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iPad swamps e-reader market, Kindling fears
August 2, 2010, Monday
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THE price war is on in the e-reader market as Barnes & Noble and Amazon.com duel to increase market share for their nook and Kindle devices, respectively.
However, the larger question for these companies is whether there's a future for e-readers - which are designed mostly for reading books, newspapers and magazines - in a consumer world that is becoming more and more enamored of tablets that can do it all.
"The stand-alone e-reader may replace my books, but it's likely to face tough competition from an iPad," notes Eric Clemons, an operations and information management professor at Wharton.
On June 21, Barnes & Noble cut the price of its nook e-reader to US$199 from US$259 and introduced a WiFi-only version for US$149. Hours later, Amazon cut the price of its Kindle to US$189 from US$259.
In early July, Sony joined the fray by cutting prices for its three e-readers, which now start at US$149.99. The Kindle, nook and Sony Reader are all devices that connect to online book stores allowing users to download digital content over a 3G wireless service, WiFi or by downloading from a PC, and feature e-ink screens, which mimic the look of ordinary ink on paper.
Based on market share, Amazon is considered to be the leader in the e-reader race followed by No. 2 Sony, according to Forrester Research, which expects Amazon to sell about 3.5 million Kindles in 2010.
The online retailer says that the device is its best selling product, but declines to offer specific sales figures. Barnes & Noble's nook hit the market for the Christmas 2009 shopping season and the bookseller has promoted the device heavily in its bookstores.
Both companies have retail partnerships with the likes of Target and Best Buy. Sony also has a sizable distribution channel with those same partners. Meanwhile, a bevy of other upstarts are targeting the e-reader market. Borders rolled out a device called the Kobo this spring, and in June began a promotion that bundles the gadget, priced at US$149, with a US$20 gift card.
News Corp recently acquired Skiff, a Hearst-owned company that makes its own e-reader, which has yet to surface in retail stores.
At the time of the sale, News Corp indicated that its interest was not in the e-reader device itself but in Skiff's content-delivery platform, which will allow the company to deliver media-rich journalism to tablets, smartphones, e-readers and netbooks.
The elephant in the e-reader market is Apple's iPad. Experts at Wharton say that the iPad, which has its own bookstore and an interface for reading digital books, reinvented the tablet PC market and forced e-readers into a corner.
In the end, multifunction devices like the iPad, which allow users to play games, peruse their e-mail, create presentations and surf the web in addition to reading books, may render e-readers obsolete.
Single function
When Amazon introduced the Kindle in 2007, the device was meant to offer an experience that was like reading a book or magazine - nothing more, nothing less. However, it's unclear that consumers will continue to want a single function device. "Look at the portfolio of things people do with an iPad. They move between Web surfing, books and entertainment," says Peter Fader, a marketing professor at Wharton. "That's what people want. Book reading is just one slice of what they do. It's similar to the same way smartphones are taking over regular mobile phones. There's no need for a phone that just does voice calls."
According to experts at Wharton, e-readers are at best a niche market and at worst may soon become extinct. The one advantage e-readers have over the iPad is that they can be read easily in daylight due to the e-ink screens.
"But how big of a market is that?" asks Fader. Karl Ulrich, an operations and information management professor at Wharton, says the current batch of e-readers has three advantages: high-contrast screens, long battery life and low cost.
"However, the more general-purpose tablet computer is going to just keep getting better on those three dimensions," Ulrich notes. "I bought both the Kindle and the iPad to try them both. I never use the Kindle. The iPad on the other hand is phenomenally useful."
Indeed, sales figures indicate that e-readers are a niche relative to a device like the iPad. Apple reported recently that it sold 3 million iPads in 80 days despite prices starting at US$499.
Amazon CEO Jeff Bezos sees the Kindle as more than just a device - it's a platform that can be used across multiple gadgets.
For instance, Amazon has Kindle apps for the iPad and iPhone as well as the BlackBerry and Google's Android operating system. The apps synchronize with the main device as users read an e-book. If a consumer leaves his or her Kindle or iPad at home, for example, he or she can pick up the same page while on the road using a mobile phone.
At Amazon's shareholder meeting May 25, Bezos likened the Kindle to a digital camera. Smartphones have cameras too, but consumers still buy single function devices.
"Kindle will compete with these LCD devices like the iPad primarily by being a very focused product," Bezos said at the meeting. "Serious readers (are) going to want a purpose-built device because it's an important activity to them. Now, if you look at it in terms of population or percentage of households, 90 percent of households are not necessarily serious reading households. And so we're very focused - the Kindle is all about reading."
