Price Matters: Why The Kindle Hasn't Succumbed To The iPad

As Todd wrote about earlier today, the Amazon Kindle is very successful and may well have been the hottest gadget this holiday shopping season. I sense that more than a few people are surprised by this, given that they believed the iPad was going to relegate the Kindle, and all other eBook readers, as irrelevant. So far I have not seen much reporting on what the market appears to be saying loudly, that is that the iPad is too expensive.

True, Apple has sold a lot of iPads since it has been announced, but I wonder to whom? Gadget hounds such as myself are going to find a way to buy the device, but what about the average consumer?

I have a friend who is not a gadget fanatic like myself, but I think the iPad would be perfect for him. He reads a lot, so eBooks make sense, but he is a pastor and could benefit from having electronic versions of the Bible, for which the Kindle is not the best device. I think the combination of the Kindle app, plus OliveTree’s Bible Reader, and Evernote would be ideal for my friend, but there is one problem, the $499 price tag for the iPad.

Amazon clearly found the sweet spot price for the Kindle. At $139 people appear to have no problem buying a single purpose device, even if they already own an iPad. While I personally think the iPad is too heavy for an eBook reader, I wonder how many people who bought the Kindle would have done so if the iPad cost $250?

Even if Apple were to significantly drop the price of the iPad, Amazon could still easily combat that by lowering the price of the Kindle. It is not a stretch for Amazon to give Kindles away for free to people who committed to buying a certain number of books per year. Yet, even after the iPad 2 launches I don’t expect Apple will sell the current iPad for less than $300 as they have never been willing to pursue the low end computing market.

The bottom line is that there is a market for one or two low priced, eBook readers. I expect Kindle will continue to sell well and the question isn’t how the iPad will affect the Kindle, but how the Kindle and Barnes & Noble NOOKcolor will affect each other.