It seemd as if Amazon had found the ideal product for their business model in the form of the Amazon Kindle reader. Its domination of the developing e-book reader market was almost total. It achieved around about a 60% market share (the Sony reader trailed in second with a 35% market share), and it was hard to see, despite the fact that almost every new reader that was released was instantly given the title of the “Kindle Killer”, where the competition was going to come from.
Then the Apple iPad came along and, although it is an entirely different device, it did look set to spoil the party somewhat. The iPad is not without some fairly major flaws of its own, and whilst most Apple devices seem to provoke a “love them or loathe them” response, the numbers of people who would buy almost anything with the Apple logo on it are certainly large enough to make a major dent in the sales of the Kindle.
As well as releasing new, sexy hardware, Apple also struck a deal with many of the major publishers which let them charge whatever they wanted for e-books – as long as they weren’t offered for less on any other device – the Kindle in other words. This looked set to put a bit of a spanner in the works of Amazon’s policy of providing e-books for $ 9.99 or less. It certainly seems as if the price of e-books has been creeping upwards since the launch of the iPad. It does seem a little strange that increased competition should drive prices upwards – but there you have it.
The price of the e-book readers themselves has fallen however. Barnes and Noble cut the price of their Nook reader to $ 199. Amazon’s Kindle 2.0 is now selling for just $ 189 – a huge reduction over the $ 359 launch price of February 2009. The Kindle DX can now be yours for just $ 379, a saving of $ 110 over the previous $ 489 ticket price.
Even the pricey DX model is now over $ 100 cheaper than the cheapest of the Apple iPad range. Neither does the iPad come with connection to the internet for free as is the case for the Kindle range. Of course, the iPad is much more than an e-book reader, so it may be that people are prepared to pay more for a more powerful and versatile device – even if it does have much poorer battery life and a less “reading friendly” screen (which excels for other applications).
It will be interesting to see whether this downward price movement of e-book readers is simply a temporary reaction to the iPad or whether it heralds the dawn of a new pricing policy. It could be that companies like Amazon and Barnes and Noble might take advantage of the trend for higher priced e-books by offering lower priced hardware secure in the knowledge that they will make their profit throughout the life of the device. Or it may simply be a stalling tactic until the next generation color Kindle hits the streets later this year.
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