John Paczkowski

Recent Posts by John Paczkowski

Kindle’s Killer App: A Price Cut

Remarking on the iPad iBooks application in January, Apple CEO Steve Jobs said, “Amazon’s done a great job of pioneering [e-book] functionality with the Kindle. We’re going to stand on their shoulders and go a little further.”

It was a backhanded compliment, but also a threat. What will Amazon (AMZN) do if Apple (AAPL) delivers on it, as early reviews of the iPad suggest it might? If the iPad succeeds in capturing e-reader mindshare, and the market decides the iPad is indeed a direct competitor to Kindle, how should the retailer respond?

Simple: With a price cut. Piper Jaffray analyst Gene Munster suggests that Amazon drop Kindle’s price to $149 from $259, which seems reasonable (manufacturing costs permitting).

By widening the pricing gap between the two devices, Amazon might temper the maybe-I-should-just-spend-the-extra-money-and-get-the-iPad hesitancy that, let’s face it, a lot of potential Kindle buyers are probably already experiencing.

At $149, the Kindle as single-purpose reading device is a pretty compelling proposition, particularly given the selection advantage the Kindle store has over the iBook store. It’s an impulse buy.

At $259, it starts to become “half the money I need to buy an iPad.”

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik