Sony Deal, Amazon Announcement Signal Intensifying E-Reader Wars

 
 
By Nicholas Kolakowski  |  Posted 2009-12-20 Email Print this article Print
 
 
 
 
 
 
 

Sony's announced deal with News Corp. to port content from the Wall Street Journal, MarketWatch and the New York Post onto its e-readers marks a further escalation in the holiday battle between various manufacturers pushing mobile reader devices. At the same time, Amazon.com has announced that its Kindle line is experiencing its best sales month so far. Despite earlier analyst predictions that e-readers would remain a niche product and a slow seller in 2009, the massive hype surrounding the Kindle, Nook and other devices suggests that they could be experiencing much more rapid mainstream adoption.

Sony announced on Dec. 17 a deal with News Corp. that would make content from the Wall Street Journal, MarketWatch and the New York Post available on its e-readers, in another sign that the battle between various companies over the electronic book market is intensifying as 2009 comes to a close. Amazon.com and Barnes & Noble already offer periodical content on their respective Kindle and Nook lines, while other companies such as Plastic Logic are reportedly in talks with publishing companies.

According to Reuters, Sony will offer monthly subscriptions to the Wall Street Journal for $14.99, MarketWatch for $10.99 and the New York Post for $9.99.

Meanwhile, Amazon.com claimed that December was the best sales month so far for the Kindle line, and said it would ship the device on an expedited basis to customers for free. However, the online retailer continued its tradition of refusing to break out exact sales figures. Amazon.com CEO Jeff Bezos has previously been quoted as saying sales of the Kindle and associated e-books account for roughly 35 percent of the company's book-related revenue.

A Dec. 1 research note by financial advisory group Collins Stewart estimated that Amazon.com could sell as many as 550,000 Kindle devices in 2009. The note's chief author, Sandeep Aggarwal, broke that down as 450,000 Kindle 2 devices and 100,000 Kindle DX devices, although there was no mention of how those figures were reached.

Overall, Aggarwal predicted about $301.4 million in Kindle revenue in 2009, increasing to $671.4 million in 2010, $1.2 billion in 2011 and $1.8 billion in 2012.

Earlier in the year, a report from Forrester Research predicted that about 3 million units would be sold in the United States in 2009, although that was before the introduction of Barnes & Noble's Nook and the massive holiday-related marketing push by Amazon.com. The increased competition between device makers has been driving the price of e-readers down, with Amazon.com reducing the price of the Kindle 2 to $259 to match that of the Nook. Sony's e-readers retail roughly within that range. Amazon.com and Barnes & Noble have also been introducing applications that port their e-reader functionality onto devices such as the iPhone in an attempt to gain a little more market share and mind share.

"The cost of the display component is high and sales volumes are still modest, yet consumers demand and expect ever-lower prices," Sarah Rotman Epps, a Forrester analyst, wrote in the Sept. 1 research report. "The bottom line: E-reader product strategists will have to educate consumers and innovate to bring prices down. Even if they are entirely successful at both these feats, e-readers will never be mass-market devices like MP3 players."

If manufacturers want e-readers to become ubiquitous within the marketplace, Epps added, the price will have to come down drastically, perhaps even to as low as $50. At that point, though, the relatively high cost of components would become a larger factor, possibly forcing manufacturers to seek what Epps referred to as a "subsidy."

Amazon.com was initially helped in its market penetration by a series of high-profile launches for each successive device, including a Feb. 9 event for the Kindle 2 involving a reading by horror maestro Stephen King. Since then, though, a number of new e-readers have made the marketplace more crowded. Smaller companies such as Plastic Logic have attempted to carve off a piece of the market by announcing that their e-readers will be targeted toward specific customer segments, such as business users.

Although Barnes & Noble experienced a good deal of publicity when it announced the Nook in October, early reviews from the Wall Street Journal and the New York Times have suggested that the device needs further refinement. Barnes & Noble has claimed that massive demand has delayed shipments of the Nook to both stores and customers until the first week of January.

It will likely be much longer than early January, though, before solid figures emerge to back the various manufacturers' claims about their products' sales. Until then, the hype surrounding e-readers seems to be shouting down those earlier predictions that the devices will remain a niche product. 

 
 
 
 
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
 
 
 
 
 
 
 

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