Amazon has attracted a fair deal of criticism regarding the price of its Kindle reader and has now stated that the price of the Kindle 2 reader will drop from $ 359 to $ 299. The Kindle 2 was launched in February 2009. The Kindle DX, launched in June 2009, is unaffected and its price remains at $ 489. Customers who had their Kindles shipped to them within the thirty days prior to the price cut announcement will receive a $ 60 credit based on the price difference.

This is the first price cut for any of the devices in the Kindle reader family. According to Amazon, increases in production volume now permit them to pass savings on to the consumer. This explanation is being queried by many industry analysts who feel that it may be a little early for price cuts of this nature given that the Kindle 2 was released only five months ago.

Increased competition from other ebook reader manufacturers is widely believed to have been a major factor in Amazon’s decision. In addition to Amazon, Sony, Apple and a host of smaller companies seem anxious to secure their share of what is now widely predicted to be the future of reading.

The Taiwanese manufacturer Netronix is currently producing lowerfunctionality, reduced cost, ebook readers for companies such as Elonex and Interead. These sacrifice the wireless connectivity of the Kindle – but prices are considerably lower. Possibly even more significant than the price is the speed of development. The Netronix readers were developed and brought to market in under six months.

Amazon is clearly motivated to sell a high volume of Kindles – even if this does necessitate a price cut. The repeat business from Kindle users – many of whom will quite naturally be heavy readers – represents a very lucrative market for Amazon. Some industry watchers have suggested that the $ 60 reduction isn’t enough for the Amazon Kindle to make the break out into iPod type status. A value below $ 200 has been proposed by many as being the required price point.

Whatever the true reasons behind Amazon’s decision to adjust the Kindle 2’s price, it’s probably fair to say that Amazon know a thing or two about setting price levels. It’s pretty much been the cornerstone of their business for quite a number of years now.

Following the pricing announcement, Amazon shares firmed up by 2.3%.

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