Amazon’s bid to offer its wireless electronic book reader in 100 countries gives it an early lead in the race to dominate the market.
Yet while the move could boost the Kindle’s share of the emerging eBook business to upward of 70 percent, Amazon faces growing competition, plunging prices and increasingly restive book and newspaper publishers.
As a stripped-down device for reading text and not much else, Amazon’s Kindle looks pricey relative to netbook computers with similar price tags of around $200 to $300. And the Kindle’s key hardware advantages look increasingly easy for rivals to match and perhaps even overcome.
To be sure, the year-end holiday season looks to become the break-out year for sales of electronic readers. Market researcher Forrester now says it expects 3 million eReader units to be sold in the United States alone in 2009, up from a prior prediction of 2 million.
Forrester expects Amazon to have nearly 60 percent of the U.S. eReader market, roughly twice that of the Sony eBook Reader’s 35 percent share. Dutch company Irex Technologies, working in close collaboration with bookseller Barnes & Noble, accounts for the remaining 5 percent.
Of course, Kindle’s expansion into international markets stretching from China to Europe should give it an even greater market-share lead worldwide, putting it on a par with Google’s dominance of the Web search market or Apple’s lead in music players and, increasingly, in smartphones.
The Sony eBook Reader so far is only available in the United States, Canada, Britain and a handful of other European markets. Sony makes a cousin of the eReader in its home market, Japan, called Librie.
But many forces are in play that could make it hard for Amazon to sustain its current momentum.
First, prices are plunging. The start-up Interead has introduced a basic eReader device called COOL-ER Reader that sells for $249. Sony has plans to introduce its Pocket Reader device for $199 in December. Amazon responded by cutting the price of its Kindle 2 reader to $299 from $359 a few months back. On Tuesday, it cut another $40 off the price in the United States.
Amazon provides few details on the costs or sales volumes of the Kindle, but most analysts believe the Kindle business still loses money for the company.
To date, Kindle could boast of a critical advantage over other devices: the capacity to wirelessly download new books or other content in under 60 seconds. Rivals such as Sony’s eBook Reader must be synchronized by users with a computer to receive fresh reading material.
But that’s changing. Sony has announced two new models for the U.S. market with built-in wireless connections provided by mobile operator AT&T, the same carrier that supplies the Kindle’s wireless access.
Irex is also introducing a wireless model. Upcoming eReaders from Asus in Taiwan are expected to have two color screens and open like an actual book. Eventually more flexible, almost paper-like screens should become economical. The problem for Amazon is that many competitors will have access to this technology. This may tempt big players like Apple and Microsoft into the market.
As common standards take hold among publishers of electronic books, it’s hard to see how Amazon can continue to command the margins it currently enjoys on hardcover book sales — triple those of digital downloads. Publishers are unlikely to sit idly by and crown Amazon the king of the eBook trade the way Apple is in music.
The truth is that Amazon is hedging its bets, preparing for the day when selling physical books is displaced by digital media downloads the way MP3s have wiped out CD sales. The online retailer should be congratulated for building what is fast becoming a billion-dollar revenue business, after taking the unlikely role of hardware maker. But, so far, it is hardly a substitute for selling boxes of books.
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Somehow lose in the mix, Amazon is getting close to losing money per Kindle sold, and is reportedly losing several dollars per each New York Times bestseller book sold…
From the WSJ:
“In April, research firm iSuppli estimated that the Kindle costs $185 to make, but Amazon’s CFO Tom Szkutak later said the true cost was “significantly higher.””
http://blogs.wsj.com/digits/2009/07/08/a mazon-cuts-kindle-price-by-50/
From Newsweek:
“As I understand it, Amazon pays the same wholesale price for Kindle books as it does for real books—generally 50 percent of the list price. For a typical hardback that retails for $26—say, E.L. Doctorow’s Homer & Langley—Amazon pays $13 and then sells it for $9.99 on the Kindle, taking a $3 loss on each sale.
http://www.newsweek.com/id/216521
- Posted by Archie[...] >>>Source Article [...]
- Posted by Gweedopig.com :: Lifestyle // Health Science // Technology :: Amazon’s Kindle Gets Jump on Competition // stories, news, and information from around the globe.The actually cost of the Kindle to produce is $22.75. Two molded plastic covers = $2.50, motherboard = $3.00, lcd screen, $6.00, misc. $3.00. The balance is overhead/ licensing/development costs.
- Posted by Peter J. Evans IIIIn five years these will sell for $30, after they have captured sales from all the sheeple that don’t comprehend accurate manufacturing costs. That’s why $2000 lcd monitors cost $99 now. It’s not economies of scale, it is simple lying and gouging.
