Expect to see Amazon offering a Kindle for less than $100 by the end of the year. In a research note offered by Citigroup, analyst Mark Mahaney predicted that Amazon’s e-reader is so successful that the company will be able to lower the price by the end of the year.
Noting that “eBooks have clearly reached critical mass” for Amazon, Mahaney says, “We believe that industry-wide, eBooks will surpass Print books in terms of sales within 2-3 years,” adding that Kindle sales are up 200% in 2011 so far compared with the same period last year.
Mahaney estimates that Kindle sales for 2011 are currently at 17.5 million, with “over 310 million” eBooks sold in the same period for a combined revenue of $3.8 billion, or 8% of Amazon’s total revenue for the year.
By 2012, Kindle and eBook sales are expected to reach 10% of Amazon’s revenue, with Mahaney adding, “We have long had a 10% rule – when one segment achieves 10% of the total business, it can impact the growth rate of the total business.”
Lowering the base Kindle price to under $100 is expected to improve sales because it brings the device into the realm of a potential “impulse buy,” especially during the Holiday season.
It’s also not that significant a price drop for Amazon: Currently, there’s a Kindle available for $114. Such a move will also make the device even more competitive with Borders’ Kobo E-Reader Touch, which recently saw its price dropped to $99.99. With these sorts of moves, how long before we see Apple launch a low-price iPad Nano and try to take over this area?
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