The eReader pricing shakeup spells doom for everyone but the big three

The eReader Shakeup

Barnes & Noble struck first with a brilliantly thrown sucker punch followed up by a groin shot to hit Amazon where it hurt — right in the bottom line. Less than three weeks ago the eReader market was a familiar place with established price points. We were eeking down to the $99 eReader with the monochromatic LCD-screened JetBook Lite. The cheapest E-Ink eReader was just about to hit market for $150 in the Borders Kobo. Mid-ranged eReader prices were established with the Kindle and Nook running a neck-in-neck race and offering similar devices — both with 3G and WiFi connection for $259. Sprinkle in the many other eReaders and you had a complete, if overflowing, market.

Well you can forget about all that now.

Shortly after Barnes & Noble announced the Nook WiFi would be coming out for $149, they followed up by announcing that their Nook 3G would shave $60 off its asking price and dip to a reasonable $199. Behold the new price point for eReaders. But the main surprise came when Amazon did what Amazon does best — control the market. In a blindingly fast response, Amazon announced that their Kindle 2 would not only drop to below the $200 price point, but beat the Nook 3G by selling for $189.

Within twelve hours the entire eReader market had turned on its head.

Next it was Sony’s turn to do what they do best: react. Rarely in the forefront, Sony typically is a responder instead of a trendsetter. Their line of Sony Readers had already declined in price before the major shakeup. Now Sony was left to do what little they could to still make their Reader lineup viable and drop their remaining prices to $149 for the Pocket Edition, $169 for the Touch Edition and $299 for the Daily Edition. It’s a move that smelled of desperation. While Amazon showed how a price drop could help a company retain dominance, Sony showed how too little too late can damn a product. The Pocket Edition should have at least been marked down to $119, better yet $99. As it stands now, there’s very little appeal to buy the Sony Pocket Edition Reader over the B&N Nook WiFi or the Kobo Reader. At $169, there’s little benefit to set apart the Sony Touch Edition Reader from the slightly higher Amazon 2 or Nook 3G. Yes, the PRS-600 has touch, but it’s confounded by a murky screen and no WiFi.

More than anything else these moves echoed the response from consumers saying, “we aren’t going to spend more than $200 on a mid-sized eReader anymore.” The only large-screened eReader that could come close to being labeled successful is the Kindle DX. It may gain more sales now that it to has been lowered to a more inviting $379 price and features an E-Ink screen with 50% better contrast levels. Every other eReader priced over $300 (baring the original prices for first generation eReaders like the Kindle and Sony products) has met in failure. iRex Technologies entered bankruptcy after trying to sell the DR800SG in the U.S. for $399 and that was even with an agreement with large electronics seller Best Buy. Plastic Logic failed to deliver the long-awaited QUE ProReader by their deadline date and refunded the extravagant $799 pre-orders. Just today it was InteRead’s turn, makers of the COOL-ER series of eReaders, to announce they were in the process of liquidating the company.

Don’t expect it to end there.

Those companies were on their way out before the price shakedown. Now with such a drastic shift, who’s going to be left? Most likely, just the big three: Amazon, Barnes & Noble and Sony. They’re the only ones who can survive and continue to plot the course for eReaders. We don’t expect Sony to be a strong contender, but they’ll always be there nipping at the big dogs’ heels. It’s sad in some ways because there are quality eReader manufacturers that build good products. Pocketbook is one company that comes to mind. However, they don’t have the popularity or buying power to stay with the big three in a North American market. Eventually consumers will have to kowtow to their higher prices to support a good product. That’s something that consumers have proven not to do willingly in the past.

The market shakeup won’t stop here.

All three of the big eReader players are working on their next generation eReaders. Amazon has been working on the third iteration of the Kindle, rumored (depending on the month) to feature a reflective color Mirasol screen or even be more of a tablet PC product. B&N already has the Nook 2 labeled as a work in progress and is expected to launch it by the end of the year. Even Sony is rumored to be releasing their next generation Reader in the upcoming weeks.

With the next generation of eReaders will come the refresh of the $250 to $300 price point, but will consumers bite? If it’s more of the same then most likely not. That 6-inch E-Ink screen with WiFi and 3G diet has gone stale. To get people to pay more you’ll have to give them more and that most likely means the inclusion of new color screen technologies like Mirasol, Pixel Qi, Liquavista and others.

What about the little guy?

A miracle. For a small manufacturer to break into the eReader big leagues it would take a literal miracle. We’re talking Roy Hobbs stuff here complete with music, lightning and exploding lights. And even if they’re lucky enough to find themselves in Roy Hobbs’ cleats, it will mostly likely turn out like the book and not the movie. Their device would have to be superb, offer something not found anywhere else and be hooked up to a robust and supportive marketplace. More importantly it would have to be cheap. How on earth could any small manufacturer make money on it?

There’s certainly more to see and witness as the eReader market continues to solidify and we’re sure that many more exciting things will be heading our way soon. To the little guys, it was fun while it lasted. Now where’s our $99 E-Ink eReader?

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9 Responses to “The eReader pricing shakeup spells doom for everyone but the big three”

  1. Thing about the Sony Touch is that it’s wicked fast and has some nice Sony software touches. OTOH, the Nook can now be rooted and have apps installed on it. This all makes my head hurt.

  2. Good article with an acurate synopsis oc the current ereader market. The Alex by Spring Design was not mentioned but is worthy of discussion as it may be that small company with the innovative product you talk about. It’s just that price, $400! I don’t know how they are going to survive without a price drop.
    Phil

    • The Spring Design Alex is a very nice eReader. Only thing is, while we think the Alex out Nooks the Nook, does it perform well enough to spend $250 on (or even $200 more comparing 3G apples to apples)? That will ultimately be what dooms all of the smaller eReader makers. They just can’t price cut like the big three and survive it.

  3. Why do reader manufacturers keep cramming in features to retain the $300 price point? I’d think that they’d take a page, as it were, from the DVD player market and focus on getting to sub-$100 prices.

  4. We have a color $99 reader coming for the Holiday season.. and it’s pretty hot!

    See Publisher’s Weekly article:
    Copia Offers New Reading Devices, New Prices

    http://bit.ly/98xhwG

  5. Please stop saying “price point.” Just say “price.”

    While there can be a difference (percentage profit), that difference isn’t in the usage above.

  6. Yeah, not convinced. The big three (and this article) seem to forget the rest of the world outside of America.

    Scooter.

    • The focus of the post was the American market, not international. There are to many variables to account for a worldwide consensus and certain markets, namely China, Japan and Korea, won’t be effected much at all by the recent price drops.

  7. Copia, Skiff, Asus, and a host of others are nothing more than Vapor. The discussion is correct in stating that the big 3 will control, because they have the content. If Sony could make a reader with a normal screen, they would win, because their products are works of art, and the best build quality on the street – Period.

    Another annoyance, is who the hell decided on some of these screen sizes? My eyesight just isn’t that good. And the Sony daily, what a bizarre shaped screen. If they had made it an inch wider, people would have dove on it.

    Apple Ipad is not a good reader – it is a toy, like a video game.

    I will wait. In the mean time, I am using my IREX DR800SG, which is a superb reader, but unfortunately, the 3G does not connect to anything anymore, since the bankruptcy.