Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

Summary: Barnes & Noble cut prices for its nook e-reader from $259 to $199 and introduced a $149 Wi-Fi version in a move to put pressure on Amazon's Kindle and grab more market share.

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Barnes & Noble cut prices for its nook e-reader from $259 to $199 and introduced a $149 Wi-Fi version in a move to put pressure on Amazon's Kindle and grab more market share.

The move is likely to put Amazon on the defensive and the e-commerce giant appears to have been either caught flat-footed or resting on its early Kindle lead. Many folks have noted that Apple's iPad is a dedicated e-reader killer, but let's exclude Steve Jobs & Co. from the picture. Even excluding Apple, Amazon looks a bit behind the curve on e-readers.

Update: Amazon cut the Kindle price to $189.

Consider the following:

  • Barnes & Noble is using its stores for nook distribution and has integrated the device with its retail experience nicely. Barnes & Noble also inked a distribution deal with Best Buy.
  • Sony's Reader franchise also enjoys broad distribution and hits multiple price points ranging from $169.99 to $349.99.
  • Meanwhile, Amazon lacks a Wi-Fi only option and will run you $259. Amazon did do a retail distribution deal with Target and has only just started running ads to promote the Kindle. These ads also indicate that Amazon needs to promote the Kindle more. Before the nook, iPad and better competition, you'd never see Amazon promoting the Kindle in the back of Business Week and other magazines and on TV.

And now Amazon is going to look like its playing defense again. Amazon will have to cut prices. I've been researching e-readers for a few weeks now. The difference between the $259 price point and $199 is huge. At $199 and lower, you figure you can get ROI in a year while you ponder whether you want or need an iPad (assuming you primarily intend the device to be for reading). Sony with its multiple price points was gaining traction in my little buying/research experiment.

Now the nook may be back on the table. The Wi-Fi version---the current nook minus 3G---will offer complementary AT&T hotspots and at $149 looks like a good deal.

The big point here is that Amazon's Kindle is off the table at $259---unless of course that price falls.

Simply put price matters, but ultimately Amazon needs to cook up Kindle 3 and quickly. If Amazon doesn't move the needle again on e-reader innovation it's going to be stuck playing a game where price is the only real differentiation.

Stifel Nicolaus analyst George Askew said in a recent research note:

We believe Kindle’s retail presence signals a need for Amazon to combat the popularity of Apple’s iPad. The Target partnership provides Amazon the ability to display the Kindle to consumers in a physical retail environment. We believe that Kindle’s availability at Target should mitigate competition from Sony’s eReaders. Sony sells multiple eReaders through Target at price points of $169.99 and $199.99. The pricing difference notwithstanding, we believe that Amazon’s eBook network, and wireless connectivity, make it an attractive alternative to Sony’s eReaders.

Update: There are a lot of questions about nook purchases at the $259 price point. Here's what Barnes & Noble had to say:

Also, noted that some of the comments are asking about recent purchases.  You may want let those readers know that customers who are within the 14 day return policy period can contact customer service or see their local B&N store manager. Barnes & Noble will gladly provide them with a $10 refund -- the difference between the $259 purchase price, free $50 gift card, and new $199 price.

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Topics: Amazon, Hardware, Mobility

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31 comments
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  • Annoyed!!!!

    I just received a Nook for Father's Day and I suspect that I was one of many. Even though I had some struggles yesterday with set-up, I eventually got through it and have been pretty happy since.

    Until now. For B&N to market the Nook that heavily for Father's Day and to then dramatically change pricing the next day is just wrong and short sighted. I realize how this works. Someone in the marketing team said let's use this one last promotion to get those sitting on the fence who haven't yet bought but who can be nudged to buy. (Or in this case, their wives/kids to buy.) And then we can use pricing to increase penetration for the segment below the current price point. If we had changed pricing prior to Father's Day, we might have risked cannibalizing some of that revenue.

    Just one problem, though. I went from pretty happy to really annoyed. I went from being a promoter to being a detractor. And I suspect I'm not the only one.

    This reminds me of when Apple launched the iPhone and then radically changed their pricing shortly thereafter ... and promptly alienated their most loyal early adopters.

