Kindle vs. Nook: The price war is on; E-reader shipments to surge?

Kindle vs. Nook: The price war is on; E-reader shipments to surge?

Summary: The price war in e-readers is on and the scrum between Amazon's Kindle and Barnes & Noble may be enough to change the buying calculus for dedicated reading devices.

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TOPICS: Amazon, Hardware
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The price war in e-readers is on and the scrum between Amazon's Kindle and Barnes & Noble's Nook may be enough to change the buying calculus for dedicated reading devices.

On Monday, Barnes & Noble cut the price of the 3G Nook to $199. It also launched a $149 Wi-Fi version. Just hours later, Amazon responded by cutting the price of the Kindle to $189.

At $259, the price of the Kindle and Nook just 24 hours ago, an e-reader purchase competed with an Apple iPad, which started at $499 for a Wi-Fi version. Below $200, a dedicated e-reader purchase makes a lot more sense. It appears that Yankee Group's prediction earlier this year was dead on. Forrester projected that the $150 price point would jump start e-reader sales.

The Yankee Group projected 6 million e-reader devices would ship in 2010. By 2013 that tally is expected to jump to 19.2 million.

Why? Price matters.

Note how the device sales surge yet the revenue for device falls through 2013 in the chart above.

The larger question for the e-reader market isn't necessarily the price war. The issue is whether a dedicated e-reader can stand on its own with smartphones, tablets, slates and netbooks.

With the pricing changes, we're going to find out where e-readers stand. If price cuts don't juice unit shipments it's clear that the category is a non-starter. If units surge, it's likely that e-readers will ride shotgun with all of your other devices---laptops, smartphones et al.

In any case, Monday's developments may have rattled Amazon, which increasingly looked like it was behind the curve. Here's what Amazon CEO Jeff Bezos said at the company's shareholder meeting just a few weeks ago:

If you look at reading, for serious readers they’re 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.

After the price cut, Amazon's Kindle may still be targeted at hard core readers, but it's clear that the company has the mass market in mind. At the very least, Amazon isn't dictating pricing on e-readers any more. Rivals like Barnes & Noble and Sony are driving the e-reader price bus.

Who will win?

The battle between Amazon, Barnes & Noble and Sony is going to be interesting. Simply put, scale and distribution will determine the e-reader winners.

Let's face it: The e-reading devices are all very similar and price may be the biggest selling point. In this battle, Amazon may find itself at a competitive disadvantage. To wit:

  • Amazon has its store and Target as distribution points, but trails the Barnes & Noble-Best Buy channel.
  • Sony has the manufacturing scale to trump Amazon and Barnes & Noble pricing. Sony could further squeeze pricing.
  • Price wars are deadly for all involved.

The only real way to break the pricing cycle is to out-innovate the other guys. And much of that innovation resides with Apple and its iPad. This battle will be fun to watch and even better for consumers.

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Topics: Amazon, Hardware

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26 comments
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  • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

    I really enjoy my Nook. I hope the price drops spur interest in all e-readers. At $259 it was just too much. Barnes & Noble so far has followed through on their commitment to it. I just got an email that the Nook OS 1.4 is available.
    Admin71
  • Who cares? iPad has won....

    Millions of iPads sold, how many thousands of nooks or Kindles? Game over.
    MSFTWorshipper
    • The iPad is NOT for avid readers

      @MSFTWorshipper
      @MSFTWorshipper
      Until I can read for hours on the iPad and not get eye-strain, it isn't 'Game Over'.
      At $149, the new wifi Nook is almost an impluse buy. At $499, the Apple isn't (unless you are a fanboy).
      visualambrosia
    • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

      @MSFTWorshipper

      You obviously are not a reader. The iPad is not an E-reader. Please read for twenty minutes on eInk and then on your computer monitor/iPad and then kindly remove your foot from your mouth.

      The point of eInk is simple and two-fold: reduce eye strain and conserve battery life. eInk is not constantly refreshed (so no you cant watch a movie on it) and it draws no power to maintain the characters on the screen (so yes you can read War and Peace on one battery charge). It does not require backlighting and therefore does not cause eye strain. It is intended to read just as a book does and studies have shown it excels at this. So eReaders are quite useful, the iPad however, is not. The sales of the iPad reflect most on two things: 1) the ingenius marketing strategy of Steve Jobs and 2) the abounding stupidity of his customers.
      goonie@...
  • Are you out of your mind?

