At this time last year, the market for e-book readers was buoyant. Following the enormous success which Amazon had achieved 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 working feverishly to get their new readers to market in advance of the 2009 festive season and Plastic Logic, Asus and a number of others were rushing to get their readers released as quickly as they could manage. 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 hot developing market.
At the moment however, just a few months later, the outlook is markedly different. The price of e-book reader hardware has been in free fall. 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.
Several new e-book readers which were going through the development process – including Plastic Logic’s Que – have been cancelled. The market appears to be entering a new phase in its development – whether there will be a place for pure electronic manufacturers in future or not is somewhat debatable. The Amazon business model lends itself very well to selling lower priced reader hardware and making a profit on the subsequent sales of Kindle books. A similar strategy would be available to Barnes and Noble of course, but it’s debatable as to whether or not they can benefit from the same types of economies of scale as Amazon.
Of course, it would be hopelessly naive to ignore the impact of the Apple iPad in all of this. It’s certain that the price of e-book readers would have trended downwards anyway – but the iPad’s launch certainly speeded things up 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 disregarding the debate about e-ink displays being better for reading on than backlit screens, there is – currently at any rate – more than enough daylight between the Kindle price and the price of even the entry model of iPad to make the Kindle a very attractive option for prospective customers whose chief interest is reading books. The iPad’s monthly connection fees will be a stumbling block for many customers.
It does appear that there is enough room in the market for both the Amazon Kindle and the iPad to co-exist – for the short term future at least. Other e-book reader manufacturers, including Sony and Barnes and Noble, seem destined to struggle as hardware prices will continue to fall.