Kindle, Nook and Vizplex eReader devices face mass extinction

Kindle, Nook and Vizplex eReader devices face mass extinction

Summary: The Amazon Kindle and the Barnes & Noble Nook have taken a pricing nose dive, hitting the rock-bottom "margin floor" and ending the age of unitasking Vizplex e-Ink devices for e-book reading.

SHARE:
TOPICS: Hardware, Mobility
232

The Amazon Kindle and the Barnes & Noble Nook have taken a pricing nose dive, hitting the rock-bottom "margin floor" and ending the age of unitasking Vizplex e-Ink devices for e-book reading.

In March of this year, I knew that it was coming. I just didn't realize that it was going to happen so quickly.

While the launch of the iPad almost certainly was a foretelling of the end of the dedicated eReader device, the actual extinction event started this week with Barnes & Noble's introduction of a $149.00, Wi-Fi only Nook, as well as a significant price drop of the Wi-Fi/3G model to $199 from $259.00.

This was followed by an immediate retaliation by Amazon, which dropped the price of their 3G Kindle 2 to $189.00.

Oh, how the mighty have fallen. Just two and a half years ago, the original Kindle was selling for $399.00.

This price war and throwing down of the proverbial gauntlet was presumably instigated by Barnes & Noble because it had finally come to the realization that it was only going to be on an equal playing field with its aggressive competitor by effectively erasing the profit margins on device sales and focusing all off its efforts on its content store.

For its primary competitor, B&N has poisoned the well.

At the same time, this also effectively put all secondary competitors which make and distribute e-reader devices for the North American and European markets out of business or in an immediately precarious position, who presumably do not have the ability to absorb such huge price cuts due to differences in volume manufacturing costs.

Companies such Spring Design, iRex, Bookeen, Kobo and Plastic Logic come to mind, just to name a few.

All of these companies e-reader devices will almost certainly be gone within the next few months unless they undercut both the Nook and the Kindle on price and have better features and cheaper content, which will be extremely difficult to do.

Of all of these companies which compete with Amazon and B&N, SONY may be able to weather the storm, but even this is questionable as their mid-range touchscreen reader product which has no wireless connectivity at all is $200, and their "Daily" wireless edition is $300.

SONY just doesn't play in the cheap, commodity ballpark, and they may not be able to stomach additional price cuts by Amazon and B&N as the dark and cold abyss of the "margin floor" approaches.

Where is that bottom? I don't know exactly, but I can tell you that it is very close to device manufacturing cost, which is somewhere between $90 and $125.

And unfortunately, Amazon and Barnes & Noble will be unable to sustain a business on the devices when it hits that low, because the price of the most important and expensive component of those Black & White e-ink readers, the Vizplex display, is controlled by a company that exclusively manufactures and owns the rights to the electrophoretic technology used in these devices, E Ink Corporation.

The "give away the razors and sell the blades" model doesn't work with dedicated e-book readers because Amazon and Barnes & Noble's customer base is increasingly becoming iPad and iPhone users, and shortly will also be Android phone and tablet users.

In which case, there's no reason to sell "razors" at all, especially since Android Tablets will be made out of commodity parts, will use cheap LCD display technology and will be far more capable, and many will be priced in the $200-$300 range and well within striking distance of the current price of dedicated e-readers.

Indeed, e-ink may be superior for daytime reading, and at least for the time being, the hardcore reader types, most of which are Boomers, will go out and buy Kindles and Nooks for their content consumption this summer at the beach.

But the Millennials will only be interested in their iPhones, iPads and Droids, with brilliant and sharp color displays, and the App versions of these e-book stores will suit most of these people fine, at least for the remaining ones that still like to read books.

In the next year Vizplex e-Ink will almost certainly be revved to color technology, but for the dedicated reading device, it will be too late.

By then, different competing high-performance transflective LCD displays will be on the scene, manufactured in huge volumes and will be licensed to a large number of manufacturers and will be used in many types of smartphones and tablets. And unlike e-Ink, these displays which will perform equally well outdoors and indoors will be cheap.

The age of the dedicated e-Reader will then be over. Content, not obsession over the devices themselves, will be king.

Did B&N herald the end of e-Reader devices by introducing such margin-hemorraging price cuts on the Nook? Talk Back and Let Me Know.

