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VIDEOIs Amazon's New Kindle Good Enough?
Despite new features -- like a battery that lasts for a month and a slightly smaller size -- the Kindle 3 may not be cheap enough at $139.
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Improvements to the Kindle include a screen that features increased grayscale contrast, a battery that lasts for a month, and it’s slightly smaller than the last version. The reader comes with a Wi-Fi and 3G version and a Wi-Fi-only version. The 3G-Wi-Fi version will sell for $189 and the Wi-Fi-only version will sell for $139, making it the cheapest reader on the market right now. Amazon said it will begin taking orders today with a ship date of August 27 to customers in 140 countries.
This is a smart move on Amazon’s part. The company isn't going to compete head to head with Apple (AAPL) over its iPad or with other tech companies making similar reading products. Amazon CEO Jeff Bezos said the company intentionally left off “whiz-bang” features like a colored screen and touchscreen controls, which he thinks would ruin the reading experience.
Where Amazon misses on this new Kindle is the price. While it’s currently the cheapest reader on the market, it’s not cheap enough. The Kindle does look cheap compared to Barnes & Noble's (BKS) Nook, which retails for $199, and Apple’s iPad, which goes for $499 and up. Amazon should price the Kindle under $100 dollars. This would make it available to the mass market and then Amazon could put its efforts into selling books and subscriptions.
This would be similar to the “razor blade” business model made famous by Procter & Gamble’s (PG) Gillette. The idea is to sell the razor cheap but users have to keep buying razor blades. In other words, Amazon could entice the market with an extremely low Kindle price and then get users to keep buying books priced anywhere from $5.99 to $16.99.
The ebook market is growing fast but it's extremely crowded. This new, improved Kindle will keep Amazon in the game for now but it won’t be long until some company sells the reader at a price where everyone will own one.
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