The Kindle $189 price-point is quite a shock. The Kindle at $189 makes things very, very interesting on a few fronts -
- It’s below the $200 price-point which marketers like to obsess over and consider some sort of holy grail of consumer electronics pricing. It almost becomes an impulse purchase.
- It kills both lower priced options like Kobo and Nook WiFi and higher priced options like Sony Reader Daily Edition on value for money. The only competitor to Kindle at $189 is Nook at $199.
- It removes netbooks and tablets from the equation for most readers – The price difference is now $200 for newer netbooks and $310 for the iPad ($429 for iPad 3G).
- Lots of existing eReader owners who don’t own a Kindle will consider getting it. As will lots of people who read on other devices. $189 registers psychologically as $100-something and seems much, much lesser than $259 which seems 2 times as much (we’re talking about perception here).
- A lot of people will start buying Kindles for family members and as gifts for friends. Why share a Kindle when an additional one is just $189 plus you can share all the books. Basically, for $189 you get a Kindle and a duplicate copy of every single Kindle book you own.
People are very impressed by the eReader price cuts and if we stick to people who’re actually analyzing the possibilities we start seeing some very intelligent reactions to Kindle $189.
Kindle $189 – Will it help Amazon win the eBook Wars?
GigaOm thinks that the eBook wars will be won by Amazon –
- Kindle Apps and Buy Once, Read Anywhere. Citing his own habit of using Kindle for iPad as an example Om thinks Kindle Apps across various platforms give it a big advantage.
- Association with Books and Reading. A good point about how people associate buying books online with Amazon and Amazon has customer credit card information (Not to mention 1-click buying). He mentions Amazon’s 15 years of customer data and that’s perhaps the single most potent advantage – something no one else can compete with as far as books are concerned.
- Amazon can do software. He cites B&N’s lack of technology DNA. This sounds a bit elitist and there’s still a lot of truth to it. He definitely makes a good point about Amazon, at heart, being a software company.
It’s interesting to hear an opinion like this. While Om predicts Amazon winning the ebook wars he feels the Kindle itself will die out. He even says that the reading experience on the iPad is far superior. There really seem to be LCD-compatible people and LCD-incompatibles and never the twain shall agree.
Is a Kindle at $189 enough for people to stop comparing it to Tablets?
It seems not.
It’s becoming obvious that a lot of people were just pretending that price was a factor and they had absolutely no intention of ever buying an eReader. It’s vexing that now that we have a $189 Kindle, a $199 Nook, and a $149 Nook WiFi these people have suddenly changed their mind about what the ideal price point for an eReader should be.
The frequent cries for a sub $200 device are now replaced by cries for a $100 device.
Bowerbird corrects the Illiterates at SAI
Jay Yarow’s articles would make you think the Kindle stole his girlfriend or shot him in the knee. He posts an article on the Kindle $189 price-cut which is just a thinly veiled swipe at Amazon and yet another prayer from Yarow for Amazon’s demise.
Luckily Bowerbird points out the fallacy of his argument -
amazon wasn’t “forced” to lower their price.
where do you get your information, anyway?
since amazon is making so much more money
from each individual e-book (blade) they sell,
they can drop the price on the kindle (razor)…
That brings up an interesting question – Is Kindle at $189 a loss leader, and if yes, what does each shipped Kindle cost Amazon?
The blades and razors arguments didn’t make sense when ebooks were $9.99 and Publishers were getting $14 per book. However, now that Publishers are getting only 70% of what ebooks are sold for it’s becoming pretty relevant.
Here’s WSJ’s take on the Kindle at $189 -
“Booksellers are actually making money off of e-books now.
That was not the case when they built their business plans and set their original prices for these devices,” said James McQuivey, an analyst at Forrester Research.
James McQuivey also predicts $99 dedicated eReaders by end of 2010.
Why did B&N cut the price of the Nook?
It’s a bit tiring to have the Press always interpret things in terms of the $500, not suited for LCD-incompatibles, iPad. If we are to believe them the Sun only shines so it can reflect off the iPad’s sexy screen and show iPad owners the glory of the cult of Apple.
B&N’s Tony Astaria says that B&N had been working on a low-priced Nook long before Apple announced the iPad. The fact that nookwifi.com was registered by B&N in May of 2009 attests to this. He also said the price-cut on the 3G Nook was to encourage summer reading.
It’s worth looking at what possible reasons there could be for a Nook price-cut -
- The Kindle 2.5 update with Folders and lots of features tilted the balance heavily in favor of the Kindle.
- B&N anticipate a Kindle 3 release.
- B&N think Amazon is about to release something (a device, a feature) that would give Kindle a big leg up over the Nook.
- B&N didn’t see as many sales as their sold-out holiday season made them believe they would have and now have excess Nook stock.
- They feel they are getting left behind.
- PVI hit new economies of scale with their 6″ eInk screen.
