Amazon Trims Price of Biggest Kindle Fire

It says it is passing on production cost declines to customers

By Christopher Freeburn, InvestorPlace Writer

Kindle FireOn Wednesday, Amazon (NASDAQ:AMZN) announced that it is slashing the U.S. prices of its 8.9-inch Kindle Fire HD tablets.

The price of the Wi-Fi only tablet will fall $30 to $269, while models with 4G connectivity will drop $100 to $399.  An Amazon executive said production costs for the tablets have declined, allowing the company to “pass the savings” on to customers, Reuters noted.

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Amazon does not release sales figures for its Kindle tablets. The company sells its tablets without profit, hoping to generate more revenue from digital content purchases and advertising.

An analyst at Pacific Crest Securities recently revealed that sources in Amazon’s supply chain indicated that demand for the 8.9-inch Kindle Fire HD was less than the company had hoped. The price cuts are likely intended to boost demand for the tablet, which competes with Apple‘s (NASDAQ:AAPL) iPad, Barnes & Noble‘s (NYSE:BKS) Nook, and Android-based tablets from Google (NASDAQ:GOOG) and Samsung.

An Amazon spokesperson denied that the price cuts were in response to weak demand.

In December, Amazon cut Kindle Fire HD prices by $50, but just for a day, in advance of holiday sales.

Concerns that the price drops might signal lackluster Kindle Fire sales sent Amazon shares down about 2% in Thursday midday trading.

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