Why Amazon Will Continue To Influence The E-book Reader Market
Despite the release of the (very wonderful) Apple iPad, Amazon’s Kindle reader continues to sell well. The third generation Kindle sold out shortly after its release and customers are currently looking at a three to four week wait for their new Kindle to ship. Whilst it may not generate quite the hysteria of the iPhone 4, the Kindle clearly fulfils a market need and there seem to be plenty of consumers eager to get their hands on what has become Amazon’s number one selling item.
Of course, the price of e-book readers has absolutely plummeted. The new entry level Kindle (with no 3G) is now available for just $139 – less than 40% of the original Kindle launch price of $359. In all probability, e-book reader prices still have some way to fall – but, for the moment at least, there’s enough daylight between the Kindle price and the entry level iPad price to make the Kindle an attractive option if you mainly want to read books. The other factor in the Kindle’s favour is the fact that there is no monthly connection/download fee – unlike the iPad. This will be enough to stack the odds in its favour for many customers.
Of course, Amazon can tolerate selling their e-book reader hardware at knock down prices due to the fact that they will profit from the ongoing sale of their Kindle books throughout the lifetime of the device. Other e-book reader manufacturers don’t have this option and may well struggle if hardware costs are driven down very much further. Even Barnes and Noble, who in theory at least could adopt a similar strategy, would probably struggle to achieve the economies of scale available to Amazon and could also face a hard time if hardware prices fall too low.
At the moment, it might be shaping up to be a two horse race with the Amazon Kindle dominating the low cost no monthly fee sector of the market and Apple cleaning up in the high end multi-function market sector. It looks as if, for the foreseeable future at least, the Kindle and the iPad can co-exist. How much longer the other (lesser?) e-book readers will survive is open to debate however.
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