Amazon cut the price on their Kindle digital e-book reader again. This marks the second price cut of the year so far (the previous cut was $60). With Christmas rapidly approaching, and more digital readers hitting the market all the time (now, Barnes & Noble is going to sell one), one wonders if we won't see another price cut—or possible holiday price reductions—before the year is out.
As it stands now, here's the current breakdown of Kindle models and prices:
The $259 and $279 Kindle differ only in that the latter allows one to download e-books when traveling abroad (outside the United States). The Kindle DX is the deluxe, super-sized Kindle, with a larger reading screen and more memory. Scott Hanselman, a technologist whom I follow on Twitter and whose blog and podcast I read and listen to regularly, has a nice post up about the differences between the Kindle and the Kindle DX if you'd like to read more on that.
Given this most recent price reduction, I'd like to dig up an older post of mine, How much does the Kindle 2 really cost?, where I cited an article where the author ran through a cost-justification of the Kindle 2. The author makes a comparison between buying a Kindle and accompanying e-books (at a rate of 2 per month) vs... buying the same number of traditional paperbacks.
So, buying paperbacks:
I could get free shipping if I ordered two paperbacks at a time and didn't mind waiting five to nine business days for them to ship. If I chose standard shipping (three business days) instead, I'd pay about $4.88 for two paperbacks mailed together. I wouldn't be charged tax. (I live in San Francisco. How much you pay in shipping or taxes depends on where you live.) The $4.88 shipping for two books a month would equal $58.56 a year. That brings my two-paperback-a-month habit (books + shipping) to $447.12 per year.
Versus buying the Kindle (remember, the cited price of the reader does not include the recent price cut, nor does it include the price cut of $60 from three months ago):
My Kindle 2 order totaled $365.98, which includes $359 for the e-book reader and $6.98 for three-business-day shipping. The average price of the top 10 Amazon Kindle nonfiction bestsellers is $9.78. If I bought two e-books per month, I'd spend $19.56 per month or $234.72 a year (shipping isn't necessary). My grand total for the year: $600.70, which includes the Kindle 2 and 24 e-books.
That gives us $447 vs.. $600. A $153 difference. If you extrapolate this out to 2 years as the author of the article does (excluding the cost of the Kindle on the second year, of course), those figures go to $894 and $835. By buying the Kindle (at yesterday's prices) you wind up saving $59.
Now, let's look at that in light of the recent Kindle price reduction.
The first scenario obviously doesn't change, so our annual price of buying 2 paperbacks/month remains at $447.
The first year Kindle price plus e-books, however, goes down to $500 (Kindle: $259; s/h: $6.98; e-books: $234.72) from $600.
That makes for a 1 year difference of $53 in favor of buying traditional books (much better than the initial figure of $153). Over 2 years, however, we have $894 for traditional books and $734, a difference in favor of the Kindle of $160. Before the price reduction, that savings for 2 years of Kindle ownership was $59.
Given all of that, the question is this: Is now the time to buy a Kindle?
I think not.
While I think the long term cost savings begin to warrant the cost of the device, I'm willing to wait just a little bit longer to see what holiday price reductions Amazon institutes. Competition in the digital reader space is increasing, driving prices down. I'd like to see how much further they fall before I pull the trigger.
2009-10-09 Update: No sooner do I publish this post when word gets around Twitter that Barnes & Noble is planning a color e-book reader, to be released next year. A reason to put off buying a monochrome reader, or does this have further potential to drive prices of existing readers down? Guess we'll wait and see.