How Amazon’s Competitive Advantage Will Ensure The Continued Success Of The Kindle Reader
Friday, September 10th, 2010At 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 large display DX model in the summer of the same year - a small army of personal electronics firms seemed to be developing, releasing or updating e-book readers of their own in order to grab a share of the new and rapidly developing 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), held in Las Vegas in early 2010, had a dedicated e-book reader section for the first time ever. E-book readers were a hot developing market.
Right now however, no more than a few months later, it’s an entirely different scenario. The price of e-book reader hardware has been in free fall. Amazon have now introduced an entry level, Wi-Fi only, Kindle priced at $ 139 - not much more than a third of the $ 359 price 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.
A number of e-book readers which were in development - including Plastic Logic’s Que - have been abandoned. The market seems to be entering a new phase in its development - and whether there is any place in it for pure electronics manufacturers or not is open to debate. The Amazon business model is very well suited to selling lower priced readers and making a profit on the subsequent sales of Kindle books. Barnes and Noble could employ a similar strategy - but whether or not they could make use of economies of scale in the same way that Amazon can is debatable.
Clearly the release of Apple’s iPad tablet computer has been an important influence in 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, bearing in mind the fact that the new third generation Kindles sold out shortly after they were released, the iPad doesn’t look like the Kindle Killer that it was expected to be.
Even putting the debate about e-ink displays being easier to read on than back-lit 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 fact that the iPad has a monthly download/connection fee will not please everyone.
It does look like there is sufficient room in the market for both the Amazon Kindle and the iPad to rub along - 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.
Check out the Amazon Kindle for yourself and view the wide range of Kindle accessories available to help you personalise your reader.
