Kindle Price Drop Not Enough

Last week, starting to feel the coming competitive heat and perhaps having exhausted the market for early enthusiasts, Amazon’s Kindle 2 saw a price drop from $299 to $259. The company also launched an “international version,” which works in “100 countries” and uses AT&T as behind-the-scenes network (vs. Sprint  in the US; CDMA vs. GSM).

Last week also saw discussion of Barnes & Noble’s forthcoming eReader, to be powered by Android. It joins a growing list and will reportedly have built-in WiFi and a six inch color display, which the Kindle does not. As I’ve written before, even before it has really started to go mainstream, the eReader market is already intensely competitive. Kindle is clearly the most visible device and the leader accordingly.

But Sony has a device that starts at $199 (apparently backordered), still $60 less than the Kindle. And others to gain attention in this initial “land grab” phase will likely go lower. In order to hold and grow its market Kindle will have to drop prices further and/or improve and expand the functionality of the device — in other words: color screen, better Internet access experience, maybe apps, etc.

There will be tablets (Apple, Android) that tap into the apps available for their respective mobile handsets. This may prove to be a competitive advantage and could support higher prices. But the Kindle, without a developer ecosystem, apps, broader media capability or aggressive pricing, may find itself losing out over time to more fully functioning and cheaper models.

Indeed, we may even see the eReaders given away at some point — like PC printers — by publishers and/or retailers to accelerate the eBook market.

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Reader: Here’s another eReader from LG, which is solar powered.