Kindle Pricing, Research Paper Example

Amazon is one of a number of companies (Sony is another) which have developed electronic devices which deliver books, newspapers and other printed matter without using paper.  This is a growing market, with technology evolving rapidly.  In the not too distant future it is thought that mobile phones and other devices will perform a similar service. The perspectives of expansion in this new market are socially positive, arranging conditions for going green. This market will save millions of tons of trees, needed for publishing books, newspapers, and gloss magazines, and millions of gallons of water, needed for the production of new as well as reused paper. This market is new and unexplored. The most successful companies who will attain the largest market segments will prevail and will achieve the greatest of profits. This market also will make the publications of various literatures economically dependent. Today there are only a number of top electronic-book reader producers: the Amazon Kindle, the Sony Reader, and the Apple iPad.

The original Kindle came out in the end of 2007 at the price of $399. The product was sold out over the internet from Amazon.com immediately, and only by April 2008 the price was lowered to $359. The marketing approach of the Kindle was revolutionizing, making it one of the most popular products at the end of the decade. The Kindle was not manufactured specifically for a young market segment or even for the techies of the market. The Kindle is rather conservative as an electronic innovation. This specific marketing tactic made it popular among the ordinary book-lovers, the older segment of the population including. The display was made specially to make the Kindle resemble the ordinary book with the white pages and ordinary ink-printed. The display was made in so that reading form the Kindle would not stress the eyes of its readers. The device has instant 3G internet access to the Amazon internet library, where one can download any book for a decently low fee. Classic literature is made available even for free, while the Kindle does not even need to be connected with a personal PC. Manufacturers wisely approached the question of power, where the Kindle does not need a lot of energy and could hold up to two weeks without recharging and without using internet access.

In February 2009 Kindle 2 came out, the pricing policy of Amazon.com put the new enhanced device at the price of $359 a unit. This tactic lured more e-readers to buy the enhanced after its predecessor device. Amazon.com did not stop at this point, on July 2009 it announced the Kindle DX, an enlarged variant of the Kindle 2 with a 9.7 inch display. The new Kindle DX sells at the price of $459, while Kindle 2 is now at $299 per unit. That very year the iSuppli, an electronic marketing corporation which provides analyses and consultation concerning electronic value reported the prices of the Kindle 2 technology to be worth only $185.49¹. This price is extremely low, making Amazon.com able to discount further the price of its product if needed.  This pricing however does not include the fee that Amazon pays internet providers for the free internet service e-readers use. This makes the true cost of the product much higher. However, another factor that should be taken into consideration is that publications have a contracted deal with Amazon.com, allowing Amazon.com to provide literature of various publications at prices under $9.99, newspaper subscription at under $14.99 a month, and magazine available at under $2.99 per month. Considering book prices this is considerably lower than having to pay for common paper books. In addition we should not forget the price that publications pay for the production of their books.

I would recommend Amazon.com to maintain the current price, if discounting, than maximum up to $20-$30 due to the absence of some multimedia features that are provided by its competitors. The Kindle needs to remain being the leader in this new market, maintaining to compete with Apple’s new multimedia iPad. When considering the fact that the pricing of e-books is already low enough, Amazon.com should not lower the prices. This will save the interest of publications in Kindle rather than lure their interest towards other competitors in this market.

Resources

Anonymous, (2009). Business: Well read; Electronic-book readers. The Economist. 390:8618.

Amazon.com, (2009). Kindle 2: Amazon’s New Wireless Reading Device (Latest Generation).   Retrieved Mar. 20, 2010 from http://www.amazon.com/dp/B00154JDAI/?tag=googhydr20&hvadid=3098353217&ref=pd_sl_41di7k8jq1_b

Carnoy D., (2009). Report: Kindle 2 costs $185.49 to build. Retrieved Mar. 20, 2010 from http://news.cnet.com/8301-17938_105-10224907-1.html