Topics: Hardware, Mobility

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

232 comments
Log in or register to join the discussion
  • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

    Umm, speaking as a so-called Millennial, I have to say I prefer the eInk display eReaders. It's a much superior experience for extended reading of books. And I want to be able to read books in direct sunlight, such as on the beach on my upcoming vacation.

    Then compare the battery life. 10 days versus 10 hours. It's a no-brainer. I can take my Nook with me on a trip and not even have to bother with bringing a charger.

    The iPad is a cool device for a lot of reasons, but as an eBook reader, it stinks. Who wants to read for extended periods off an LCD screen? And then the battery drains far too quickly.
    mjk2007
    • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

      @mjk2007 BetaMax was better than VHS, who won?
      PMUP
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @PMUP who said beta max was better? it sucked! it was inconvenient to use as well!
        dimithrak@...
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @dimithrak it was widely acknowledged by the professional video production industry that the BetaMax format was superior in terms of cassette quality and video performance. However, it was more expensive, and exclusively SONY controlled, which led to its downfall as a consumer video media format.

        Still, this did not stop Beta from excelling in the professional video production industry, and for many, many years, TV news production was done with BetaCam, video cameras that used Beta tape. It was only very RECENTLY replaced with HD video cams for field use. However it never shipped at the volumes that VHS did.
        jperlow
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @PMUP
        And the exact scenario is happening here...like the death grip that Sony held onto the Beta format patents with, E Ink Corporation is doing the same thing with their display technology patents. Sony has proven time and time again, you *CAN* milk the cash cow *TO DEATH*. Almost every product Sony produces that carries a Sony patent has failed miserably and cost far more money than the patent licenses paid them.
        E Ink Corporation needs to take a a close look at the Sony playbook and do exactly the opposite! In this way, E Ink Corporation *MAY* be able to stave off the exodus of vendors using their patents.
        tech_ed@...
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @JPERLOW
        The consumer Beta and the Pro Beta Max had almost nothing in common but the name. Yes the cassette size was the same but little else. Sony successfully used the similarity as a marketing ploy since most folks did not realize the difference.

        VHS was also pushed all the way to HD. Unfortunatly the copyright protection folks squashed the ability to record HD.

        Frankly this is a replay of almost 10 years ago with the first e-ink devices. The color LCDs stink in the sun and will continue to. This time around at least there are easy places to buy e-books.
        lrdiver
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        to dimithrak: the betamax (or Beta) format has been in use in the television industry for almost 30 years for it's superior reproductive qualities to VHS and is only now beginning to be phased out in favor of server based storage and digital recording media.
        Peteram777
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @PMUP Early Betamax had only a 1 hour tape. They supposedly said, "Who'd want to tape more than an hour?" I guess no one considered the length of a movie. DUH
        The original Atari 800 was superior to the Apple][, but Atari never marketed it right (no niche play, internal competition with game console) and Apple wrote history
        Capitalism is not about producing the best product, it is about marketing a 'good enough' product.
        d.j.elliott@...
    • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

      @mjk2007 I thing you are full of shit. Now some people are going to get a great deal on some great e-readers. new models are coming.
      dickrieck@...
    • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

      @mjk2007 100% agree with you.

      But Cool wannabe's will read on the LCD and hurt their eyes in the process, just to be cool. Poor people, so sad.
      sirexilon@...
  • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

    I totally agree with you mjk. <br><br>I don't think e-readers are that different from gaming consoles - the companies make their money on the games and not the machines. It makes sense that the e-reader providers are using the readers as the base for competing for market share in the book market. The e-reader makers that are not linked to bookstores of their own will certainly struggle.<br><br>On another note, I am Gen Y but I like books. iPad offer a world of divided attention and distraction (news, facebook, youtube,film, music). A device like a kindle is just like, well, reading a book. It is as different experience from using an ipad as reading a book is to surfing the net. <br><br>I'm really impressed by my kindle. It's got me back into reading again because it's all so easy. I've never sung the praises of a device before, but it's great.
    mrk141
  • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

    I am sorry, but some people just want to read. I already have a desktop, a laptop, and a smart phone, and I DON'T want to read a novel on any of them. On the other hand a dedicated device like the nook allows me to read novels quite comfortably.

