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The Kindle Fire: Cost savings or weak brand?

Amazon released its Kindle Fire HD last November and this week it slashed the price by $30. That’s a bad sign. Yet Kindle Business President Dave Limp cheerily explained that cost efficiencies in manufacturing were simply being passed along to Amazon customers.

Limp’s excuse sounds nice, but this is really about brand preference.

The Kindle Fire HD was already one of the most inexpensive eReaders on the market. This price reduction is a sign of poor sales.

Kindle’s main competition, of course, is the pricier Apple iPad. It’s odd that even a $100 difference between the iPad and the Fire was not a large enough price incentive to trigger Kindle sales.

Clearly, Kindle is thinking that $130 will drive customers to the cheaper alternative.

The Kindle brand is relatively successful but the dramatic price cut is a troubling sign of problems. Customers will almost always pay more for brands with meaning.

Amazon’s Kindle Fire is experiencing difficulties that probably have nothing at all to do with cost.




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