Amazon (AMZN) is sold out of its basic Kindle e-reader, according to the company's website. The model costs $189, has a six-inch screen and comes with free WiFi. The Kindle now being promoted on the Amazon homepage is the more expensive Kindle DX, which retails for $379 and has a 9.7-inch screen.
Amazon dropped the price of the sold-out Kindle from $259 in June. In July the company "announced that Kindle device unit sales accelerated each month in the second quarter -- both on a sequential month-over-month basis and on a year-over-year basis." Jeff Bezos, founder and CEO of the e-commerce company, was quoted as saying "We've reached a tipping point with the new price of Kindle -- the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189."
It's a tipping point indeed and it may cost Amazon dearly. Its Kindle competes with the Barnes & Noble (BKS) Nook, an e-reader from Sony (SNE), and, many analysts believe, the least expensive version of the Apple (AAPL) iPad that sells for $499. Amazon may be introducing a new, thinner version of the Kindle in August, but that has not been confirmed by the company.
Amazon will lose sales whether or not it's about to launch a new generation e-reader. Analysts have already voiced concerns that the iPad could undermine Kindle sales. The online retailer may have cut the Kindle's price to improve its competitive position, but the move is likely to have squeezed margins. It's possible that Amazon also lowered the price to sell more units and improve traffic to its e-book store. Whatever the reason, Amazon can't pick up market share if it doesn't have a product to sell.
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