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Amazon’s decision to shave $60 off the price of its Kindle 2 this week caught some industry observers off guard. But Forrester Research analyst Sarah Rotman Epps said she wasn’t surprised. “It’s predictable that prices decrease for consumer electronics as manufacturing volume scales up — just ask those poor saps who paid $499 for a 4GB iPhone in 2007,” Rotman Epps said. “But there’s also some pricing pressure specific to the e-reader category that Amazon is responding to.” Avoiding Gadget Clutter Amazon’s price change to $299 neatly repositions the Kindle 2 between Sony’s PRS-505 and its touchscreen-capable PRS-700BC, which Amazon currently prices at $269 and $349. Last month’s introduction of the $249 Cool-er by U.K.-based startup Interead also signals that the barrier for entering the market is dropping. “Taiwanese manufacturer Netronix is cranking out stripped-down, less-expensive e-readers for companies like Interead and Borders UK,” Rotman Epps said. “Neither has wireless connectivity, but they each expand consumer choice for a lower price. What’s more, they were developed and brought to market rapidly — the Cool-er Reader took only six months from concept to retail.” Amazon also has to deal with reluctance by some consumers to increase their gadget clutter. Rotman Epps observes that multi-function devices such as smartphones and netbooks have put a ceiling on how much e-readers are worth. “If you can buy a fully functioning netbook for $300, it makes consumers think twice about shelling out even close to that much for a single-function device like an e-reader,” Rotman Epps said. Netbooks represent yet another low-cost platform on which eBooks can be read using software from Sony and other vendors. “Google announced yesterday that it will be launching an OS for netbooks — it already has Android for smartphones — so I wouldn’t be surprised to see Google partnering with a device…
Read more here: Growing E-Book Competition Drove Kindle Price Cut
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mona mccallum