    On the wholesale model, the publisher might make $14 on a book, and Amazon would sell it for $9.99 - taking a loss on the book, just to promote the Kindle store. On the new model, the publisher sets the price, and gets a cut. In the agency model, the publisher makes less money, the books cost more, and where does that money go? To amazon, they aren't allowed to take a loss on it anymore.

    Sounds nuts, right? Well, it is, but the publishers feared amazon's pricing control would eventually force them to take less.

    Anyway, now that Amazon is out of the losing money on e-books game...they no longer have as much pressure to profit on the hardware sales. They can go the opposite route now, lose money on the hardware, and concentrate on the Kindle store profits.

    In that sense, this has accelerated the process of driving the Kindle hardware downwards - but in the sense of differentiating from the iPad...nah.

    It was already half the price, and one is a dedicated ebook reader, the other is a mobile computer.

  1. qazwart

    Joined: Dec 1969


    Maybe Goodbye to Kindle?

    As your article states, the Kindle's main purpose is to drive ebook sales. It has always been my contention that Amazon has no direct interest in the failure or success of the Kindle except to open up the eBook market.

    Amazon might simply take the attitude that if the Kindle fails, it's no great loss if they can get a piece of the ebook market from the iPad. Fortunately, for Amazon, the Apple book store is an optional piece of software (you download it free from the Apple Apps Store), The prices of Apple's books are about 30% higher than Amazon, and the book store software is missing features that Amazon's store has like taking notes, reading on other devices like the iPhone, Blackberries, and Mac/Windows PCs.

    If I was Amazon, I'd be sure to push the iPad version of the Kindle bookstore everywhere they can. It should be a big feature on its website and should let people know why they should buy their ebooks from Amazon vs. Apple.

    Amazon's focus should be on being platform agnostic. Get the ebook store on Android, Google Chrome OS, RIM, Windows and Mac. Allow people to read books from one platform to another and not to worry about the Kindle sales.

    The Kindle will still be around for quite a while since its has some distinct advantages: It's eink screen allows you to read for days, even weeks without recharging the batteries. It's screen works better the brighter the light which makes it great for outdoor reading. It is lighter by half which makes reading much less tiring.

    There's no real need for a price cut. The Kindle is still 1/2 the price of an iPad and to many people, it might be worth it for an exclusive device that does exactly one thing and does it better than the iPad: Read books that contain lots of words.

    Even if the Kindle's sales completely collapse, the Kindle did its main job: Spur the ebook market for Amazon. It's now Amazon's job to make sure they're the ebook store of choice no matter what ebook reader their customer has.

  1. VinitaBoy

    Joined: Dec 1969


    Comparing "Like" Devices

    "There's no real need for a price cut. The Kindle is still 1/2 the price of an iPad . . . ."

    Um, I suppose that's true if you want to compare Apples to Oranges. To be fair, the iPad's only fair comparison in terms of screen size and memory availability is the Kindle DX, and THAT device's price is $489.

    For that $10 savings, one must forego a backlit color display, a suite of productivity apps (built in or available for purchase), games, music, e-mail, movies, surfing the web, and much more. Not to mention that the iPad has FOUR TIMES the memory/storage capacity in the least expensive model!

    Make no mistake: I love Amazon. I buy almost all of my tech devices there . . . but unless I'm missing something that's obvious to others, the Kindle DX seems like a complete and utter waste of money for a one-trick pony.

  1. iphonerulez

    Joined: Dec 1969


    The Kindle did a good job for Amazon

    and for readers. It basically carried the eReader mindshare for the past couple of years. I believe that Amazon should only concern themselves about selling eBooks for all platforms. Yeah, they should still have some flagship eReader of their own, as long as they don't take it too seriously. Their goal should be to move eBooks and I think Apple should allow the Kindle app to run on all their mobile devices to keep plenty of content available for users.

    I'm not going to get into whether the iPad is better than the Kindle or whatever. I think the Kindle is serving its purpose for those that just like to read. It can still do some things the iPad can't. I think a color Kindle would be nice, but the price will have to be kept reasonable if it's going to be compared to the iPad. I don't think it should, but that's just my personal opinion.

  1. slapppy

    Joined: Dec 1969


    Buying a Kindle?

    Why bother with a Kindle even at that price? Its not worth the money, period.

  1. thebiggfrogg

    Joined: Dec 1969


    The guy's a Munster?

    Sounds more like Lurch or Cousin It.

    (I take that back Cousin Its gibberish was much more intelligible).

  1. testudo

    Joined: Dec 1969



    Amazon can increase sales if it reduces the price???? You're f'ing kidding me! Damn, someone better go tell this analyst to stop giving away this incredible advice for free. There's people out there who'd pay big money for analysis like this....

  1. testudo

    Joined: Dec 1969


    Re: Comparing like devices

    Um, I suppose that's true if you want to compare Apples to Oranges. To be fair, the iPad's only fair comparison in terms of screen size and memory availability is the Kindle DX, and THAT device's price is $489.

    How is it that comparing the Kindle to the iPad isn't 'fair', but somehow the DX is a fair comparison? Just because of screen size?

    BTW, since the Kindle basically has always available connection to the bookstore through it's whispernet, you should be comparing the Kindle or Kindle DX to the data-capable iPad. That means it's $489 to $639 + $30 a month.

    Or is that the point where you then go "Oh, but the iPad has wi-fi, and that's everywhere, so you don't need the other!" Unless, of course, the iPad had the data-plan and the Kindle didn't, and then it would be a big plus for the iPad, I guess.

  1. facebook_Chad

    Via Facebook

    Joined: Apr 2010



    That actually sounds like a good idea dude, serously.


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