    "Below $200, a dedicated e-reader purchase makes a lot more sense"

    Sure, maybe in your universe. Greyscale, text-only readers are done. Anyone who has looked at an illustrated childrens book or science text book knows it.

    Everyone it seems, except the "tech" bloggers.
    croberts
    • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

      @croberts
      IMHO, this comment - and the article itself - misses a big point.

      The screen on Kindle (and on Nook and Sonys as well) is E ink, not grayscale - and that is a HUGE plus for the Kindle/Nook. Thanks to that screen, the book readers (I owned Sony PRS before the Kindle) are the first electronic devices that I can comfortably read on; conversely, I cannot read a book on my iPad (or on my laptop, for that matter) without a headache after an hour or so.

      With that in mind, I really do not think iPad and E ink devices (Kindle/Nook/Sonys) are direct competitors. Those who care primarily about color illustrations will use iPad, or laptops. Now, would I prefer to see photos in a Kindle book in color? Of course - but not at the cost of putting up with current LCD screens.
      nikola@...
  • Time to sober up

    @DanLM

    Unless you don't own stock that includes Foxconn, or for that matter stock in any company that manufactures in China (cause they are there for one reason only - cheap labor), then you'd better look in the mirror if you're worried about a suicide.
    croberts
    • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

      @croberts Why should I look in the mirror. I do not support a company that cause's its employee's to commit suicide. You obviously do, because you are making excuses for them.<br>Wonder how many products you own where a worker died making it?<br><br>Do you care? Thought not

      No croberts, I do not own stock in the scum company. Neither apple or its manufacture. You must, because you don't seem to worried about the deaths
      DanLM
  • Apple tells them they need more product it is up to

    @DanLM
    the manufacturer the make the one who gets the order to say "We can't do it" to say "We will have to add people" to say "We will have to sub contract with our competition". There are many a choice to make. Where does Apples success lead to killing workers who contract with Apple? Your logic is flawed.

    Do I care? Sure do and I trust actions and contracts will be adjusted by all the parties involved including Apple. Do I care your logic and or reason is flaws.. Not too much seen it all to often. Suppose it's possible you belong to the Tea Party as well:P Tell you what find me the memo or email from any executive that says to the effect "Apple does not care how you ramp up production just do it" at that point I will have concern but till then I can't blame Apple for requesting increased production do in large part to the success of its products getting the OK from the builder and in effect doing what everyone else in this industry and other industries do. Can you explain why you focus so on Apple when there are so many others? Dell could have told Foxcomm that Hey since Apple is doing so well you can take workers off of our line and put them on Apples for a bit could they not? You are being in the end silly:P

    Pagan jim
    James Quinn
  • Still not buying one...

    I won't buy an e-reader until all of these conditions are met:<br><br>1. The price of the e-reader is below $50<br>2. The e-reader has Wi-Fi AND<br>3. The e-reader can connect to ANY bookstore<br><br>Until then, all you have are b&n-readers, Amazon-readers, and Apple-readers. I want free choice, not lock-in.
    barence773
    • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

      @barence773

      1. I think you are a touch unrealistic with the price. I can see it being $100 as the optimum price that most will go for.
      2. Meh... my reader doesn't do wireless and it doesn't bother me that it doesn't. But I guess if you plan to download papers daily and don't want to do it via a computer... to each his own.
      3. I don't know that I need it to connect to any bookstore. I do buy books from other ebookstores (fictionwise, kobobooks, etc.) Since Sony uses epub getting books from other places is not a problem. It's only a problem when the only ebookstore that has a particular title is Amazon. Seriously I think if Amazon would add epub to their list of approved formats they would make even more money from other ebook lovers. So really with my Sony I'm not locked-in completely... as I mentioned I can get books from other online sources and upload them to my reader (except Amazon and probably Apple... haven't tried them).
      duchovny
  • MIssing the bigger point

    The price of an e-book is still out of whack. Where sales will take off is when e-book prices for new releases drop below $10. The publishers are still in the same mind set as newspapers (we sell a physical product, not a digital product). Amazon has also struck a deal with some publishers that it won't release an e-book at the same time a the physical book, (windowing releases). Again, wrong headed thinking. You will only hurt yourselves.
    tomthetoe
    • Missing the bigger point

      @tomthetoe

      It's a matter of time before the big publishers wake up...or go out of business. The music industry tried to protect the CD and their enormous profit margins, too, but they succumbed to the inevitable. So will publishers.

