An excerpt from some Kindle analysis
Amazon's price-cutting won't be cheap. The company said last year that its Kindle manufacturing costs were "significantly higher" than an estimate from iSuppli of $185.49. Costs likely have come down since then, and not offering cell-network access reduces costs as well. Still, it is a good bet the company is losing money at $139 a unit. One silver lining from the Apple threat is that the price rises pushed though on e-books should have improved Amazon's margins there.
Price wars can damp investors' appetites for companies. Amazon may be following the only path open to it, but it still risks scaring those who don't trust the company's commitment to the bottom line.
Heard on the Street: The High Cost of Amazon's Cheap Kindle - WSJ.com
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