Indeed, in the long run, it's unclear whether a single function device can do well in a gadget-overloaded world.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. All rights reserved. Shanghai Daily condensed the article.)
However, the larger question for these companies is whether there's a future for e-readers - which are designed mostly for reading books, newspapers and magazines - in a consumer world that is becoming more and more enamored of tablets that can do it all.
"The stand-alone e-reader may replace my books, but it's likely to face tough competition from an iPad," notes Eric Clemons, an operations and information management professor at Wharton.
On June 21, Barnes & Noble cut the price of its nook e-reader to US$199 from US$259 and introduced a WiFi-only version for US$149. Hours later, Amazon cut the price of its Kindle to US$189 from US$259.
In early July, Sony joined the fray by cutting prices for its three e-readers, which now start at US$149.99. The Kindle, nook and Sony Reader are all devices that connect to online book stores allowing users to download digital content over a 3G wireless service, WiFi or by downloading from a PC, and feature e-ink screens, which mimic the look of ordinary ink on paper.
Based on market share, Amazon is considered to be the leader in the e-reader race followed by No. 2 Sony, according to Forrester Research, which expects Amazon to sell about 3.5 million Kindles in 2010.
The online retailer says that the device is its best selling product, but declines to offer specific sales figures. Barnes & Noble's nook hit the market for the Christmas 2009 shopping season and the bookseller has promoted the device heavily in its bookstores.
Both companies have retail partnerships with the likes of Target and Best Buy. Sony also has a sizable distribution channel with those same partners. Meanwhile, a bevy of other upstarts are targeting the e-reader market. Borders rolled out a device called the Kobo this spring, and in June began a promotion that bundles the gadget, priced at US$149, with a US$20 gift card.
News Corp recently acquired Skiff, a Hearst-owned company that makes its own e-reader, which has yet to surface in retail stores.
At the time of the sale, News Corp indicated that its interest was not in the e-reader device itself but in Skiff's content-delivery platform, which will allow the company to deliver media-rich journalism to tablets, smartphones, e-readers and netbooks.
The elephant in the e-reader market is Apple's iPad. Experts at Wharton say that the iPad, which has its own bookstore and an interface for reading digital books, reinvented the tablet PC market and forced e-readers into a corner.
In the end, multifunction devices like the iPad, which allow users to play games, peruse their e-mail, create presentations and surf the web in addition to reading books, may render e-readers obsolete.
Single function
When Amazon introduced the Kindle in 2007, the device was meant to offer an experience that was like reading a book or magazine - nothing more, nothing less. However, it's unclear that consumers will continue to want a single function device. "Look at the portfolio of things people do with an iPad. They move between Web surfing, books and entertainment," says Peter Fader, a marketing professor at Wharton. "That's what people want. Book reading is just one slice of what they do. It's similar to the same way smartphones are taking over regular mobile phones. There's no need for a phone that just does voice calls."
According to experts at Wharton, e-readers are at best a niche market and at worst may soon become extinct. The one advantage e-readers have over the iPad is that they can be read easily in daylight due to the e-ink screens.
"But how big of a market is that?" asks Fader. Karl Ulrich, an operations and information management professor at Wharton, says the current batch of e-readers has three advantages: high-contrast screens, long battery life and low cost.
"However, the more general-purpose tablet computer is going to just keep getting better on those three dimensions," Ulrich notes. "I bought both the Kindle and the iPad to try them both. I never use the Kindle. The iPad on the other hand is phenomenally useful."
Indeed, sales figures indicate that e-readers are a niche relative to a device like the iPad. Apple reported recently that it sold 3 million iPads in 80 days despite prices starting at US$499.
Amazon CEO Jeff Bezos sees the Kindle as more than just a device - it's a platform that can be used across multiple gadgets.
For instance, Amazon has Kindle apps for the iPad and iPhone as well as the BlackBerry and Google's Android operating system. The apps synchronize with the main device as users read an e-book. If a consumer leaves his or her Kindle or iPad at home, for example, he or she can pick up the same page while on the road using a mobile phone.
At Amazon's shareholder meeting May 25, Bezos likened the Kindle to a digital camera. Smartphones have cameras too, but consumers still buy single function devices.
"Kindle will compete with these LCD devices like the iPad primarily by being a very focused product," Bezos said at the meeting. "Serious readers (are) going to want a purpose-built device because it's an important activity to them. Now, if you look at it in terms of population or percentage of households, 90 percent of households are not necessarily serious reading households. And so we're very focused - the Kindle is all about reading."
Indeed, in the long run, it's unclear whether a single function device can do well in a gadget-overloaded world.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. All rights reserved. Shanghai Daily condensed the article.)
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