Amazon cuts Kindle price to $299

Amazon.com Inc. founder and Chief Executive Officer Jeff Bezos holds the new Kindle 2 electronic reader at a news conference in New York where the device was introduced, February 9, 2009.

SAN FRANCISCO (Reuters) - Online retailer Amazon.com has cut the price of its standard Kindle electronic reader by 17 percent to $299, the company said on Wednesday, the latest salvo in the war for digital readers.

The price cut comes amid a budding digital book battle where rivals like Amazon, Sony Corp and a host of smaller companies are anxious to get in on the ground floor of what some say is the future of reading.

Amazon said customers who had ordered Kindles that had shipped within the past 30 days would receive a $60 credit on the price difference.

Electronic readers allow consumers to read books, magazines or newspapers on a tablet that downloads content digitally. While the devices are convenient for those who travel and embraced by avid readers on the go, their high prices have been a barrier to many.

"While it is a significant drop both in terms of the overall percentage of the price as well as getting under the $300 barrier, it is still not going to be enough to break it out of its niche," said Ross Rubin, consumer technology analyst at the NPD Group.

In February, Seattle-based Amazon unveiled the second version of its digital book reader, priced at $359. The first, which debuted at $399 but whose price was later reduced to $359, came out in November 2007 amid much fanfare.

'DIGITAL VENDING MACHINE'

Amazon has pointed to the Kindle as a growth driver and said sales have surpassed expectations, without disclosing sales or profit data.

A spokeswoman said Amazon was able to cut the price of the Kindle as higher volume had reduced manufacturing costs.

The value of the Kindle for Amazon is in the content purchased by users of the e-reader, analysts say. The retailer charges $9.99 for most bestsellers digitized for the device.

Tuesday's price reduction could be attributable to a number of factors, said Rubin.

"(It's) growing economies of scale or perhaps Amazon is seeing that consumers are buying enough content where it can further subsidize the device," Rubin said, adding that Amazon has a "greater than usual incentive" to knock $60 off the price.

"It's essentially selling a vending machine into consumers' hands," he said.

In May, the company introduced a larger version of the Kindle DX, designed to better view newspapers and magazines, which remains at $489. The price on that device could also drop, Rubin said.

The new $299 price tag on the Kindle puts Amazon's device more in line with competitors' pricing. While earlier Sony e-readers retailed for $399, the cost of more recent versions has been cut to $299 and $279, according to Sony's consumer website.

Still other devices entering the market are cheaper, such as the $249 Cool-er from Interead.

Amazon shares rose $1.73 or 2.3 percent to close at $77.36 on Wednesday on the Nasdaq.

(Reporting by Alexandria Sage; Additional reporting by Brad Dorfman; Editing by Richard Chang, Leslie Gevirtz and Matthew Lewis)