At this time last year, the market for e-book readers was buoyant. Following the stunning success which Amazon had achieved with its Kindle reader – first with the Kindle 2.0 in February of 2009 and then with the large format DX edition in the summer of the same year – a veritable host of personal electronics manufacturers were either developing, releasing or updating their own e-book readers so as to get their share of the nascent 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. For the first time ever, the Computer Electronics Show, which took place in Las Vegas during early 2010, featured a dedicated area for e-book readers. E-book readers were a rapidly developing, and potentially very profitable, market.
Currently, no more than a few short months later, the scene is very different. The price of e-book readers has plunged. 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. Barnes and Noble have also dropped the price of the Nook reader to S 149 - and this will probably be cut again before 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 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. The Amazon business model is very well suited to selling lower priced reader hardware and making a profit on the ongoing 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. E-book reader prices were always going to fall - but the appearance of the iPad definitely seems to have jollied things along quite a bit faster. However, based on the fact that the third generation Kindles sold out shortly after launch – even today customers are facing a three to four week wait before their Kindles will ship – it doesn’t look as if the iPad is the long awaited Kindle Killer that it was widely predicted 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 fact that the iPad has a monthly download/connection fee will not please everyone.
It does appear that there is ample room in the market for both the Amazon Kindle and the iPad to co-exist - for the short term future at least. Other manufacturers, including major players like Sony and Barnes and Noble, will probably struggle badly if e-book reader prices keep falling.