Sony has slashed the prices of three of its e-reader models, following similar moves by rivals Amazon.com and Barnes & Noble, as competition in the e-reader category continues to heat up. Sony and its competitors face a looming threat from the Apple iPad, which includes a color e-reader application.
Another day, another e-reader price cut. On the heels of Amazon.com announcing a
retooled-and-cheaper version of its large-screen Kindle DX, Sony slashed the
prices of its own e-readers in order to better compete in what has become an
ever-hotter market.
The Sony Reader Pocket Edition now retails for $149, the new
Daily Edition for $299, and the Touch Edition for $169. That represents a
series of price-drops ranging from $20 to $50; previously, the Pocket Edition
had retailed for $169, the Daily Edition for $349, and the Touch Edition for
$199.
The e-reader arena started heating up on June 21, when
Barnes & Noble announced a price reduction for its Nook e-reader from $259
to $199, along with a WiFi-only version of its device for $149. That same
afternoon, Amazon announced that the price of its original Kindle would be
reset from $259 to $199.
On top of the price cuts,
Barnes
& Noble and Amazon seem equally determined to not be outdone in the
features department, with each company announcing successive software
updates. The Nook's latest software update included Android-based games, while
the Kindle added social-networking functionality.
Despite the manufacturers' shared determination to trump
their rivals in the prices and features departments, each faces a growing
threat in Apple's iPad, which includes a full-color e-reader application. During
Apple's Worldwide Developers Conference in June, CEO Steve Jobs indicated that
some 5 million e-books had been downloaded through the company's iBookstore.
The iPad's success may have also compelled
Amazon
to introduce a larger, cheaper version of the Kindle DX, which boasts the
same-size screen, at 9.7 inches diagonal, as Apple's device. Despite the
price-drops for the original Kindle, the Kindle DX had remained relatively
untouched until the beginning of July, possibly because the online retailer
viewed the market for larger-screen e-readers as relatively uncompetitive.
In addition to a new slate-gray color for the outer shell,
the Kindle DX's latest version retails for $379, down from $489 for the
previous iteration. Amazon also claimed improvements to the e-ink screen,
particularly the "50 percent better contrast for the clearest text and sharpest
images."
Despite the steady price decreases, a bottom possibly exists
to how far e-reader retailers are willing to let their units' prices fall.
"With these cuts, eBook readers from Barnes & Noble as
well as Amazon now are priced at about the breakeven level with their Bill of
Materials (BOM) and manufacturing costs," William Kidd, director and principal
analyst of financial services for iSuppli, wrote in a June 24 statement
following the start of the manufacturers' price war. "With zero profits on
their hardware, both these companies now hope to make their money in this
market through the sale of books."
The prominent placement of
Sony's Reader Store for e-books, with
its layout vaguely reminiscent of Apple's iTunes store, suggests a similar
model may be in effect for the electronics maker. "This is the same
-razor/razor blade' business model successfully employed in the video game
business," continued Kidd in his statement, "where the hardware is sold at a
loss and profits are made on sales of content."
But more price competition could also help narrow the
market, possibly wiping out smaller e-reader manufacturers unable to scale and
leaving the bigger players-Sony, Amazon and Barnes & Noble-to face down
Apple's entrance into their market.
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