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Amazon Faces New Challenges, Introduces Lower-Cost 3G Kindle

Amazon stealthily releases 3G Kindle With Special Offers, as pressure from competing e-readers mounts

As its competition announced new models that shoot squarely at the heart of Amazon's Kindle e-reader business, Amazon responded by quietly unleashing a 3G variant of its Kindle With Special Offers. Like the Wi-Fi-only Kindle With Special Offers, this model shaves $25 off the price in exchange for turning the screensaver into a targeted advertising slate with deals.

The Wi-Fi Kindle With Special Offers shipped just six weeks ago, and at $114, Amazon has said it already has shot to best-selling Kindle status. Now, the same special offers, which can vary from discounts on Amazon merchandise to discounts on Kindle and Audible books, and on Amazon gift cards.

Are Price Breaks Enough to Stay Ahead?

With this move, Amazon maintains its price lead on both its Wi-Fi- and 3G-connected products. For that matter, Amazon is now just one of two e-reader makers in the market with a 3G product (Sony being the other, with its Sony Reader Daily Edition). The other two notable players in this space, Barnes & Noble and Kobo, each only have Wi-Fi-equipped E Ink e-readers now.

Barnes & Noble just took the wraps of its second-generation Nook reader, and while the new device adds an infrared touch screen at a $139 price, the company didn't mention plans for bringing a 3G model to market, too. Kobo also this week introduced its new Kobo eReader Touch Edition at $10 less, and it too only connects via Wi-Fi.

The new B&N and Kobo models have been--predictably--compared to the third-generation Amazon Kindle, and rightly so. But aside from introducing touch screen overlays at an affordable price (Sony's touch models remain stratospherically priced, with the comparably sized Reader Touch Edition priced at $229), these models are largely playing catch-up to Amazon's Kindle. They're first getting the E Ink Pearl display, nearly a year after Amazon debuted the technology.

That reality raises the question of whether Amazon can stave off the competition on a technical basis (answer: It stands a good chance of having enough chops to remain competitive with the newcomers, although the final judgment remains to be seen once the noobs ship and the reviews are in).

It also raises the question: What more can Amazon do to take on the competition?

The answer there is more complex. While Amazon can probably hold its own on the strength of its current product line, it can and should move forward with innovation on its dedicated Kindle e-reader. While integrating touch into its design is an obvious gimme, Amazon needs to go beyond shaving off millimeters from the chassis and ounces from the weight if it truly wants to stay in front.

Another move that's less obvious, but would make total sense: Introducing an Android-based operating system to Kindle. Frankly, Kindle apps have been a no-show, in spite of a developer's program being in place. And given Amazon's investment in an Android app store-and that arch-rival Barnes & Noble already uses Android as the basis for its e-reader-moving to Android would be a logical next step, and one that can leverage Android app ecosystem (at least, in so far as apps can be tailored to run on a non-LCD device).

What lies ahead for Amazon's Kindle is anyone's guess, really. But one thing's for sure: Amazon will have an answer to these latest e-reader developments. It's just a question of when the company will reveal its hand--and how its next step in dedicated e-readers will fit in with its rumored Android tablet.


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