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Amazon's new Kindle ratchets up ereader price battle

Amazon.com's announcement that it will launch a new version of its Kindle ebook reader in late August could further stoke a price battle between major players.

By Martyn Williams / Friday, July 30 2010

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Amazon.com's announcement Thursday that it will launch a new version of its Kindle ebook reader in August could further stoke a price battle between major players in the ereader market.

Ebook reader prices have been slowly falling for months but price cuts began to gain pace since late June, when Barnes & Noble cut the price of its Nook reader and introduced a new model at US$149.

The price made it the cheapest ebook reader from a major retailer. It still holds that distinction today, but might not hold it much longer.

Amazon.com's third-generation Kindle will come in two models, one with 3G wireless and one without, and the cheaper of the two will cost US$139 when it goes on sale on Aug. 27. This new model will also herald the Kindle's release in New Zealand.

It's an impressive price decline for the Kindle, the cheapest model of which cost US$259 in the middle of June. In late August, barely two months later, the Kindle entry point will have dropped by almost half.

"At that price it's now almost an impulse buy for some consumers," said Tim Renowden, an analyst at Ovum in London. He said he wouldn't be surprised if Barnes & Noble further cut the price of the Nook, but that the competition would most be felt by lesser-known brands.

Many of these companies have used price as a key selling point, but with the Kindle so cheap it will be hard to compete when Amazon.com offers additional benefits, such as tight integration with its online store and a huge library of books.