updated 02:30 pm EDT, Thu April 1, 2010
Piper Jaffray says Kindle should avoid iPad
Piper Jaffray analyst Gene Munster today called for Amazon to drop the Kindle's price to $149 to avoid a collision with the iPad. He told TTD that trying to compete directly with Apple would almost certainly fail and that the best choice would be to avoid it as much as possible. A major price gap, in this view, would calm nervous investors.
"They [at Amazon] should stick to what they're good at," Munster said.
Amazon has already been aggressively cutting the pricing of the Kindle over the past year, bringing it down to $259 this past October. However, the device is not only facing pressure by being too close to the iPad for some buyers but threats from stripped-down but much less expensive readers, such as the Kobo eReader. A price drop could eliminate any profit Amazon might make, but the retailer has often treated the Kindle as a loss leader to help drive e-book sales.
The financial expert added that Amazon doesn't need to be successful in e-readers, as its online retailing business could double or triple in share within the next five to 10 years. It could either afford to take losses or back out of the business but still remain successful as a company, Munster said.