[fjtorres]

1- The tear-down estimates, at introduction, were that the K2 cost about $185 to build. Some component costs, most notably the screen, have dropped a bit so a fair estimate would be to say the current build cost probably runs around $160.

2- Going by the price differential between the Wifi Nook and the 3G version, the added cost of of the 3G connectivity (hardware and service) runs about $50. Thus one could reasonably project a WiFi-only Kindle to cost about $110 to build. Wifi chips don't add much to the cost of a reader. (About $8). So even a USB-only Kindle (which is *not* going to happen any time soon) would cost about $100 to build.

3- While a $99 Kindle is theoretically possible, the negative effects to competition might stir up regulatory issues (especially in already-hostile Europe) that Amazon wouldn't want to deal with, so forget about a loss-leader Kindle unless B&N gets there first, allowing Amazon to claim self-defense. Best guess is that a wifi-only Kindle would run at least $129 and more likely $139 (the current price for refurbs).

4- Component prices will continue to drop, especially if the current (and next) wave of Kindles and Nooks continue selling at current rates, so a $99 connected Kindle might be possible in a year or so. But unless somebody else forces their hand, Amazon isn't going there willingly. Not any time soon. Remember, the K2 launched at double the build price so for Amazon to *want* to go that low the build cost would have to run more like $70, and prferably $50, for Amazon to go there.

5- The next big development for Kindle, and probably the reason for a WiFi Kindle to appear, is that Kindle is going to have to move into B&M retail sales. Target is *not* going to be the end of it. It's doubtful WalMart would want to carry an Amazon product but Best Buy and Radio Shack would. Sears and other department stores. Once a product reaches B&M retail, the question of channel conflict arises; Amazon would have to price the B&M product the same as the online product. Which means forgoing whatever profit the retailer is getting out of the reader. So, even if Amazon could comfortably sell their reader at $99, they would want to keep it higher so they can accomodate their retail partners. (And, paying retailers to sell your product negates a lot of the gains from the incremental sales B&M retail might add over direct sales.)

6- Finally, there is the matter of sales rate. Sure, a $99 Kindle would sell more than a $150 Kindle. Or a $129 Kindle. But how much more? As pointed out, dedicated reader devices *are* a niche market; even at $99, that's still the price of a dozen paperbacks. For a reader to make sense you need to be somebody who reads at least a book a month. And that demographic is not *that* big. Realistically, the biggest costs associated with ebook reading aren't from the reader device but the books themselves. And the Psychological value of $99 over $129 isn't enough to draw in many more buyers; certainly not enough to forgo the extra margin.

Bottom line? Not in 2010. Maybe in (late) 2011.