What Is In Store For The E-Book Business Sector?
Thursday, September 2nd, 2010This time last year, the new market for e-book readers was really taking off - gold rush style. Following the stunning success which Amazon had enjoyed with its Kindle reader – first with the Kindle 2.0 in February of 2009 and then with the larger DX model in the summer of the same year – numerous electronics manufacturers were either developing, releasing or updating their own e-book readers so as to secure a share of the newly emerging market.
Sony and Barnes and Noble were bursting a gut to get their new readers launched before the 2009 festive season and Samsung, Plastic Logic, Asus and a host of others were rushing to get their readers on the market as fast as they could. The Computer Electronics Show (CES), which took place in Las Vegas in early 2010, had a special zone dedicated to e-book readers for the first time ever. E-book readers were a rapidly growing market.
Today, just a few short months later, the scene is somewhat different. The prices of e-book readers have absolutely plummeted. The new third generation Kindle now has an entry level Wi-Fi only model on offer for just $ 139, less than half of the $ 359 price at which the Kindle 2.0 launched. The price of Barnes and Noble’s Nook reader is also down on its launch price at $ 149 – and you can expect to see this fall further prior to the festive season.
A number of e-book readers in development – including Plastic Logic’s Que – have been shelved. The market is entering a new phase in its development and whether or not pure electronics manufacturers can compete on e-book reader sales alone must be open to debate. Amazon’s business model is very well suited to selling lower priced reader hardware and making a profit on the through life sales of Kindle books. Barnes and Noble could benefit from a similar business model of course, but it’s doubtful if they would be able to take advantage of the same economies of scale as Amazon.
Obviously the launch of the Apple iPad has been a major influence in all of this. There’s little doubt that e-book reader prices would have come down anyway – but the iPad has certainly hastened things along quite a bit. However, considering that the third generation Kindles sold out almost immediately after launch – even today customers are facing a three to four week wait for their Kindles to ship – it doesn’t look like the iPad is the long awaited Kindle Killer that it was widely forecast to be.
Even putting the debate about e-ink displays being easier to read on than backlit screens to one side, there is - at this time - enough of a gap between the price of the Kindle and the price of the entry level iPad to ensure that the Kindle will continue to be the more attractive option for anyone who just wants to read books. The monthly connection fees for the iPad will also not be to everyone’s taste.
It does look as if there is sufficient room in the market for both the Amazon Kindle and the iPad to co-exist - for the foreseeable future at any rate. Other manufacturers, including major players like Sony and Barnes and Noble, will probably struggle badly if e-book reader prices keep falling.