    So I applaud the price change, but their timing stinks and I don't think it was coincidental.
    MKivlin
    • $50 dollar gift card with purchase

      @MKivlin

      For at least the two weeks prior to the change, there was a promo for $50 gift card with purchase. The price change is annoying, but if you buy stuff at B&N that covers most of the drop for the 3G version. There is still the $10 difference and sales tax on the full $259 version, so it'll be nice if a coupon arrived for people that purchased the nook in early June.
      jcschweitzer
      • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

        @jcschweitzer This from Barnes & Noble.

        Also, noted that some of the comments are asking about recent purchases. You may want let those readers know that customers who are within the 14 day return policy period can contact customer service or see their local B&N store manager. Barnes & Noble will gladly provide them with a $10 refund -- the difference between the $259 purchase price, free $50 gift card, and new $199 price.
        Larry Dignan
  • B&N is being very aggressive

    I frequent Barns and Noble stores and they are indeed pushing very hard the Nooks. It's a good strategy that seems to be working as it's generating interests in the stores. I was sitting next to a middle age gentleman happily reading away on his Nook yesterday. Allowing Nook owners to read any book and periodicals(?) in the store for free (one hour per) is genius. Amazon just cannot compete with this, and I don't see them ever trying to match it. Sony readers have a placement in Borders Book Stores but I've yet to see anyone showing interest in them, compared to the Nooks.

    From what I am seeing (again I frequent many B&N stores), there seem to be lots of interest from the older generations in the Nooks, for some reason.
    dave95.
  • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

    I went for the Kobo ereader. Not much for connectivity but since I do most of my own conversion, USB works for me. The Bluetooth was used once for testing.

    Some software glitches -- an apostrophe in a file name triggers a false protected content message but overall works pretty well as an ebook reader.
    DNSB
  • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

    I still wonder if these singe-purpose devices are gong to survive the long run. In the face of a growing number of iPhones and Android devices entering the market every day, reading digitally will quickly become another selling point for owning a multi-purpose device for many consumers. I see this trend having the same path as the craze with GPS devices 2 years ago and Netbooks last year...
    asg749d
  • Yet another personal gadget

    I think the whole e-book reader market segment is a flash in the pan. It's great from a revenue standpoint, to sell an expensive and quickly outdated personal gadget, but from a consumer standpoint, people are not very well educated about what they are buying.

    Like portable DVD players last decade, my advice to people was: "Buy a laptop instead. Laptops do a whole bunch of stuff, have bigger screens, and don't cost THAT much more."

    Likewise, I have had many people approach me about "which e-Book reader I recommend" -- the answer is: NONE. Buy a netbook. They are cheaper and do a whole bunch of other stuff. As soon as the tablet PC market heats up again (thanks to the iPad), my advice will be to buy a tablet PC instead of a netbook.

    What makes this even worse from a technical standpoint is that the e-book readers ARE computers, often using the same processors and architectures as netbooks, but delivered in a "big blackberry" form factor instead of a clamshell.

    Which brings me to my next point. As the line blurs from cell phone to PDA to smart phone, you have an ever-increasing computing capability that you carry around in your pocket with you already. I think the natural evolution is for "smart phones" to take on more netbook-like functionality. There are already e-book readers for Blackberry and Windows Mobile.

    So if you if you're a real technology junky, it's possible that you've got overlapping functionality already, and that you're spending the same computing dollars multiple times.
    jparr
    • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

      @jparr The Nook is a better size. Hands down. It's comfortable, but not overly large. Small, but not too small. The other devices may have overlapping functionality, but so do my bike and my car and my sons Hot Wheel tricycle. We use them all the time, just not for the exact same reason.
      Tiquor
  • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

    You can thank Steve Jobs for this price drop. The iPad has raised the bar on e-readers.
    clayasbury@...
  • It's getting very tempting . . .

    And I may end up biting the hook and get this one. As a major book retailer, Just about anything I want is or will be available through B&N soon (It helps that I get discounts from them via my wife's Company Benefits).

    To everyone who keeps harping on multifunction devices, you have to remember one thing - America's population is graying (I myself will be 48 in less than 2 months). That group has the most money to spend, and conversely has the most dislike for multifunction devices. They prefer simple cell phones to the ultra fancy gizmos (I'm at the point where I'd willingly kill people for s PHONE: no camera, no internet capability - I just want a simple phone, without having to move to Jitterbug . . .).