    You are assuming that everyone is going to want a device for web browsing, and the truth is that most people already have other devices to use for browsing the web and they don't want to use them for reading novels.

    So let's see, I could pay upwards of $500 for an IPad, or I could pay $150 for a Nook. Well since I only want to read, and ALREADY have the ability to browse the web in 3 different forms (actually more), then I think the Nook is a no brainer.
    I think that is why a lot of people who just want to read will buy the Nook, or similar device, and people who want to browse the web will get another device.

    I doubt that most people who purchase a tablet like the iPad are doing so with the intention of just reading.
    As a person who both reads and browses the web, I can tell you that there is room for both.
    shadowboxer123
    • What youo have is . . .

      @shadowboxer123

      A blogger with a new toy, and he thinks that's it's the bees knees and will rule the world forever, and everyone should just go ahead and roll over and play dead now.

      Give him about 6 months, and he'll be back to normal . . .
      JLHenry
    • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

      @shadowboxer123 I have been reading on my smartphone for years - everything from a Bible, Novels and Newspapers.
      My Doctoral dissertation was written half on a Palm.
      Dedicated readers have a place for those who desire that - but they will be limited if they limit their functionality.
      dhwagner
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @dhwagner
        that's wonderful, but MOST people, not all, but MOST are not going to want to read a novel on a smartphone. are there exceptions? of course. but as a general rule most people will prefer something else.
        shadowboxer123
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @shadowboxer123

        "MOST people, not all, but MOST are not going to want to read a novel on a smartphone. are there exceptions? of course. but as a general rule most people will prefer something else."

        Yes. A web browsing device.

        Its true smartphones will be too small for many people. But e-ink devices are too "single purpose" for many others. People tend to want a "bargain" as their top priority. If color screen Android web tablets with 10-12 inch screens are virtually the same price as 6 inch e-Ink devices? I bet I know where most consumers will go. They either won't know, or won't care, about eyestrain or battery issues.
        Snark Shark
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @dhwagner Don't forget the limits of the proprietary KINDLE book format. I don't think users want to have to figure out if their eReader recognizes a file format. Nor do they want DRM. As for me, I want a used book eReader market and not the lame 2 weeks on the Nook.
        d.j.elliott@...
    • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

      @shadowboxer123 I agree iPad users are not getting it to read - try holding it up for long enough to read, then try a Kindle or a paperback. No contest. There is a place for a dedicated device and to imply the Millenials are all too distracted to read is condescending at best.
      nigebj
      • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

        @nigebj Jason's logic about "millennials" vs. "boomers" is wrong, but the other part of his argument (that there just aren't enough people who CARE about the superiority of e-Ink displays to keep it commercially viable) seems correct. I don't think we should be distracted by his subtle bit of reverse agism if the larger part of his argument is correct. These devices are doomed, because the percentage of people OF ANY AGE who care more about less flashy things like battery life or how sharp a display is will dwarf the number of people who will opt instead for an Android device costing virtually the same price, which can websurf on the same piece of hardware. Pair that with the people who buy the iPad even sooner because of Apple's cool cache, and the market will be eaten out from underneath e-Ink devices sooner or later. Yes, there will always be a vocal majority who go on message boards and blogs and crow about how its superior (probably correctly) but that doesn't magically increase the profit margins and convince Ma and Pa America to give up their lifelong habits of trying to get the most for the least (the perception will be that a web-surfing color device for the same price range does that).
        Snark Shark
    • RE: Kindle, Nook and Vizplex eReader devices face mass extinction

      @shadowboxer123 You seem to think that what applies to YOU automatically applies to a large enough group of other people to keep a whole industry alive. It ain't so.

      If things go down JUST right, ONE or TWO e-Ink device makers might survive by the skin of their teeth. Probably Amazon, who can subsidize the devices with ramped up book prices, and Sony, who may take a loss just to have a single model left to keep a toe in.

      The fact that there's "a need" coming from a vocal minority doesn't change that most people aren't as exacting. That's not a business model to keep a product alive--its simply a way for people to vent, and project their own preferences (even if they are CORRECT preferences--e-Ink tech IS superior) onto a larger population who mostly don't care. And thus aren't buying enough to support an industry with shrinking profit margins and too many competitors.
      Snark Shark