Study: Everyone Wants a Kindle–For $50
by Peter Kafka
Posted on September 3, 2009 at 7:14 AM PT
The Kindle gets plenty of attention, but the e-book reader is still a niche device. When will that change? When it gets cheaper.
That insight is blindingly obvious, of course. But a new study from Forrester (FORR) tries to figure out just how much Amazon (AMZN) and its competitors will have to discount their devices in order to get them into millions and millions of peoples’ hands.
The answer? A lot.
After flourishing a variety of of charts and graphs (Forrester tells us that it employed something called a Van Westendorp Price Sensitivity Meter, which sounds like an awesome Dr. Evil device but turns out to be just a pedestrian marketing technique), Forrester argues that the pricing sweet spot for a dedicated e-book reader is…$50.
The readers will get a whole lot cheaper, of course, just as all consumer electronics do. But given that Amazon’s Kindle2 now goes for $299, and Sony’s (SNE) comparable gizmo will go on sale this year for $399, it may take a while to get there.
And even then, Forrester argues, the Kindle or its equivalent may never reach the same kind of ubiquity that Apple’s (AAPL) iPod line has–in large part because of the success of Apple’s iPhone and other do-it-all devices. It’s an argument I’ve made several times, but just for variety, here’s Forrester’s take:
The price points of multi-use devices like smartphones and netbooks informs the value that they assign to a single-purpose device like an eReader. With new 3G iPhones selling for $199 and a variety of netbooks selling for $300, devices in adjacent categories put the squeeze on eReaders. Convenience plays a core role in consumers’ decision-making. For many, the superior functionality of dedicated eReaders simply isn’t seen as making them sufficiently more convenient than cheaper multifunction devices to justify the additional cost.
[Image credit: Jonathan Harford]
Comments
I hope none of these companies is dumb enough to try and make a killing on the hardware (in the long-term anyway).
Amazon it seems to me has a big head start on the infrastructure to support the device and Sony, as far as I know has only the back-end for the PS3 on their resume for this sort of thing, hardly impressive.
As usual, we have to wait while six different vendors try and lock the world into their technology in various ways only to eventually have them all give waay to some generic hardware and software.
If Amazon is smart they will focus on selling electronic books (magazines, music, etc.) and not worry so much about whether their reader will be the target device. Of course the “need” for DRM as an enforcing agent for copyright makes cross-platform technologies almost impossible. DRM almost requires that there be a monopolist in the mix somewhere.
Posted by Mac Beach at September 3rd, 2009 at 12:38 pmAmazon is clearly a content play. But confused about Sony strategy, among others. Can’t get a handle on it.
Posted by Peter Kafka at September 3rd, 2009 at 2:19 pmI think the winner will be the company that embraces the netbook as an ebook reader. I’ve downloaded a free utility that rotates my screen so I can hold my netbook like a regular book. BN.com has released their free ereader download, and combine with the screen rotator — I’ve got the ideal potential ebook reader. Unfortunately, BN.com ebook content is lackluster and their price point is even higher than the Kindle content.
The “discount” these outlets offer for the e-version of books is ridiculous. Bring a hardcover release down to $5 and now we’re clicking…
Posted by Don The Idea Guy Snyder at September 4th, 2009 at 3:36 amIt’s hard to understand how the readers will sell for $50, when the displays alone cost $60, and it’s been documented that the hardware for each Kindle costs Amazon about $185. NextGen Research’s study on e-book readers and e-Paper (http://tinyurl.com/mxh5ta)
Posted by Larry Fisher at September 4th, 2009 at 7:21 amseems more realistic.