Price, partners to boost Asia's e-reader adoption

E-reader manufacturers such as Amazon, Sony and Fujitsu, have to work more closely with telcos and Internet service providers (ISPs) to develop a better pricing system for Web access and their e-reader devices, an analyst has urged.

Currently, Amazon's international version of its Kindle e-book reader comes ready with access to an internal 3G network that allows users to tap its database of books for browsing and available for purchase in the United States and some100 other countries around the world. Other e-readers such as Sony's Daily Edition Reader, also use cellular wireless connectivity to access the Web.

This need for 3G network connectivity effectively brings network providers into the equation, according to Ilham Samudera, senior market analyst for communications research at IDC Asia-Pacific.

"There has got to be some pricing model applied to the device. Either through revenue sharing, or content providers like Amazon or Barnes and Noble have to pay a fixed fee for the bandwidth provided by the 3G network operator," Samudera told ZDNet Asia in an interview.

However, determining the type of pricing model for e-readers is a challenge as no relationship has been established between the various market players such as Amazon and local telcos, he noted. These dedicated devices, which are capable of displaying e-books and note-taking, are also facing price competition with other devices such as netbooks and smartphones. The latter offers much more functions within the same price range, the IDC analyst said.

Fellow analyst firm Forrester, provides a different perspective and predicts that the e-reader market will start heating up, especially next year.

"We expect [e-reader] sales in 2010 to double, bringing cumulative sales of [these devices] to 10 million by year-end," Forrester noted in a report. It also predicted that total e-reader sales in the U.S. to reach 2 million by the end of this year.

It also noted that as competition increases, market leaders such as Amazon and Sony, will have to cut prices in order to stay attractive to consumers. This, in turn, would help boost the popularity of e-readers, it added.

The Forrester report cited an example in startup, Interead, which launched a low-end e-reader in June this year called the "COOL-ER Reader", which was priced at US$249. Subsequently, Sony launched a pared down version of its Reader device--the Pocket Reader--and set its price at US$199. Amazon also reduced its Kindle 2 prices from US$359 to US$299.

The drop in initial cost of these devices is necessary to boost the adoption of e-reader, according to Forrester's report. The research firm surveyed 4,706 online shoppers from the U.S. and discovered that most customers "substantially undervalue these devices", where more than 60 percent of them thought an e-reader should be priced below US$99.

Samudera also noted that compared to other markets, people in the Asia-Pacific region are "not that keen to read", with the exception of Japan and Korea. As such, besides the inhibiting cost factor, manufacturers of e-readers need to "drill down" to determine the region's consumer behavior.

In order to overcome this "cultural" barrier, he suggested that manufacturers work closely with influential entities such as local governments, to increase the demand and coverage of these devices.

"The only way I can see e-readers taking off is for governments to support it" said Samudera. "Take for example the education sector. If the government is willing to invest and push e-readers for all students, so the teaching materials, which have been centralized in a common database, can be distributed to all students quickly and efficiently."

This will allow the education ministry to better control and monitor the development of educating its population, and help in bridging the digital divide between urban and rural areas, he added.

But, he noted, the selling price of these devices must first fall to an acceptable level.

Agreeing with Samudera's assessment, Fujitsu's marketing lead for its color e-reader, FLEPia, said it would take time for governments to assess the feasibility of such an investment.

Asked about the importance price plays in increasing adoption of e-readers, the Fujitsu spokesperson said in an e-mail: "We agree. We are always trying to lower the cost of our e-readers to meet market requirement as the market grows."

In Taiwan, the Ministry of Education is reportedly planning to offer e-readers to schoolchildren in 2010, according to an IDG article.

The ministry said in the report that it is currently reviewing designs for e-readers and does not yet know how many it will purchase for 2010. The investment is part of a five-year, NT$50 billion (US$1.55 billion) budget earmarked for IT initiatives in classrooms.