    And as you get older, you also start having physical problems that interfere with some of those multifunction things: Eyestrain is getting to be a Major medical problem, and the dedicated e-readers help to solve that. When I had my Handspring Visor, I used it mainly as an e-reader (the older non-backlit deluxe), and I could read on it for hours on end, without having to change batteries or recharging it for days. I now use an Ipod Touch, and I have to stop reading and take a break every so often, or I start to lose the ability to focus: the same thing happens after staring at my LCD screen at work all day. The E-readers help this problem, and have the added benefit of being simple to operate (a LOT simpler than a laptop: just turn it on, hit a couple of buttons and you're reading - Convenience sells, folks. That's why the Ipad and iPods sell well.).

    And if these thing let my father and the in-laws do e-mail and simple surfing without having to learn how the use a computer (via a browser), good.

    Sometimes we techies make things harder than they need to be. As I've gotten older, I'm slowing learning that in most cases, simpler is better.
    JLHenry
    • I agreed 250%

      People tend to forget that there is a segment of the population that would like something geared for one purpose, and does that one purpose VERY well.
      Plus I too get eye-strain now (I'm only 44), and would love a device that is easy on the eyes.
      visualambrosia
    • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

      @JLHenry I like single purpose devices. My Nook is awesome. I keep it in my bag next to my laptop when I travel, but when at home I keep it in the house. The Nook is something you can just curl up with and read. It's not a giant laptop with an angled screen and a keyboardin the way. It's really quite nice.
      Tiquor
    • Speak for yourself ....

      @JLHenry
      I am 48 years old and I do like multifunction devices, but they must they must provide value. For me the iPad does not provide a good cost value, I would buy a netbook instead, however for reading the Nook ereader is the best out there. Since I am older reading on cell phone sized screen is horrid I need a slightly larger screen and a netbook is not a good reading device to heavy and bulky.
      mrlinux
  • About time someone reduced price

    For those that have already paid $259 for their Nook! welcome to the club of buying electronic gadgets. It has happened to all of us on one thing or another, just live with it like the rest of us.

    As for the eBook being just a very temporary device, just depends on your needs. Have you ever had a 500 page book that you could not put down until you had finished? No? Then an eBook would not be for you and you would not likely understand the need. Now they may be two ways the industry may go. eBooks could turn into a more powerful computer and still use the eInk software that does not tire the eye. The other way would be if eInk sells its software to be installed on other computers. But I will tell you this, I could not (and most could not) read and entire 500 page book in one sitting on any computer as things are now.

    The Nook and especially the Kindle, should be free. Let the sales of the electronic books pay for the device. The Kindle locks you into their format, so why is the Kindle so expensive when you must buy the media from them?

    Last, I would like the govenment to investigate the publishing industry for price fixing on pricing of their electronic books. They forced the price of this media to be close to the price of the printed media, when the manufacturing cost is not the same.
    DadsPad
  • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

    If you can sell a wi-fi reader for $200,
    why not add internet surfing (with Flash) and sell it for the same price. I think Adobe or Palm would be smart to do this.
    dran001@...
  • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

    It should be noted that Amazon doesn't need to offer a WiFi only version, since the G3 connection that the Kindle has is complimentary with the device (no monthly fee!). I don't know how long that will last, but as long as you can use it to access the internet anywhere without paying a monthly fee, there's absolultely no reason to connect through a local hotspot.
    grassdogstudio
    • RE: Amazon's Kindle in crosshairs: Barnes & Noble cuts nook prices as e-reader war heats up

      @grassdogstudio The nook doesn't require 3G fees either. Ten seconds of researach would have told you this.

      Just bought the nook and have NO regrets. Great device.
      behindthecamera
    • AT&T . . .

      @grassdogstudio

      Maybe we're all getting mad at the wrong people . . . It ain't the iPhones and iPads sucking up all the WiFi, it's all 'dem derned kindle owners . . . ;)
      JLHenry
      • YouTube

        @JLHenry When YouTube sells a dedicated movie watcher gizmo then you could have a point.
        Ed Burnette
      • Ed Burnette . . .

        Here Ya' go!!

        http://www.bestbuy.com/site/olspage.jsp?id=pcat17071&type=page&st=Flo_TV_20091018&sc=Global&cp=1&nrp=15&sp=&qp=&list=n&iht=y&usc=All+Categories&ks=960&p=[promotion%2C+synonymns]&pu=defaultusr&pt=1273986001

        Also, I don't know very many people in my neck of the woods that waste all their free time watching YouTube, most of us actually go OUTSIDE and do things!! Watta concept!!
        JLHenry