      There's already a lot of competition out there in the sub-$10 and sub-$5 range. Not your bestsellers, but you know, there are a lot of good books that publishers have let go out of print or that are published by small presses.
      JStrnad1
      • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

        @JStrnad1

        New releases are over priced but if you read a lot of classics, like I do, you can make up the $150.00 you shell out for an eReader quick by reading expired copyright material free from Project Gutenberg or Google Books.
        goonie@...
      • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

        @JStrnad1 Absolutly! The faster tech changes, the faster a company/organization needs to respond if they intend to survive. IMHO - we should look at where there is momentum and go that direction. There is rapid growth in the e-publishing arena, It feel that the early adopters will be the survivors. Be a hold out and expect to whither.

        We can download a legal copy of a song from our favorite site for 70cents to 90 cents per. This is not a significant price drop over buying 14 songs on a cd for $10-$12. Electronic media certainly has it's own infrastructure needs, but to me, I don't see that those would be the same cost as physical distribution and warehousing. I don't have the facts, but my gut tells me the prices for e-books is really high right now when compared to their paper slab counterparts.
        PhotoIT
  • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

    Who spends only $499 for an iPad? When you get the 3G and a monthly contract with AT&T, you're looking at closer to a thousand. And since when is $499 competitive with $149, the price of a dedicated e-reader?

    Would you spend $1000 to get a toaster that connects to the internet, displays photos on its front, accesses your email, etc.? Or would you just buy a toaster that, you know, toasts bread for a lot less?

    Same thing with e-readers. If you're a Reader...and, sorry Steve, but there are still lots of folks reading books...you are probably a) cheap, and b) wanting an immersive experience, not a distracted one. You may want photos and email and all that stuff, but you don't necessarily want it on your reading device! (Or your toaster.)

    And folks...get over the sports metaphors. Everything isn't a football game. If iPads and tablets and slates outsell dedicated e-readers a thousand-to-one, it isn't "game over" for the e-readers. All they need is a market niche and they'll do just fine. They sell more corn than caviar but neither one "defeats" the other, we've got both.
    JStrnad1
    • Wrong!

      @JStrnad1 Ipad is the caviar!
      MSFTWorshipper
  • Won't buy until publishers stop price gouging on e-books.

    I own hundreds of books, but I've stopped buying books while waiting for publishers to do the right thing with e-books, so I can switch. A "real" book is create once, print, store, ship, and store again before finally selling. The printing expense, shipping, and handling of paper is very expensive. The e-book is create once then copy infinitely at almost zero extra cost. I refuse to pay even paperback prices for a basic file copy. The music and movie industries have ripped consumers off by keeping digital disc prices artificially high for decades while production costs plummeted, I won't support book publishers doing the same thing to me for the next few decades. It costs nearly the same for a book publisher to sell 500,000 copies of an e-book as to sell 10,000 copies. Pass all that savings on and I'll enthusiastically start buying a lot of books again as e-books. E-books should cost half as much as a paperback, $4.95 tops. Charging $10+ is a complete ripoff.

    If publishers insist on price gouging, well the digital age has made checking an e-book out at the online library really easy. I'll just stop buying books permanently and check them out online. If every person who buys several dozen books a year stops buying completely, perhaps the publishers will get the message that we're not going to let them rip us off when there are such easy alternatives.
    BillDem
    • RE: Kindle vs. Nook: The price war is on; E-reader shipments to surge?

      @BillDem
      You are right on the money! I think whether an eBook reader costs $149 or $199 doesn't matter. It's the amount you have to pay per book that matters. I was also thinking that about 1/2 the cost of a paperback would make it an attractive option.
      mbratch
  • The iPad is NOT for avid readers

    Until I can read for hours on the iPad and not get eye-strain, it isn't 'Game Over'.
    At $149, the new wifi Nook is almost an impluse buy. At $499, the Apple isn't (unless you are a fanboy).
    visualambrosia