Whether or not you were expecting it (and you weren’t), Kindle slashed the price of the new Kindle 2 by sixty dollars, bringing the price down to a manageable $299. Still pricey, but not as pricey as buying 1,500 paper books.

The new Kindle, after only two months on the market, is bigger than its predecessor and has a few extra bells and whistles. When it originally came out with a price of $359, customers gobbled it up, making it an instant Amazon bestseller. Now, Amazon hopes it will become an even bigger seller. With an appreciated dip below the three hundred mark, the Kindle is available to a broader market base.

The question is, “why?”

“Economy,” is a common response. consumer expectation for reduced costs has led several manufacturers to reduce their prices, offer ’stimulus deals,’ and produce lower-value devices to a penny-pinching crowd.

Others point to an oft-overlooked business deal that took place in June. Prime View International, an offshore company that produced parts of the Kindle, acquired E-Ink, maker of “electronic paper displays,” including Kindle’s screen. The marriage of the two companies meant a reduced cost for Amazon’s Kindle 2. One network in publishing this conjecture, rallied the comments of Goldman Sachs’ James Mitchell to corroborate: “this cut similarly flows from supplier scale in manufacturing key components, such as the E Ink screen.”

Maybe. But why would Amazon altruistically knock a whopping $60 off the hot-selling device? Just to be nice? Price cuts come with a reason, and usually that reason is motivated by something in the future, not something that happened in the past. Sure, the manufacturing volume/production costs have something to do with it, but that’s not the whole story.

Serious competition is a much more feasible option. Kindle can’t expect to sell 2 million devices without other gold-hunters trekking to their territory. E-books are increasingly becoming viewed as a cost-friendly, eco-friendly, space-friendly alternative to the ‘real thing.’ As consumer interest grows, and demand rises, several companies are poised to maximize on the emerging market. Sony’s digital reader has already gained a considerable following. The iPhone and iPod touch, with “Kindle” apps available, have a strong pull for e-book reading. As smartphones double as readers, and a spate of new readers readies to pour into the market, Kindle’s price cut may be the best way to maintain a market share.

Despite its flashy new redesign, the Kindle simply doesn’t bring to the table the kind of versatility that the mobile generation wants. If it can’t receive calls from mom, play your tunes, and take a picture, it is pass. The Kindle does none of the above. It remains to be seen whether the Kindle’s splash in the pond is a passing trend or an enduring legend.

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