Black Friday Deals

Amazon was effectively able to slash $50 off the price of its 3G Kindle on Wednesday – with a little help from AT&T.

The e-tailer announced a new version of its ad-supported Kindle, or what it calls its “Kindle with Special Offers.” The new version will operate on both WiFi and AT&T’s 3G networks, but will cost only $139 compared to $189 for the current 3G version of the Kindle.

The difference is the new Kindle comes bundled with advertisements and sponsored screensavers.

Amazon made a similar move with its WiFi-only Kindle earlier this year, offering an ad-supported version of the device for $114 compared to $139 for the ad-free version.  In May, the company launched a 3G version of ad-supported Kindle priced at $164.

The original ad-supported Kindle was supported  by several sponsors, including Visa, Procter & Gamble and Buick. Amazon AMZN said in its statement on Wednesday that AT&T T will sponsor the 3G version – which has enabled a 26% price reduction on the device compared to the current $189 price tag.

This latest move represents Amazon upping its ante in the competitive e-reader market, as it makes the 3G Kindle now on par price-wise with the latest version of the Nook from chief rival Barnes & Noble. The new Nook offers a touch-screen – which is not available on the Kindle – but comes in only a WiFi version at $139. Barnes also sells the LCD-based Nook Color – often referred to as a “Reader’s Tablet” for $249 – and Amazon is widely rumored to be working on a tablet of its own for a market launch later this year.

Amazon shares were up more than 2% by midday Wednesday, signaling that investors are not too concerned with the company eating into its profit margins on this latest move. Tear-down data from HIS iSuppli last year indicated that the company already prices the Kindle at near-break-even levels, so the fact that Amazon got AT&T to effective underwrite its latest price cut may help assuage concerns that the company’s already-thin margins will survive this latest move to keep its lead in this market segment.

Source: .marketwatch.com