There are many consumers who pay what’s asked of them to get their hands on the latest gadgets. In reality, a device is worth as much as you think it is. Let’s take Kindle for instance. When the device made its debut, it was being sold for close to $400. Many complained at the time that the device was simply expensive and yet they went out and bought the device. Amazon did reduce its prices to boost its Kindle sales, but there is no question Amazon could have sold more units if it was more aggressive with its pricing strategy.
Apple iPad has generated a lot of buzz in the U.S. The device is not only shiny but way more affordable than any of us thought it’d be. It’s true that it has some serious issues. But people don’t seem to be paying too much attention to those problems at this point. So why is the iPad selling like hot cakes when people find $259 Kindle expensive? Apple’s marketing machine aside, could it be that Amazon is charging too much for its device?
According to multiple sources, Amazon is getting ready to cut its Kindle prices after the iPad launch. Piper Jaffray analyst Gene Munster has claimed that Amazon may have to drop its prices by more than $100 (potentially to $149) if it wants to keep its sales numbers high. Considering that Amazon has a huge set of sales trends and data available through its data mining system, you can be rest assured that it will react if its sales numbers are dismal post-iPad launch.
e-Book readers should be cheaper than they are. There is no question about it. Paying hundreds of dollars for an e-book reader when publishers are threatening to increase e-book prices does not make sense. Amazon has had a few years to lower its costs and pass on the saving to its customers. But that has not happened lately. The trouble is, the iPad is not going to completely replace Amazon Kindle. The device is fancy and can be used as an e-book reader. But it’s just not as energy efficient and does not take advantage of E-ink technology either.
I do believe that Amazon’s best bet is to be more aggressive with Amazon Kindle. The company can adopt a similar model to wireless subscription to subsidize the hardware and sell more books in the process (let’s say a 24 month book subscription plan). The numbers will need to be worked out, but Amazon Kindle’s market-share will grow much faster if Amazon manages to make the device affordable to the average Joe. The iPad is not for everyone after all. That’s why Kindle and other e-readers will stick around. But their manufacturers need to play their cards right.
Your take: would you sign up for a 2 year ($20 a month book subscription plan) if Amazon offered a Kindle with it for free? What’s the fair price for Amazon Kindle in your opinion?