Massive Nook Tablet Price Drop – Will Kindle Fire Price Drop Follow?

The Kindle Fire and the Nook Tablet 8 GB have been at $199 for a long time. The Nook Tablet 16 GB has been at $249 while the Google Nexus 7 came in at $209 for the 8 GB version.

Today, B&N changed the equation drastically with massive price cuts on Nook Tablets:

  1. A $50 price cut on 16 GB Nook Tablet brings it to $199 (down from $249). So, for $199, you now get 16 GB of in-built memory (plus an SD Card). Suddenly the 16 GB Nook Tablet is a far more dangerous Kindle Fire competitor.
  2. A $20 price cut on 8 GB Nook Tablet brings it to $179 (down from $199). This was the model competing with the Kindle Fire and this forces Amazon to cut the price of the Kindle Fire to $179 or $169.
  3. Nook Color is down to $149. This should put further pressure on eInk Kindle and eInk Nook sales. It’s 2 years old now (from first release) but the Nook Color holds up very well.

Galaxy Nexus 7 forcing Nook Tablet Price Drops?

Since the Galaxy Nexus 7 came out, B&N has done the following to make Nook Tablet and Nook Color competitive:

  1. A temporary $50 gift card with the $249 Nook Tablet. This was a one or two week offer that ended around a week ago.
  2. 5 free Disney books with Nook Tablet. This offer replaced the $50 gift card (and apparently didn’t work very well, given the new price drop).
  3. Now this permanent $50 price cut.

It’s pretty obvious that the release of the Google Nexus 7 has forced B&N to lower the price of the Nook Tablet. Hooray Competition!

The big questions are – What will Amazon do? Is there a new Nook Tablet on the way?

Is there a Nook Tablet 2 on the way?

There might be an additional reason for the massive price cuts on Nook Tablets – A new Nook Tablet 2.

Rumors suggest that B&N will release Nook Tablet 2 in October. That it will have new improved screens and that it will support new types of media content, including content never before seen on Tablets.

These massive price cuts suggest B&N is clearing out stock. It certainly suggests that there might be a Nook Tablet 2 announcement in September or October and that the new Nook Tablet 2 will ship in October or November.

What will Amazon do? Is Kindle Fire 2 imminent?

The 16 GB Nook Tablet being available at $199 puts huge pressure on Kindle Fire.

Firstly, 16 GB is double the memory. Secondly, Kindle Fire memory can’t be expanded while Nook Tablet memory can be. Thirdly, both are direct competitors in the High-Value Tablet market and even people who wouldn’t have bought a Nook Tablet would want Kindle Fire prices to be adjusted so that they can feel they are getting as good a bargain.

Amazon must do one or more of the following –

  1. Drop the price of the Kindle Fire to $169 or $179. To avoid losing sales to Nook Tablet 16 GB and Nook Tablet 8 GB.
  2. Drop the price of refurbished Kindle Fires to $139 or $149. To avoid losing sales to Nook Color.
  3. Announce the Kindle Fire 2 earlier than it would have liked. To give future Tablet owners something to wait for.

I’d expect a response within a day or two.

Competition is Good for Us

By end of 2012 we might have the following High-Value Tablets in the market –

  1. Kindle Fire 2 in $199 to $249 price range. Rumored to be multiple models.
  2. Nook Tablet 2 in $199 to $249 price range. Might be multiple models.
  3. Galaxy Nexus 7 in $199 to $259 range.
  4. iPod Mini. Rumored to be at $299.
  5. Windows 8 Tablets.

It will be a lot of options and there will be brutal competition. Which is great for us customers. A few years ago the only option was a $499 to $799 iPad. Now, with $149 Nook Colors and $199 Kindle Fires and $199 Nook Tablets and $209 Nexus 7s, the technology can reach a lot more people. That in turn brings in more companies and more developers and leads to cheaper Tablets and better software.

Color Kindle closer than expected? New $199 8 GB Nook Tablet?

Color Kindle might be much closer than expected.

DigiTimes, which has a split personality (30% of the time Nostradamus, 70% of the time your local tavern drunkard prophesizing the 2012 Mayan apocalypse), makes three very bold Color Kindle claims

  1. EInk (the maker of Kindle eInk displays) has won a big order to make 6″ color eInk Panels for Amazon (presumably for color eInk Readers or color eInk powered Tablets).
  2. The order is OVER 3 million screens a month.
  3. The shipments start in March 2012. Say what?

If Digitime is right (and that’s a big IIIIIIIIIIFFFFFFFFFF), it would mean Kindle 5 is the much awaited Color Kindle. That Amazon is confident enough in what they have to order 3 million screens a month.

 E Ink Holdings (EIH) reportedly has landed orders for 6-inch color e-book reader modules from Amazon with shipments to begin in March …

Shipments of the touched-enabled e-book reader modules are expected to top three million units a month, the paper said.

3 million shipments a month makes you wonder exactly what Amazon are using these screens for.

Do we have a color eInk Kindle eReader or a color eInk powered Kindle Tablet?

The size of the order i.e. 3 million screens a month, makes me think Amazon is planning on putting these color eInk screens into Tablets and changing the equation on Tablet battery life.

Reasons a color eInk powered Kindle Tablet makes sense:

  1. The battery life creates a huge competitive advantage. It also combines with low price and Amazon’s ecosystem to create a trifecta of hard-to-beat advantages. 
  2. Amazon really needs to do something to improve Kindle Fire. Right now it’s surviving on low price and Amazon’s brand.
  3. There has been talk all along that Kindle Fire 1 was a stop-gap measure – until the ‘real’ Kindle Tablet could be released. That makes sense – why would a company that built a Kindle from the ground-up just clone a Playbook to make the Kindle Fire?
  4. B&N is releasing an 8 GB Nook Tablet for $199 and might drop the Nook Color price to $179 or even $149. Amazon perhaps needs something NEW to compete. More on that below.
  5. Color eInk is a sufficiently cool technology to try and make it the centerpiece of a new Kindle Tablet offering.
  6. Amazon could just add it to the Kindle Fire/Kindle Tablet family. As another option.
  7. There’s something undeniably cool and convenient about a Tablet with a week of battery life.

Reasons a color eInk powered Kindle 5 eReader make sense:

  1. Color eInk probably isn’t up to scratch yet – how will it compete with LCDs?
  2. Color eInk allows Color Kindle to compete in textbooks and in comics and certain other areas.
  3. Color eInk removes one of the perceived ‘huge weaknesses’ of the eInk Kindles.
  4. Color eInk gives Amazon a jump over B&N and Sony and Kobo in the dedicated eReader market.
  5. Color eInk will appeal greatly to some casual readers.

Actually, there are enough points here to leave me in considerable confusion as to exactly what Amazon intends to do with these screens. I’d say – 75% chance we get a Color Kindle which is the first big technological jump in eReaders since someone realized you don’t have to put a touch layer under the glass. 25% chance Amazon has some magical and revolutionary new Kindle Tablet that makes perfect pancakes and outlasts the Energizer Bunny.

Regardless of whether it’s a Color Kindle or a Color eInk powered ThermoNuclear Kindle Tablet, it’s much-needed. Why?

B&N is taking the fight to Amazon with $199 8 GB Nook Tablet

Barnes and Noble is supposedly releasing a new Nook Tablet on Wednesday. The details on Nook Tablet from The Verge –

  1. Nook Tablet with 8 GB memory for $199. The current $249 model has 16 GB memory.
  2. Available at WalMart starting 12:01 am on February 22nd.
  3. Exact same as $249 Nook Tablet except 8GB memory instead of 16 GB.

This has obviously led to some speculation – 

  1. Nook Color price will drop. Yes, obviously. Perhaps to $179 or $149.
  2. Kindle Fire price will drop. Yes, obviously. Perhaps to $149.  
  3. Android Tablet sales will increase. Yes, obviously. It’s entirely logical to assume that people will buy more of a Tablet when it’s 20% to 25% cheaper.

The Nook Tablet is really, really good. Kindle Fire is good too. However, two of the main things that made Kindle Fire competitive with Nook Tablet (and probably outsell it by a 2.25:1 margin) were the $199 price and the Amazon brand/ecosystem.

If Nook Tablet comes in at $199, then it’s instantly the better tablet for anyone who doesn’t care about Amazon’s ecosystem and brand. Amazon will have no choice – it’ll have to drop Kindle Fire to $179 or $149. 

Perhaps just as disruptive will be B&N dropping the Nook Color to $179 or $149. As we go lower, the number of people able to buy a device increases exponentially. The $250 barrier, the $200 barrier, the $150 barrier, the magical and guillotine-wielding-revolutionary $100 barrier.

Kindle Fire is $199. The faster, hardware-volume-button-equipped, SD-card-slot-possessing Nook Tablet 8 GB will be $199. Nook Color will be $149 or $179.

The only solution for Amazon – Kindle Fire price drop to $179 or $149, new Color eInk powered Kindle Bonfire. Aah … the joys of Kindle Fire vs Nook Tablet competition.

Did Amazon rush Kindle Fire to prevent Nook Tablet’s domination?

Did Amazon rush Kindle Fire to market? It certainly seems so. Nearly all the problems actual owners are reporting fall into two categories –

  1. Fundamental Hardware design decision mistakes such as not having a volume control and not having a back button. Physical buttons are so nineteen-ninety-late.
  2. Basic Software issues such as the Carousel and the touchscreen responsiveness fluctuating. Who wouldn’t want their erotic books displayed on their front page?

