Why doesn't Spring Design lower the price of the Alex

[thinkpad]

Seriously $399 for a 6 inch e-ink display is just way to expensive with all the price slashing all around. You get a Kindle DX Graphite for $379.

What are Spring Design thinking, who's going to buy their reader for this price? Don't get me wrong I would love to get a Alex. I think it's very different from the Kindle but not at that price.

[mgmueller]

Originally Posted by thinkpadx

Seriously $399 for a 6 inch e-ink display is just way to expensive with all the price slashing all around. You get a Kindle DX Graphite for $379.

What are Spring Design thinking, who's going to buy their reader for this price? Don't get me wrong I would love to get a Alex. I think it's very different from the Kindle but not at that price.

I haven't seen any figures. But if I look at the very small number of threads about Alex, the sales figures might have been bad from the beginning.
In general, figures of most ePaper devices seem way smaller than what we here now from iPad.
If so, it's the old discussion: Cutting the price in half, hoping to sell at least 3 times as many units or sticking to the price.

I only can compare to my employer:
Hardware Gross Margin is about 50%. This may sound a lot, but actually it's the lower limit. General administration, sales and other costs usually are about 25%. In small corporates (is Spring Design a startup?) it's even worse. Costs for R&D, but no or very limited cashflow.
Then it's usually extremely difficult, to reduce prices.
Amazon can do so. For them it's about market share and they have a huge "cash cow" in their core business.
Spring Design probably doesn't have any additional cash flow.

Let's assume, their Gross Margin (which is NOT profit, that's before internal costs and taxes) would be 35%. So they might be able to reduce their price by maybe 15%, else they would make a loss for every unit they sell (and they can't compensate yet with book sales). Would 15% make any difference? Would their sales figures double? I highly doubt that.

[Spiffy]

I imagine they can't afford to. They may not be getting a great price for parts, they probably spent a ton on R&D, and then they (allegedly) got screwed over by Barnes & Noble--which means that the deal which they assumed would recoup their development costs only wound up COSTING them money instead.

[kjk]

Originally Posted by thinkpadx

Seriously $399 for a 6 inch e-ink display is just way to expensive with all the price slashing all around. You get a Kindle DX Graphite for $379.

You can get a Kindle DX for $359 *now*. It was $489 just a week ago.

Companies like Spring have a real problem now. B&N and Amazon have alternate revenue streams tied to their hardware-so they can be more flexible with pricing schemes.

It was fine when B&N and Amazon both wanted to make profits on both hardware and eBooks-it kept the hardware pricing somewhat competitive. If they are shifting to a subsidized model, those companies without anything to help subsidize are going to have to compete on something other than price.

[thinkpad]

Irex also priced there devices pretty high and they went bankrupt. It's a shame when a nice device like the Alex doesn't stand a chance in the price war between Amazon and B&N.

[cutterjohn42]

Spring Design is probably small fry and greedy bastards on top of that(they've whined about eInk display for FAR too long for it to hold any price pressure any longer)... maybe the coming proliferation of Android non-eInk tablets will make them rethink... but...

This situation saddens me, but is entirely expected so long as people expect unrealistic ROI...