Tuesday, June 22, 2010

eReader Wars

It has been an interesting week in the eReader market. Following Apple's spectacular entry into the eReader market with the iPad, we started experiencing all kinds of fallout in the eBook industry. First there was the pressure by the major publishing houses to force Amazon into an agency model. This was to duplicate the deal they got with Apple and the supposed protection of first release hard cover book market. The net result of this model is that Amazon no longer sets the price of eBooks. The publisher is the seller of the book and amazon collects a commission on each sale. So, Amazon no longer needs to make its profit on the Kindle. Now it makes 30% profit on each eBook sold. So if cheap books don't drive the Kindle adoption rate (or any other eReader) then the price of the reader itself has to become more attractive. (Did you really think that eReaders were so expensive to produce that a fair retail price was $300?)

According to an AP story in the Seattle Times, "Michael Norris, a senior trade analyst at Simba Information, said the Nook's price cut indicates New York-based Barnes & Noble "is admitting that when they're up against a $500 digital photo frame on acid that does everything, they can no longer keep a straight face when selling something for $259 that only does books.""

Apple's "digital photo frame on acid" is not the only pressure that Amazon is facing. Earlier this month, Borders Books began preselling the forthcoming Aluratek Libre eBook Reader Pro for just $119, joining its $150 models of the Sony Reader and Kobo eReader. Borders has not tied itself to just one reader like Barnes & Noble did with the Nook, even though its eBookstore is powered by Kobo.

So yesterday Barnes & Noble announcd a seemingly dramatic price drop in the Nook to 199 and announced a WiFi only version (no "always connected via cellular") at $149. Amazon followed in a few hours with a dramatic slash in the price of the Kindle to just $189.

Of course, on the downside of all this great pricing news, we read that News Corp. bought Skiff, LLC for its platform, but declined to buy its much-touted eReader which now waits in obscurity for another buyer.

The summary of this is that it is now cheaper to enter the eReader market. Not below $100 yet, but edging ever nearer for quality 5" readers. Independent publishers of eBooks should rejoice over this since one of the barriers to selling even <$5 eBooks has been the number of people with eReaders. It is not likely to effect the sale of the new more expensive mainline publisher eBooks. Is it time to buy an eReader? Certainly. But read the fine print and make sure you are getting what you think you want: plug-in synchronization, WiFi, 3G, single library/bookstore, open platform. It's all out there.

[EDIT]Just saw this bit about the Sony eReader Touch edition price drop to $199. This article is very perceptive about Sony being lost in the noise of Kindle/iPad. It is a great reader! Sony Reader price drop = tree falling in the forest.[/EDIT]

Kindle Wireless Reading Device (6" Display, Global Wireless, Latest Generation)

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