Amazon is facing pressure to cut Kindle prices even while the eBook war between the retailer, Apple and publishing houses means Amazon has stopped selling some Penguin and Hachette e-books.
With the overwhelmingly positive reviews greeting the iPad, which is set to snuggle into US consumer hands on the morrow, Wall Street is getting nervous for Amazon.
Munster says he expects Amazon shares to be under pressure for a few weeks as the Street worries about the iPad eating into Kindle sales.
He notes that Amazon provides no data at all on Kindle unit sales; he estimates that Kindle sales lifetime to date are in the 2-3 million range. He predicts 2.7 million iPad sales this year, a figure we believe will be at least triple that estimate.
Meanwhile Amazon continues to reach new deals with publishers, but new titles from Pearson’s Penguin imprint aren’t being added, and its impossible to buy Hatchette titles as there’s no ‘buy’ button.
“It’s a sign that Amazon is continuing to wield its vast market power as the nation’s largest online bookseller in its negotiations with publishers ahead of the iPad launch,” notes TechFlash.
Apple uses an “agency” model with publishers, letting them set prices between $12.99 to $14.99 on digital versions of most new release titles. Amazon has always pressed for a $9.99 tag, but has been forced by Apple’s entry into the market to take up a different tariff.
We’d argue that Amazon’s hard ball approach with publishers will be remembered at some future point when it needs help from the firms it currently exploits.