Although Amazon's Kindle is enjoying strong sales, Piper Jaffray analyst Gene Munster told Barrons in a recent interview that the company needs to cut the price of its e-reader if it wants to compete with the iPad.
According to Barrons, Munster told the publication that Amazon should cut the price of the Kindle from its current $259 price tag to $149. Munster believes that the iPad could cut into Amazon's Kindle sales without a price reduction.
As troubling as that might be for Amazon, Munster contends that the e-retailer is in a good position, regardless of the way things turn out. If the Kindle succeeds, great. If not, Munster says, Amazon will still do well with online retail.
"Amazon can lose the Kindle and succeed in broader e-commerce," Munster told Barrons.
But is losing the Kindle really something that Amazon would like to see happen? The company recently acquired a touch-screen maker, Touchco, raising speculation that it might be gunning for the iPad in future iterations of its Kindle. And considering how successful the Kindle has been, it's unlikely that Amazon will just roll over.
At the same time, Munster's contention that Amazon should drop the price of the Kindle is debatable, since the Kindle's current price of $259 is substantially lower than the cheapest iPad model being offered for $499. That said, the iPad does much more than the Kindle, and delivers e-reading capabilities through the device's iBooks. A solid argument can probably be made for either side.
But at this point, Amazon's silence on the topic indicates that the company might be planning to see how well the iPad sells and how it will affect Kindle sales before it makes any decision. If it sees a drop, it might be only a matter of time before the company cuts the Kindle's price.