Amazon lowers price of Kindle DX by at least 20% by October 31?

Amazon's new large-screen Kindle e-reader, the Kindle DX, has a problem: At nearly $500, it's an expensive platform for reading magazines, newspapers, and textbooks.

Concerns about price have been addressed by several early newspaper and educational partners. Some newspaper readers will be able to get a discounted price for the Kindle DX when it goes on sale this summer, but only through long-term subscription programs that are described as "pilots" in the Amazon announcement. Another "trial" is being set up at a handful of American universities to put Kindle DXs in the hands of students, but officials from Pace and Case Western who were quoted in the New York Times said only 40 or 50 students would get the devices, and they wouldn't have to pay anything for them (the schools and Amazon would cover the costs, according to the article).

That leaves the question how many members of the public at large will be willing to pay $489 out of pocket for the Kindle DX. The smaller Kindle is a hit (currently listed as the number 1 bestselling item in Amazon electronics), but at a list price of $359 it's much cheaper than the DX. According to one informal survey, the Kindle appeals to older customers, who likely have more disposable income than the average college student.

Pricing is a tricky business for gadget manufacturers. Even in good times, manufacturers sometimes discover they have priced an item too expensive. Apple found this out the hard way when it set the initial version of the iPhone at $599, and then abruptly cut the price by 1/3 in September 2007, just a few months after launch. In a sustained recession, consumers will be even more sensitive to price.

Prediction: Amazon will announce it is dropping the list price of its Kindle DX reader by at least 20% (i.e., $392 or less) by October 31, 2009. By this time, the company will have several months of sales data and will have time to gauge its reception on college campuses. It will also be preparing for the all-important 2009 holiday shopping season, as well as the start of spring semester classes in January 2010. Another pressure point: Large-screen e-reader competition from Plastic Logic (whose device is expected in early January, 2010) and potentially even an Apple e-reader.

This prediction is for an announcement of a Kindle DX price cut by October 31, 2009. The actual change in price for consumers may come at a later date.