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The eBook reader wars

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wraith808:
So, Barnes and Noble reduces the price of the nook to $199 ($149 for the wi-fi version), and without fanfare, Amazon reduces the price of the Kindle to $189.  What gets me about this, and what no-one has commented on, is if Amazon reduced the price that steeply, that soon- that most likely means they had planned this for a while.  After all, you can't reduce prices without some research into what the minimum price you can charge for an item that has upstream costs without ramifications.  This means that they had the *ability* reduce the price for ... how long?  And kept charging the higher price until someone else moved.  So, if the nook hadn't been reduced in price, they'd still be reaping the extra profits of a higher price...

...and no one is saying anything about this?  Am I just looking at this wrong?

app103:
Hate to break it to you, but both of them could probably price their devices at about $100 without experiencing a loss. (not to say they would make any money on them if they did, but it wouldn't be a loss.)

wraith808:
Oh, I know that.  But shifts in price aren't made that quickly (especially in a large company) without a prior plan in place.  It was the *same* day.  And without a promotional build up at all.

ljbirns:
The object for both Amazon and B & N is to sell books - not readers.
See Gillette and the safety razor.

40hz:
...and no one is saying anything about this?  Am I just looking at this wrong?
-wraith808 (July 06, 2010, 03:46 PM)
--- End quote ---

Um...maybe.  :)

I'd suspect there's a little bit of a 'sense of entitlement' from the way you're asking the question.

The basic 'rule' of optimal pricing (in a free market) is to "charge what the market will bear."

By this theory, if a device is selling at $199, it would make no economic sense to reduce the price unless there were a compelling business reason (e.g. responding to or undercutting a competitor, locking in your customer base, buying market share, etc) to do so.

Lowering a price just because you can - or because some people don't think it's "fair" - isn't a compelling business reason.

Considering how well these gadgets have been selling (despite all the issues surrounding them) I'd guess most people Looking to get one don't have a serious problem with the price of a Nook or Kindle.  

FWIW, the biggest complaints about these ebook readers revolve around the outrageously restrictive EULAs, ridiculous DRM implementation, and the high (and steadily increasing) prices for downloads. From what I've seen and heard, most people don't seem to be taking issue with the price of the reader hardware.

But there's also a few million people who think nothing of dropping $400-600 on a smartphone plus a $100/month 2-year service contract just for the priviledge of owning one...so what can we expect?
 ;D  

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