How cheap can Amazon Kindle get? We have believed Kindle should be free for a long time. There is no reason one should have to pay for a basic e-reading device if e-reader makers find ways to offset their manufacturing costs. Amazon may not be ready to offer the Kindle for free. But it does plan to finally offer a Kindle for under $100. Citigroup analyst Mark Mahaney claims a $99 Kindle may be planned for Christmas time.
We would expect a sub-$100 price level by late 2011 … Our belief is that the current price levels are attractive enough to broadly expand the potential Kindle buyer base.
Amazon is already selling a top of e-books and Kindles. Going below the $100 price line could be a major psychological win for Amazon. People are more likely to consider a sub-$100 purchase a win than one that is slightly over $100.
Amazon’s ad platform for Kindle is not quite as strong as it needs to be for the company to significantly discount Kindles. But ads, apps, and subscription plans will eventually lead to much lower prices for Kindles. The days of highly expensive e-readers are truly over.
Kindle has a major competitor in the Simple Touch Reader. Amazon can put immense pressure on B&N by lowering its e-readers’ prices dramatically. It is already planning to bring two tablets (a dual core and a quad core) to the market by the end of the year to challenge NOOK Colors and iPads of this world.
I strongly believe that Amazon needs a Kindle 4 to keep its momentum in the e-reader market. It may have had enough of an advantage to delay Kindle 4’s release for a few months. Jeff Bezos knows his company can’t afford to get complacent in this business.