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Forrester Research reports on e-reader pricing
September 3, 2009 | 8:32 pm
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By Chris Meadows
Forrester Research has come out with a new report on e-book reader price points. It was covered today by ReadWriteWeb and All Things Digital.
ReadWriteWeb thinks that the price point at which e-book readers will start to take off is $99, while All Things D thinks the sweet spot is $49. Either way, with the cheapest dedicated e-ink reader weighing in at $199 right now, that price point is still a way off.
But it will come. It used to be that color LCD PDAs were $500 and up, and griped about by people who insisted that black and white was good enough for them (mainly because they couldn’t afford color). Now every LCD device is color, you can’t get stand-alone PDAs anymore (except perhaps the iPod Touch), and AT&T is offering Palm Centro color LCD smartphones for $50 (with contract).
In a few years, a lot more of us will be reading off of e-ink. However, Forrester does not think e-ink e-readers’ adoption will ever be as widespread as mp3 players’—there is not enough interest in reading, on the whole, for huge numbers to invest in single-use devices.
In the end, it may take the development of fast color e-ink and its use in iPhones for the majority of people to have e-ink in their pockets.
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Comments:
“…you can’t get stand-alone PDAs anymore…”
Yes you can. HP still makes a couple models in the iPAQ line.
Trimble still makes a few ruggedized PDA’s for various vertical market uses.
PDA’s are down but they’re not out!
While the iPod Touch is a slick device (and I use one too) their still is not the depth of software in many segments available on the Touch as is still available for Windows based PDA’s. As a result, I still use my Dell Axim daily.
Do the prices on those devices come down because they’re old, or because they reach wider use and the scale means that prices for parts and manufacturing comes down? I’m skeptical that there are enough hardcore readers willing to buy a stand-alone reading device to significantly reduce the costs of manufacturing. There’s a reason why the iPod used to cost $599 and now it costs $99, and why the Kindle started out about $300 and has remained above $300 (hint: check their relative sales numbers, or at least the estimates for the Kindle).
Forrester’s research in this area has been marked by mistakes and misjudgments from the beginning. Who can forget the infamous Kindle would be “lucky to sell more than 50,000 units in its first year” bit. And their argument back then was exactly the same as it is now.
But the more important reason why the report should be ignored by Telereaders is that Forrester’s definition of success sets the bar so high as to be irrelevant. It doesn’t matter if the ereader market hits 50 million units sold next year or in 10 years. It certainly doesn’t matter at all if there are more or less ereaders than MP3 players. As long as there’s a vibrant and competitive ebook market, the number of available titles will keep growing, prices for hardware will keep falling and innovation will flourish (hopefully soon including the demise of DRM). And that’s exactly what is happening right now with Sony, Amazon, Google, Barnes & Noble and others racing to offer better products and more features at lower prices.
As for the usual anti-Kindlista commentary, your math and history are off. The Kindle started out at $399, went down to $359 in May, 2008, and down to $299 in July. That’s a 25% drop in 20-ish months. Sony’s got their $199 model now, marking a 50% drop in entry-level cost in under 2 years.
As far as the iPod is concerned, the 5GB model introduced in October 2001 cost $399. A few months later the higher capacity 10GB went on sale for $499. About a year after the original went on sale, the prices came down to $299/$399 and while capacities were increased a few times, entry-level prices didn’t drop below $299 until the mini came on the scene in January 2004 for $249.
Finally, in the Kindle’s first 18 months, an estimated 1 million or so have been sold. Guess how many iPods sold in its first 18 months? 673,000. At least so far, price cuts and sales figures are comparable.
Sorry, my bad, that should read “iPhone”. Good point on not worrying about reaching the same levels of sales if the market is still profitable. But don’t expect to see the same levels of scale affecting manufacturing costs.
Your iPod numbers are a skewed comparison as the iPod was only available for Mac users, less than 3% of the total market at the time, and the Kindle faces no similar restriction, which is why the iPhone may be a better comparison (sorry for the mis-type).
The reason the iPhone used to cost $599 — which it still does without a two-year contract — and now can be obtained for $99 is because of the business model of the mobile phone industry. That $99 “cost” is a tiny fraction of the two years of monthly cell phone bills, which build in repayment of the up-front subsidy. Nothing to do with a decline in manufacturing costs at all.
Really? You really think there’s been no decline in Apple’s manufacturing costs for a device that’s sold tens of millions of units?