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Borders launched its own e-bookstore July 7, determined to seize a portion of the burgeoning e-reader market. According to the company, the e-bookstore will come stocked at the outset with 1.5 million volumes in a variety of formats; users will be able to access those ebooks through not only the Kobo e-reader marketed through Borders, but also BlackBerry and Android apps downloadable from the company’s Website.
In a press release, Borders officials stated they want 17 percent of the ebook market by July 2011. Part of that strategy evidently involves the BlackBerry and Android apps, which facilitate ebook purchases, offline reading, access to the user’s ebook library, and search by title, author, topic or keyword. It also involves the Kobo e-reader, which Borders currently retails for $150 through its Website.
“The race to emerge as a retail leader within the digital category is just starting,” Mike Edwards, CEO of Borders, wrote in a July 7 statement accompanying the press release. “During the past several months, we’ve been carefully crafting a digital strategy, one that has great content and a device-neutral philosophy backed by the Borders brand as its cornerstones. We believe we are very well-positioned to come out strong and to ultimately claim about a 17 percent ebook market share by this time next year.”
But Borders also confronts a hotly contested space. Amazon.com, Barnes & Noble and Sony have all been engaged in a cost-cutting war that has seen the prices of their respective e-readers drop precipitously over the past few weeks, starting when Barnes & Noble reduced its Nook device from $259 to $199, and offered a WiFi-only version for $149. Amazon followed that move by announcing its original Kindle would be reduced from $259 to $199, and then later introduced a cheaper version of its large-screen Kindle DX with improvements to the e-ink screen.
Sony then joined the game, dropping prices of three of its e-readers: The Sony Reader Pocket Edition now retails for $149, the new Daily Edition for $299, and the Touch Edition for $169.
Both Barnes & Noble and Amazon have been updating the features of their respective devices, with software updates adding everything from Google Android-based games to social-networking functionality. The Nook and Kindle, along with the Kobo and devices from smaller manufacturers, all face a challenge from 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 ebooks had been downloaded through the company’s iBookstore.
In the battle against Apple and each other, though, there apparently exists a limit to how far these manufacturers can drop their devices’ prices. “With zero profits on their hardware … these companies now hope to make their money in this market through the sale of books,” William Kidd, director and principal analyst of financial services for iSuppli, wrote in a June 24 statement following the start of the e-reader price war. “This is the same -razor/razor blade business model successfully employed in the video game business … where hardware is sold at a loss and profits are made on sales of content.”