By Joseph Galante reporting for Bloomberg
July 8 (Bloomberg) -- Amazon.com Inc., facing new competition in the electronic-reader market, cut the price of its Kindle device by 17 percent to $299.
Amazon.com was able to lower the cost because of higher volume, said Drew Herdener, a company spokesman. “Whenever we are able to create cost efficiencies like this, we pass the savings along to our customers.”
Chief Executive Officer Jeff Bezos aims to protect Amazon.com’s leadership in electronic books, music and digital publications. The Seattle-based company is lowering the price as Plastic Logic Inc. and Hearst Corp.-backed FirstPaper develop competing products. While Amazon.com doesn’t disclose Kindle sales, the device has been a popular Christmas gift, selling out the past two holiday seasons.
“It’s in Amazon’s and every other manufacturers’ interests to get these devices to a lower price point so more consumers can buy them,” said Sarah Rotman Epps, an analyst at Forrester Research Inc. in Cambridge, Massachusetts. “The price of $359 was unsustainable, and it was just a matter of time before they dropped prices.”
By 2012, Amazon.com will make more than $2 billion in annual revenue from the Kindle and related content, estimates Sandeep Aggarwal, an analyst at Collins Stewart LLC in San Francisco.
A bigger-screen version called the Kindle DX sells for $489. That price hasn’t changed.
Amazon.com rose $1.73 to $77.36 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have climbed 51 percent this year.
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