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Report: Amazon Kindle Fire Could Drop as Low as $169

If Amazon keeps the Kindle around, which would be a strategy similar to Apple's iPad 2/new iPad idea, the Kindle is likely to drop in price. DealNews says that, based on their market observations, the Kindle is likely to drop to $169, which represents the current lowest for the tablet in the market.

Compared to a new Kindle Fire that is more than likely going to follow the lead of the original Fire and Google's Nexus 7 with a $199 price point, it is uncertain that consumers will perceive a 15 percent discount on a one-year old tablet as a compelling offer. If Amazon keeps the Kindle around, $150 may be a visually and psychologically much more appealing price point that could "reimburse" buyers for the lack of a camera and other upgrades in the Kindle Fire 2.

DealNews said that Amazon has a tradition "of slashing the price of its new Kindles as they're being announced." New Kindles have launched 10 percent to 61 percent cheaper than the initial starting price of their predecessors, the service said. However, with the Kindle, we are talking about a margin and competitive pressure that is greater than the marginal loss Amazon took with its Kindle e-readers. The company will have to strike far more favorable deals to bring down the BOM of the Kindle Fire.

When introduced, the $199 Kindle Fire was estimated to have a bill of materials of $201.70, excluding R&D, marketing and shipping cost.

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