- Barnes and Noble are realizing that this is going to become a winner takes all game. The company with the most eReader and eBook sales will be able to offer the lowest prices and that in turn will lead to more sales and a vicious positive cycle.
Logically it makes little sense to cut prices from $259 to $199 when you have a $149 model debuting. You just killed your product differentiation. Here’s B&N’s official reason (via WSJ) -
Barnes & Noble said it dropped the Nook’s price so it could reach a wider group of potential customers, especially ones who aren’t hard-core readers. Amazon declined to comment beyond a press release that simply announced the price cut.
WSJ have a pretty good article and kudos to Geoffrey Fowler for not trying to interpret everything through Apple’s lens.
WSJ say Kindle 3 and new Sony Reader imminent
Wall Street Journal claim that the coming weeks will see both a Kindle 3 and a new Sony Reader -
In coming weeks, both Amazon and Sony Corp. plan to unveil new versions of their devices, said people briefed on the matter. Analysts believe the new products also will emphasize lower prices.
This is the first time someone has mentioned a ‘coming weeks’ timeframe for the Kindle 3. Earlier rumors have all talked about a Kindle 3 release date in August. If Amazon really do release Kindle 3 in July it’ll be a welcome addition to the madness and bustle of the eReader market. It would also go a long way towards explaining the Nook at $199 and the Kindle at $189.
Filed under: kindle Tagged: | $189 kindle, kindle thoughts
Why did B&N lower the Nook cost? Quite simple….Borders came out with a low end ereader called the Kobo which sold out immediately. B&N, seeing this, ingeniously came out with a $150 Wifi only model to compete with the $150 Kobo. That made the 3G + Wifi $259 model too expensive. Loved the Nook at $259. Love it even more now at $199 and looking to buy more for my wife and mother. But where with the price wars drop the final cost to? I guess we’ll have to wait and see but no matter what you buy, Nook or Kindle, they’re both an incredible value!
Agree totally with you – Now you can’t go wrong with either Nook or Kindle at their current prices. It’s a good time to be a reader.
consumer electronics product prices typically either drop by 10% every 6-12 months or maintain price by adding features. The Kindle had been $259 for over a year so a 15%-20% price drop was overdue.
It actually dropped from $279 to $259 when Nook was announced. So your 10% every 6 months does hold a lot of truth. It’s gone from $299 at launch to $189. That’s a 36.7% drop in 1 year 4 months.
The price is still not ideal (~$100), but it is certainly more reasonable than before. Enough so that I could easily justify buying one for myself, friends, or family.
However, DRM is still the deal killer. If I cannot own my books and do with them as I wish, then there is no way that I could switch from physical to digital. (The number of books in my library is so large as to be problematic, so I do wish to transition.) This is not a Kindle problem, but a problem nearly all of the books that Amazon sells for it. As such, I do think that I could even use a Kindle if given to be for free. The industry needs to grow up.
I do NOT expect a kindle 3 announcement until early August. Why? Because Amazon will wait more than 30 days after the price drop announcement. Same as they did with the Kindle2/DX.
If they wait, then the Kindles sold at $189 are a done deal. If tjhey annojnce a new K3 before the 30 days, then people may cancel/return their K2′s and wait for the K3.
Suggestion, if you are thinking about K2 vs K3? Buy K2 at target, which, I believe, has a 90 day eturn policy for full refund. THEN, wait to see what AMazon does.
I do believe that at $189, the Kindle is a must buy. I’m getting one for my wife tonight, at Target if I can.
That’s a really good suggestion. Thanks Richard.
Yes, it’s rather unlikely they’ll announce a Kindle 3 really early and negate all the $189 Kindle 2 sales.
they could also intro a Kindle 3 that has some additional features (touch? WiFi (which is really cheap to add)? others? and price it above the K2 and keep the K2 as the price leader/good model in good (K2), better (K3), best (new DX with touch) product line-up coming in ~Aug.
I would also expect a Sony product refresh in the Aug timeframe as well.
That strategy would make a ton of sense – $189, $259, and hopefully $329. The Sony refresh might be sooner.
looking at the Kindle price history
Nov 2007 $399
May 2008 $359 (10% drop in 6 months, yes it was sold out a lot of this time)
Feb 2009 K2 @ $359
July 2009 $299 (17% drop after 16 months)
Oct 2009 $259 (13% drop in 3 months)
June 2010 $189 (27% drop in 8 months)
looking at the total you get 53% drop in 31 months. That drop over that period of time would be what you would expect for an essentially unchanged device that had at least one cost reduction (K2) and maybe two (the radio in the international version might have been cheaper). In many ways the recent price drops have had the Kindle “cacth-up” for the meager price drops in the 1st 22 months it was shipping.
You’re disregarding all the improvements to the Kindle service and the software. Lots of features. Free Whispernet in 100+ countries. Free Internet browsing in 100+ countries.
I would bet most Kindle owners use Whispernet/free internet in 1 country, being in 100+ is a feature that for most has no benefit beyond the country they live in.