Hey Amazon and Sony! It’s Time for a Price Drop.

By  |  Thursday, September 3, 2009 at 11:44 am

Sony vs. KindleWhile the Amazon Kindle and to some extent the Sony Reader have ignited the e-book industry, analysts say that the market will not be able to grow much further without a serious price drop. Forrester Research studied the problem, and found the “magic price” where consumers would start considering a purchase was around $150.

It gets worse though: the actual price that consumers want to pay is much lower, sitting at around $90. This is nowhere close to the current retail prices of e-bookreaders: Sony’s somewhat close to the magic number with it’s cheapest at $199, but Amazon’s way overpriced in consumer’s eyes at $299.

Analyst Sarah Rotman Epps said that e-readers will likely never be a mass market device, however by getting prices down quicker they could exceed current sales targets easily. Consumers have an expectation that prices on technology can drop quickly (i.e. iPhone) and are expecting the same to happen here, she argues.

Component prices seem to be the major issue here, as the screens used to manufacture these devices are still somewhat prohibitively expensive. Regardless, Epps said she expects the prices of e-readers to drop about 20% in the next year.

That would put Sony near that $150 goal, but the Kindle would still remain well over $200, and above what most consumers would be willing to pay.

I agree that the pricing needs to come down on these units. If it comes to it, and the reason why the Kindle can’t get cheap faster is due to the EV-DO data included, take it out. Sell it as an option. I don’t know if Amazon would be willing to do that, but if they did that could be one way to lower prices faster.

Are you all in the market for one of these devices, and if so, what is your magic price for an e-reader? Let us know in the comments.


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8 Comments For This Post

  1. GreginChicagoland Says:

    I think if you factor in the popularity of the price point of the $99 8GB (older model) iPhone when the 3GS first launched this summer (real cost aside for a moment), I think you see some data that could support some critical mass. I think you’re right though, that removing the EV-DO card might be a way to get a cheaper model, perhaps with a higher priced one getting it.

    For me the bigger barrier to entry is the cost of the eBooks themselves. Although I have found the Kindle App for iPhone to be a very doable and convenient way to read that fits a busy schedule, I am constantly running up against a price point that (paperbacks and older books) that is very close to what I could get at a borders and Barnes and Noble-who are doing some competative pricing on their own. Plus how do I know that the ebooks I buy are going to be able to port over to other devices. Expensive and DRM’d to kingdom come? Hmmm…

    eReaders I think have a very small window to themselves if we are in fact gearing up for a tablet boom in the coming months/years. If I can get a Kindle app on a tablet, that sports all the other applications that smartphones are sporting, who wants to wait around for a cheap, dumbed down eReader?

    We are talking here about a battle for the backpack and the backpocket of people and we are getting to the point where people want to carry less around with them.

    So to get back to your title, it’s time for a price drop RIGHT freakin’ now.


  2. DaveZatz Says:

    It’s not the 3G modem, it’s the 3G service that probably doubles the Kindle price. Dump both, let me sync over USB, and I’ll buy it for $129.99.

  3. ediedi Says:

    Untul they come in color and i can subscribe to my favourite magazine online and have it downloaded every month, these things are useless.

  4. Finn Jack Says:

    Finally the competition brings a price drop and benefits the users. Great. It is hard for Amazon to deduct a price form $299 to nearly $100. Anyway this price drop would be a pathway for Sony’s success. Also Google’s open book system goes well in parallel to kill Amazon’s Kindle.

  5. Charles Says:

    I gave a Sony eReader to my son about 2 years ago and he loves it – but he had to do a lot of tinkering and format converting to get the documents he wanted to read into the device. He reads mostly technical books that are DRM-free. Observing his use of it over time convinced me of the huge potential such devices have – and how they are still very inadequate.

    The main pluses being portability (the Sony is particularly thin, lightweight and robust), capacity, very long battery life, instant ON/OFF and readability in nearly the same range of lighting conditions as regular paper.

    On the minus side, there’s the data format issue – too many proprietary eBook data formats out there result in eReaders are not universal. There’s also a data presentation issue: for example most pdf’s are made for letter-sized paper which the Sony reader cant handle appropriately, even in landscape mode; the same issue exists, I believe, for other eBook formats.

    DRM: has failed in the music industry (IMHO because the technology is tied to a device – not to an individual as per the intent of the license); the problem is less severe for eBooks as most people only have one eReader – but the flaw is the same.

    eBook loading: USB implies the use of a PC as the control device to obtain material and load it in the eReader – a two-step process; 3G implies having a (specific?) 3G service provider – too expensive for me; WIFI could replace 3G for many consumers, so could bluetooth (tethering to a cell phone or PC). I consider this issue a minor inconvenience considering that it takes a whole lot longer to read a book compared to loading it in the eReader.

    But to me, the biggest turn-offs are the price and the impracticality of loading data other than eBooks. A lot of what I read comes from the Web I’ve all but completely abandoned printed news and magazines in favour of electronic versions. Today’s eReaders are just not geared to deal with such “volatile” information. The price of an eReader and the small price difference between an eBook and its printed counterpart makes it hard to justify an eReader other than through the convenience factor, which is simply not there for me (yet).

    But there’s hope: low-consumption processors such as Intel’s Atom and ARM’s Cortex8 make it possible to build highly portable tablet PC’s such as the Viliv S5 and X70, and upcoming low-power display technologies (see http://www.pixelqi.com) will make the screens readable in any lighting condition, including bright daylight. I’m in the market for tablet PC with 10+hr battery, and 7 to 10″ display readable in bright sunlight that I can use as an eReader as well as read my email, read web content (on or offline) etc.

  6. ari Says:

    To me the price I will pay for an e-reader directly relates to price of the ebooks themselves. I’ll gladly pay upwards of $200 for a reader if the price of the e-books is cheap. I don’t believe the price of ebooks should be anywhere close to the price of an actual book. I’ve actually seen ebook prices HIGHER then ordering the book online. Until ebook prices are at drop considerably to somewhere between $5-$10 I will be waiting to buy my reader. I know Amazon has best sellers for $9.99 but there is no reason why e-book best sellers should be priced any differently then any other e-books, its not like they are saving money by printing more. Besides most best sellers are less then $10 for the paperback anyway.

  7. Duke Says:

    It was an easy decision to buy the Sony eBook reader. It has full PC and MAC computer support. If you have a netbook, you can download the free reader, create an account in 30 seconds, purchase most books for $9.99 or the 1 million free Google books, and begin reading immediately. The new Sony eReader 300 is my favorite…fits easily in my shirt pocket, huge battery life and under $200; the 5″ screen is very readable, and it doesn’t have the useless keyboard that takes up extra space. The BEST feature with Sony is that you can purchase a book, and share it with up to 5 other devices…PC’s, Mac’s, Netbooks, eReaders. The whole family can permanently have access to the whole library. Look for prices to fall. The new Sony with 3G download thru AT&T will be out by Christmas, but expect all prices to fall.

  8. Jingo Says:

    Well, they have to!
    There is a Chinese company which also produce these e-readers. It is about the same price as the Sony reader now. But their CEO said, within 2 years their reader will drop price to under 1000 Chinese Yuan(which is around 130$ I assume).

    I am surely waiting for that.

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