Kindle and Nook drop prices (but not far enough)

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Amazon and Barnes and Noble both announced price cuts this week (not coincidentally, I imagine). Amazon cut the Kindle to $189, not long after B&N announced it was cutting the Nook to $199. Not to be outdone, B&N will soon be selling a WiFi-enabled Nook for just $149. The question is: Is it enough and does it matter?

Jason Perlow, writing on ZD-Net says the pricing has been cut so much, they have reached the bottom of their margins. He goes so far as to predict the device's extinction. I'm not sure I'm ready to go that far, but I believe they have to drop prices much lower to compete with the iPad and the coming onslaught of tablet devices. In an Editor's Corner in this very space last September, I wrote a piece called "Forrester confirms ebook reader must drop substantially." Long before the iPad came along, I believed that for eReader devices to survive long-term they had to go to the cell phone/razor model. 

You give away the cell phone or razor for free or substantially below cost and you sell services or razor blades. With the advent of the iPad, my suggested model becomes even more imperative. Barnes and Noble, and Amazon are not in the device business. They are in the book selling business. As such, it shouldn't matter to them whether they sell a book in the store, online, via an iPhone or an iPad app or however it happens to occur. The fact that both companies very quickly introduced iPad apps confirms this.

So why do both companies continue to cling to the idea that they can make money from these devices? Don't stop at $199, $189 or $149. Listen to that Forrester survey (and to me) once and for all and just drop it below $100 in exchange for a promised number of book purchases, or give it away to your best customers.

These devices may be great for reading, but as multi-function tablets proliferate, it's going to be be increasingly difficult for them to gain any substantial sales. The answer is a free device/book subscription model. Time to listen or face Perlow's predicted extinction.

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