Amazon Sells Kindle for $139, But Prepare for AT&T Ads

Amazon announced its lowest price ever for its Kindle 3G with Special Offers but it comes with a catch--you may be inundated with AT&T advertisements.

On Tuesday, Amazon Inc. (AMZN) announced a deal with AT&T that will reduce its Kindle 3G with Special Offers from the standard price of $164 down to $139. New owners will get free AT&T 3G coverage for the duration of the Kindle's life in exchange for AT&T advertisements scrolling across the bottom of the screen.

Kindle 3G with Special Offers owners are used to receiving special offers at the bottom of the screen, but now will likely get an extra healthy serving of AT&T oriented advertisements.

The Kindle allows for users to buy and download books, magazines, and other materials for only the price of the materials. The Amazon Kindle is one of the big powers in the industry though it faces constant pressure from the Apple iPad and the Barnes & Noble Nook. A Google backed digital reader is also about to join the market. Story HD will tap into Google's large library of books and is expected to hit the markets on July 17^th.

Amazon first offered a Kindle with advertisements in April when it released the Wi-Fi only digital reader. The Wi-Fi only version, which Amazon sold for $119, quickly became popular and outsold the advertisement-free versions in May.

This led the company to try advertisements out with a 3G version and the move has apparently paid off. Amazon CEO Jeff Bezos reported that owners of the 3G with Special offers version read 20 percent more books and clicked on more advertisements.

In addition to AT&T's advertising, General Motors, Proctor & Gamble, and JPMorgan Chase all advertise on the unit. The advertisements have allowed Amazon to continue to be able to drop its price. Kindle's originally retailed for $259 and now a regular Kindle 3G sells for $189.

The move appears to be a win-win for both Amazon and AT&T, even with the terms of the deal not disclosed. Amazon will now likely draw in more customers with a reduced Kindle price, while AT&T gains a steady income stream. Amazon covers the data cost for the 3G network, which has been growing rapidly for AT&T.

Kindle 3G is by far the fastest-growing connected device on the AT&T network, AT&T mobility and consumer markets president Ralph de la Vega said in a statement. We consistently hear from customers how much they enjoy the freedom of not being tied to a Wi-Fi hotspot.