The book aspect is even more extreme as the cost of the digital book outside of the authors time is nearly zero, I know, I published a book I wrote directly to the Amazon website at a cost of Zero to me, and perhaps a few cents to maintain it for Amazon.
One of the major problems with the Kindle is that it will permit downloads of its books only in the continental US. I live in the US territory of Guam. We are 100% US. We have the US Postal Service, are part of the North American dialing plan, are US citizens, use US currency, and the list goes on. I was given a Kindle as a gift by a relative because they were told that even though the wireless download was available only in the US mainland I would be able to download Kindle books to my computer and then upload them into my Kindle. NOT SO. If you try to download a book it tells you that the area I am in is not permitted to receive books. When I called to inquire what the problem was, I was told that to download books to Guam is prohibited under a federal law prohibiting the transfer to US technology to foreign governments. What a load of BS. Sony has the market cornered her and that is a big corner since we have two military bases that are being enlarged as I write, a civilian population well in excess of 150,000 and virtually no paper book sellers. The only bookstore we have carries about the same variety of books you would expect to find in the book section of a Walmart. I will be switching to a different ebook format in the very near future.
- Posted by Dianne CorbettDianne –
You’re doing it wrong. Just set up a US account — should take, like, 3 minutes. And then you’re set to download to your computer and then to the device. Very easy. Sony requires the same process. Changing format doesn’t get you the cool benefit either.
AND — the whole point of the announcement this week is that people around the world will be able to download books directly. I’m in Australia now, where crappy old paperbacks can run about $18.00 US. Sign me up for the $6-7 downloads. Other markets will eat this up.
The other competitors are going to over-tech this and people won’t want it. People want ease, like an appliance. Thats why nobody here has a Zune and everyone has an ipod.
The author clearly hasn’t spent much quality time with the kindle. It’s EFFORTLESS to read the e-ink screen. Just like a book. You forget its electronic at all. You can read somehting like 5000 pages between charges. Try THAT on a netbook.
Moreover, once people have accounts, they can download kindle formated books direct to their ipod through a free app. I do it all the time. It rocks.
- Posted by BobbyZero1) CD sales have not dropped thanks to iTunes - they slumped a little but have made a healthy comeback.
2) There’s only one storage medium that doesn’t require any electricity, will survive being stepped on or a drop from a balcony and provides the ability to personalise the reading experience with note-margins, bookmarks, dog-ears and signs of wear: paper.
Like iTunes and CDs, the bound book is going nowhere.
- Posted by thesoreheadI still don’t get it. I suppose there is a big contingent that wants the book experience replaced by a digital simulacrum. That’s all fine and good, but once you get used to the light weight and extreme portability of a reader like an iPhone, reading books seems . . . so retro. Here’s this big, somewhat unwieldy thing in your hands, compared to a sleek, comfortable digital device. I understand that this is a matter of taste of course, but the more I experience digital reading, the less I miss paper. I don’t see any advantage. And perhaps the biggest complaint about the iPhone is the small size; yet, text is neatly arranged in a narrow column that is easily followed by the eye. In fact I think it increases both reading speed and comprehension, a nice one-two punch. What is missing? Well of course the esthetic experience of a book, which is particularly missed when there are graphics or photos that are key to fulfilling the understanding of a book. But if what you want is information, it is hard to believe that anyone would waste even $30 on (yet another) specialized device, taking up space in your life, requiring a special charger, and so on, when your telephone can do the job as one of the many tasks it covers.
- Posted by JD“Sony has plans to introduce its Pocket Reader device for $199 in December.”
Actually, the Pocket Reader has been available since the end of August.
- Posted by SayhelloWhy bother with something so expensive. I’ve been reading ebooks for years using a PDA. They can be picked up really cheap at auction sites (I’ve never paid more than £35)and with mobipocket installed you can read many different types of ebooks. I wouldn’t be without mine.
- Posted by carlIt’s a lot smaller than the kindle and easier to carry around - AND it does a helluva lot more than an ebook reader can.
Call me old school… but you can get all the books you’d ever want from the library. FREE
Gadgets are cool; but you just wind up replacing them every couple years with the NEXT cool thing.
I still like reading regular old books… it’s more comforting for me anyway. I read from a screen 7 to 10 hours a day; I want something tangible for my personal reads.
- Posted by Paula SchultzI live in Guam like Diane. While I was in the states I downloaded a bunch of books, and now I’ve read them all. I can get online to look at the books but it still won’t send them to my kindle. I thought this issue was resolved! I really enjoy using my kindle but this is very disappointing.
- Posted by sarah woodUnlike the Sony E-Reader, the Kindle does not allow for downloading borrowed books from your public library. Why?
- Posted by Alan Snipes