This time last year, the new market for e-book readers was really taking off – gold rush style. Following the enormous success which Amazon had achieved with its Kindle reader – firstly with the Kindle 2.0 in February of 2009 and then with the large display DX model in the summer of the same year – a small army of personal electronics firms seemed to be developing, releasing or updating e-book readers of their own in order to grab a share of the new and rapidly developing market.


Sony and Barnes and Noble were bursting a gut to get their new readers launched before the 2009 festive season and Samsung, Plastic Logic, Asus and a host of others were rushing to get their readers on the market as fast as they could. The Computer Electronics Show (CES), which took place in Las Vegas in early 2010, had a special zone dedicated to e-book readers for the first time ever. E-book readers were a hot developing market.

However, just a few months later, it’s a very different scene. The price of e-book reader hardware has been in free fall. The latest third generation Kindle now has a Wi-Fi only entry level model available for only $ 139 – less than 40% of the $ 359 price which the Kindle 2.0 launched. The price of the Nook reader from Barnes and Noble has also been slashed to just $ 149 – and a further cut before the festive season arrives seems highly likely.

Several new e-book readers which were going through the development process – including Plastic Logic’s Que – have been cancelled. The market appears to be entering a new phase in its development – whether there will be a place for pure electronic manufacturers in future or not is somewhat debatable. The Amazon business model is very well suited to selling lower priced readers and making a profit on the subsequent sales of Kindle books. Barnes and Noble could benefit from a similar business model of course, but it’s doubtful if they would be able to take advantage of the same economies of scale as Amazon.

Clearly the release of Apple’s iPad tablet computer has been an important influence in this. There’s no doubt that the price of e-book reader hardware was going to fall anyway – but the arrival of the iPad on the scene has certainly hurried things along. However, considering that the third generation Kindles sold out almost immediately after launch – even today customers are facing a three to four week wait for their Kindles to ship – it doesn’t look like the iPad is the long awaited Kindle Killer that it was widely forecast to be.

Even putting the debate about e-ink displays being easier to read on than backlit screens to one side, there is – at this time – enough of a gap between the price of the Kindle and the price of the entry level iPad to ensure that the Kindle will continue to be the more attractive option for anyone who just wants to read books. The iPad’s monthly connection fees will be a stumbling block for many customers.

It does look as if there is sufficient room in the market for both the Amazon Kindle and the iPad to co-exist – for the short term future at any rate. Other e-book reader manufacturers, including Sony and Barnes and Noble, seem destined to struggle as hardware prices will continue to fall.

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