Responding to Barnes & Noble's price cut on the Nook from earlier today, Amazon just slashed the price of the Kindle to $189. That's down from $259 — a price cut of 27%. Gadget lovers have good reason to rejoice, but there could be a downside.
The price cut was bound to happen. With the e-reader market now beyond saturated and e-readers competing with the iPad and other tablets for everybody's gadget dollars, the Kindle had one last way it could stay relevant: by going cheap. At least, cheaper than many of its alternatives (it's now $10 less than the functionally similar 3G Nook).
The problem is that, by most reports, Amazon was already selling the Kindle virtually at cost in order to drive sales of e-books. This new drop basically says Amazon has resigned itself from making any money on the hardware. That leaves the e-books themselves, but according to The New Yorker, Amazon is taking a loss on many titles. Let's see… they're making no money on the Kindle, no money on the titles — why are they in this business again? Does just saying they have 60% share of the e-reader market get them brownie points?
But really, who cares? If a business model doesn't work, it should be discontinued, and we'll all just buy iPads. In this case, though, the great loss will be technological: namely E Ink, the screen tech the Kindle uses that ensures there is no eye-straining backlight. Thanks to the Kindle and the explosion of e-readers, E Ink tech has improved greatly over the last few years, and new versions of the tech, with color screens and decent refresh rates, are on the horizon. But now that there's a clear ceiling for what people will pay for an e-reader, will anyone be interested in bringing that technology to market?
If today's price slashing is any indication, the future for e-readers looks dim. To survive their war with tablets and their own civil war, it appears they're rapidly going to become barely functional commodities. That may be a victory for gadget-loving readers, but the most tragic casualty here could be progress.