Amazon introduces cheaper Wi-Fi Kindle with ads

Amazon.com is slashing $25 off the price of a new Wi-Fi-only Kindle electronic reader. The catch: to get a Kindle for a new low price of a $114, you must purchase a version with sponsored screensaver ads and special offers. In all other respects, the new Kindle is identical to the Kindle now selling for $139. The only difference: Ads replace illustrations of classic authors like Virginia Woolf and Jules Verne that appear on current Kindle screensavers. Amazon’s Kindle vice president, Russ Grandinetti, says the lower-price sponsored ad strategy will “serve us well and make us an attractive option to the widest possible group of people.” The company introduces the ad model at a time when the market for eBooks and eReaders is become very competitive, with traditional eBook rivals such as Barnes & Noble’s Nooks and Sony Readers, and full-featured tablets such as Apple’s iPads. Forrester Research analyst James McQuivey says the special offers that come with the new Kindle have the potential to turn Amazon into a mini-Groupon.