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Originally Posted by geoffwood
I suspect Amazon are also seeing diminishing returns and reduced revenue per device.
With each price drop they lower the barrier to entry to the world of e-readers, but I suspect that the newcomers also read correspondingly fewer books. if they read more they would have been with the early adopters. So the newer users are more casual, less frequent users. If that is the case, not only is Amazon getting less upfront revenue per device, but also less recurring revenue from book purchases. Maybe they have scooped up all the additional users attracted to the $79 price tag and won't see another large sales spike until they drop the price again?
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Reading fewer books doesn't necessarily correspond to buying fewer books. I read over a hundred books a year and spend less than someone buying 5 bestsellers a year.
You are assuming that the avid readers who were the early adopters of eReaders were purchasing tons of expensive books from Amazon and I'm not sure that's the case. Voracious readers are going to be more price sensitive and many probably put in the time to track down freebies and bargains or use the library or fill up their readers with classics or join lending groups or even scan their own books. People who read less than a book a month aren't going to bother with any of that and will just buy whatever is at the top of the bestseller list when they want a book.