Discounted Kindles Tell a Story

And the price cuts keep coming.

Just three months after Amazon.com (Nasdaq: AMZN  ) shaved $40 off its Kindle e-book reader, it's back with a promotion to cut another $100 off the retail price.

There's a catch, though. Gadget-cradling bookworms who want in on the $259 Kindles will have to sign up for an Amazon.com Rewards credit card, a Visa (NYSE: V  ) card issued through JPMorgan Chase (NYSE: JPM  ) .

In other words, this is technically just a $70 price cut, since Amazon has been offering $30 discounts throughout its store for plastic-snagging shoppers who apply for the Amazon.com Rewards card for years.

"Thanks to Chase," begins the promotion, giving the impression that JPMorgan Chase is subsidizing the full $100 hit to land new accounts, but I'm not entirely sure about that.

The promo comes the first business day after a Seattle Post-Intelligencer article claimed that "several new, improved versions of the Kindle [are] in the works."

In other words, Amazon was going to have to clear out its first-generation inventory anyway. Whether or not the new Kindles will arrive in time for the holidays, once consumers know that something better is in the works, sales do tend to dry up.

Is the price promo a desperate move? Not at all. Apple (Nasdaq: AAPL  ) also found a partner in AT&T (NYSE: T  ) to take the subsidized hit on its new, cheaper, 3G iPhones. The old ones were selling briskly. Video game console makers Microsoft (Nasdaq: MSFT  ) and Sony (NYSE: SNE  ) have also been slashing their system prices lately, despite healthy consumer demand at the higher price points.

The challenge for Amazon is how to quietly stage a clearance sale, without having to roll out its new Kindles at the lower price point. It's going to happen eventually, of course. Early adopters always foot higher prices before they achieve mainstream pricing.

"I smell a small springtime price cut, and I predict that I can wait to get a Kindle for $199 after an even steeper price cut before next year's holiday season," I forecasted when the Kindle hit the market at $399 this past November. I nailed the springtime price cut. The newest promo validates the even steeper slashing that I saw heading into the 2008 holidays. I'm off a bit on the price, but 2008 is still young.

Other page-turners in the Kindle saga:

JPMorgan Chase is a Motley Fool Income Investor recommendation. Microsoft is a Motley Fool Inside Value selection. Amazon.com and Apple are Motley Fool Stock Advisor recommendations. Try any of these Foolish newsletter services free for 30 days. If the market is making you queasy, we have the cure. 

Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He owns a Kindle. He does not own shares in any of the companies in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On August 26, 2008, at 11:38 AM, Nozama wrote:

    This promotion was running several weeks ago so it has nothing to do with the timing of the article yesterday.

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