Amazon Does The Kindle Limbo But Is $114 Low Enough?

If you bought the first 3G Kindle at $399 or even the third one at $189 from Amazon (NSDQ: AMZN), $114 is a heckuva price. That’s less than some Kindle newspaper subscriptions.
But $25 off the $139 WiFi-only model in exchange for being served ads doesn’t sound that hefty. Not so, counters Jay Marine, director of Amazon Kindle, as he discussed the new version announced late Monday afternoon. “We’re pretty excited about it. It’s meaningful and we think we’ll see a meaningful response.”
If the savings stopped at the 18 percent discount, it still might not seem that meaningful to some prospective buyers. But the ad-supported Kindle is also an Amazon deal delivery system. “Not only do you save the $25,” Marine said in an interview. “You can save more money down the road.”
One of the first offers will be a $20 gift card for $10, similar to the massively popular deal LivingSocial ran soon after Amazon invested in the deals company. That’s enough to buy the top three books on the Kindle bestseller list right now and still have almost $5 left over — or two New York Times bestsellers in Kindle editions if you shop carefully now that some are priced at $12.99 or higher.
Other examples from the company include six audiobooks from its unit for $6, $1 for an album at the Amazon MP3 Store or $10 for $30 of products at one of its clothing stores. (A Zappos special edition with nothing but shoe deals probably could get traction among a certain set.) So far, none of the examples directly subsidize ebooks. “Today is all about finding a way to make Kindle affordable for more people,” Marine said, adding that every time Amazon finds a way to lower the price, sales surge. (You want numbers? That’s even less likely than the New York Times saying how many digital-only subscribers it has.) Marine said Amazon isn’t using LivingSocial for the Kindle offers.
Marine stressed that the ads and deal offers are designed not to be an intrusive experience: “We were very careful about that.” They show up on a screensaver and at the bottom of the homepage. Amazon also has layered in a user-gen option of sorts via a new app called AdMash and (not live yet). Anyone can download the app, due around the time of the May 3 ship date for the Kindle with Special Offers (sounds so much better than Kindle with Ads) and vote for the most attractive ads. Kindle owners can set preferences, too.
AdMash results can only be delivered through the $114 Kindle, which is available only in the U.S. It’s not clear if Amazon could send ads to the third-gen Kindle or to Kindle apps on other devices.
Screen shifting: In a way, what Amazon is doing is screen shifting deals. The more time I spend on a Kindle or in a Kindle app on another device, the less time I’m spending at — and quite possibly, the less money. I’m not looking at the daily deals tied to my profile or seeing serendipitous products that match an interest.
It’s also reminiscent of Amazon Prime, the $79 annual membership with free shipping that now includes some free streaming movies and TV shows. I could see Amazon offering a Kindle version of Prime, perhaps including access to some books or even adding the device into the membership. Prime isn’t Marine’s area and he was careful to say that nothing in this announcement is about Prime. (The connection is purely mine; I’m a Prime member.) But Prime is an example, he said, of Amazon’s “long history of finding new ways to lower prices for customers.”
It’s also an example of Amazon’s willingness to experiment with ways of tethering customers closer to the site. Another is the very recent launch of Cloud Drive, a way to store songs or other data with 5 GB of free storage for customers and up to 20 GB free if you buy an album from the MP3 Store.
And at $114, the next obvious dance step for this Kindle edition is to limbo below $100.