Amazon Turns Kindle into Impulse Buy
at $139

Event Summary

July 28, 2010 - Amazon.com is introducing a new generation of Kindle with a new electronic ink screen with better contrast, faster page turns and double the storage in a new smaller, lighter design while still keeping the same 6” size reading area. The 3G + WiFi version is only $189 with no monthly bills or annual contracts. A new, WiFi-only Kindle will be available for only $139. Both are now available for pre-order online and will ship beginning August 27.

Quick Take

Analytical Summary

• Current Perspective: Positive on the third generation Kindles from Amazon because the company is responding aggressively to the competition from generic ebook readers, other book retailers, and Apple’s iPad. The $139 WiFi Kindle is edging into impulse buy territory. With lower pricing and tight ties to Amazon’s already industry-leading electronic bookstore, the Kindle is a case study in how to compete against multipurpose gadgets with a dedicated device.

• Vendor Importance: High to Amazon, because the company needs to protect its lead in ebook retailing as the competition intensifies from above (with the iPad, and Android tablets are on the way) and below (new vendors hoping to enter the ebook market by competing on price). Amazon is mainly concerned about locking consumers into the Kindle ecosystem; it does not actually need the Kindle device to be wildly profitable, but it does need to ensure that a critical mass of consumers are buying ebooks from Amazon rather than Apple or Barnes & Noble.

• Market Impact: High on personal connected devices, because ebook readers have gone from expensive PC-tethered toys to a hotly contested category, largely on the back of the Kindle. The first generation Kindle was expensive and ugly, but it laid the foundation for success: an e-ink screen, a thin design that gets out of the way, and simple and instantaneous access to a large digital library from a vendor many consumers already had a sales relationship with. The second generation fixed industrial design issues, saw a price drop and a switch to globally-capable GSM from CDMA. Amazon has seen exponential growth with each price reduction, so the option of an even lower priced WiFi model in the Kindle’s third generation should make the device even more popular. Also, by putting more distance between the price of the Kindle and the far more versatile iPad, Amazon makes it easier to justify a purchase of a dedicated device.

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