It’s interesting how many of the software issues are basic issues that one or two rounds of bug fixes would solve. It’s even more interesting how nearly all the hardware issues are issues that even a 2 to 3 week user test would highlight. These are issues that really shouldn’t be there in a proper release. It certainly suggests that Amazon rushed the release of the Kindle Fire.

Today, we have interesting takes on Kindle Fire –

  1. New York Times paints a dismal picture claiming most Kindle Fire owners are disgruntled. Trust NY Times to side with the iPad.
  2. TechCrunch thinks we should not underestimate the Kindle Fire, Amazon’s Trojan Horse.

The key thing is that Amazon didn’t have an option. What are the three best sub $250 Tablet options in the market? Nook Tablet, Kindle Fire, Nook Color (according to my experiences – Nook Tablet is first and then Kindle Fire is second and Nook Color is a close third).

If Amazon waited to do the fixes that users almost certainly pointed out during user testing, and to fix the bugs that Amazon almost certainly knows about (Optimized Mode in Silk Browser is slower than unoptimized mode – the horror), then it would have missed the Holiday Season. Then we would have had Nook Tablet as the #1 sub $250 tablet and Nook Color as the #2 sub $250 Tablet.

Instead of:

  1. 5 million Kindle Fire Sales and 2.5 million Nook Tablet and Nook Color sales in Holiday Season 2011.

We would have had:

  1. 5 million Nook Tablet and Nook Color sales in Holiday Season 2011. Zero Kindle Fire sales.

This causes all sorts of headaches i.e. developers and publishers and authors start optimizing for Nook Tablet and Nook Color. People start associating Nook with High Value Tablets.

This (the threat of Nook Tablet and Nook Color) is precisely why Amazon rushed Kindle Fire

Amazon is scared to death of what Nook Tablet and Nook Color might do in the casual reader market. Casual Readers are serious shoppers. B&N is almost certainly going to pair up with Google or another provider for movies and music. It’s already started to sell rugs and such. It’s already bought Borders’ customer email list. Where does that leave Amazon?

Well, if Amazon doesn’t rush Kindle Fire, it leaves Amazon out in the cold. Amazon had already spotted B&N a year in the Reading Tablet Market. If it also spotted B&N 6 to 9 months in the low-price Tablet market, it would become too much of a lead.

My random guess at what happened

Amazon has a very cool and innovative Tablet. It was taking way longer than expected. When Jeff Bezos realized that it wasn’t going to arrive until mid 2012 (perhaps because of Mirasol integration issues), he decided to swallow the bitter pill of taking the Playbook and branding it with a Kindle logo (the size of the logo on the back should be a clue) and a rough version of the OS the ACTUAL Kindle Fire Tablet was going to use.

It doesn’t make me very happy to realize this (as a Kindle Fire owner) – However, it’s pretty likely that we’ll see a much advanced Kindle Fire in 2012 that will be nothing like the current Kindle Fire. We’re talking about a company that spent 4 years and made a Kindle that was like nothing else (and not necessarily in only good ways). Would it really have cloned a Playbook?

Is it OK to release an unpolished product to prevent a rival’s dominance?

Don’t really know the answer to that question. Amazon has a very strong brand and customers will give it some benefit of the doubt. It also ate a lot of the cost and sold Kindle Fire for $199. While there’s no way to excuse releasing a product where the ‘optimized’ version of the ‘silky smooth’ Silk Browser runs slower than the unoptimized version, its understandable that Amazon didn’t want to get left behind BOTH Apple and B&N.

If Amazon sells 5 million Kindle Fires (and all signs point to Yes) and does a lot of software updates that fix 90% of the issues that should have been fixed before release, customers will be OK for the most part. In fact, psychologically, a certain research study which is now hard to find shows that people like a company more when it messes up and then fixes the mess. We literally prefer a flawed hero who redeems himself over a hero who is already perfect (except Tim Tebow and Chuck Norris).

Amazon’s pulled it off. Kindle Fire has a lot of flaws that no publicly released device/product should have. However, it has managed to –

  1. Sell millions of devices.
  2. Validate the market for a low-priced Tablet from Amazon.
  3. Slow the rise to power of Nook Color and Nook Tablet.
  4. Show how much trust its customers have in Amazon.
  5. Shown the importance of being first to market or at least quick to market.

[Update: A Comment from Mike that’s perfect]

The question is not, ‘Is it OK to release an unpolished product to prevent a rival’s dominance.” It is “Would that approach possibly work?” Answer seems to be yes…

Of course, there is not a single person in the world who bought a Kindle Fire instead of an iPad. So Amazon hasn’t achieved everything it wanted to. A powerful new Kindle Fire 2 is around the corner. Kindle Fire has played its part – its made sure that the Kindle Fire 2 will enter a market where Amazon already has a sizable presence.