On Tuesday, Amazon.com announced it has dropped the price on its Kindle e-reader. The new Kindle with Special Offers will cost $114 — $25 less than the currently lowest-priced Kindle — and include advertisements on the bottom of the device's home page and on its screen savers.
When it comes to e-readers, though, price isn't the point, ThinkEquity analyst Aaron Kessler said. It's more about e-book sales, he explained. After all, digital book sales is what's really bringing in the money for Amazon [AMZN 180.48 -3.56 (-1.93%) ] and not necessarily the devices themselves. He likened it to the razors and the razor blades model, a business tactic where one good is sold at a discount while the second dependent good is sold at a considerably higher price.
"I think originally, Amazon's plan was to sell the Kindle, I mean obviously, it was a much higher price point and it was less about the books," Kessler said. "I think it's now switched the razor blades model, where they're likely almost giving the Kindle away for free, potentially at even a small loss and looking to make that back with volume on the books."
Originally Posted by Gingersnap
