imageShould Jeff Bezos be smiling more?

"Combined sales of the Amazon Kindle and the Sony Reader will be 1,000,000 units in 2008," says Evan Schnittman at Oxford University Press. "This estimate is based on solid data" such as PVI stats on E Ink display shipments

Extrapolating from various sources, he "can easily imagine the success of Kindle and Reader dramatically expanding next year and growing by a factor of five. If imagethat happens, then the formula above leads to a completely new e-book economy. Five million devices would mean e-book sales of $1,200,000,000, which, by my estimation, is 1.3% of the current global book market of $90,000,000,000…

"I personally don’t see publishing becoming a 50% digital business as books and CD’s are completely different animals. But I sure can see that the 3% – 4% I once predicted isn’t such a crazy notion any more. And yes, I believe in e-books.

So what do you think, gang? Read Evan Schnittman’s post and see if he’s accounting for all the factors. Meanwhile keep in mind that E Ink readers are just part of the picture. How about the OLPC machine and other mini laptops, not to mention cell phones? (Via PersonaNonData.)

Of interest: Monopolizing Reading, in Medialoper, and a Techmeme roundup.

Related: History and the Future of e-paper, in Computerworld (via Slashdot, MobileRead and The Book Is Dead).


  1. I have found that digitimes article to be very useful. It has helped me to identify people who don’t bother to do basic research on a topic before writing about it.

    The data provided by that article cannot be trusted. The 60/40 split ignores all other device manufacturers including Jinke and Netronix.

  2. I agree that the 60/40 split is at best an indication that the ratio between recent Kindle and Sony sales is 60:40. However if Digitimes is correct about PVIs total production, then 1M units this year for all vendors combined is a reasonable estimate.

  3. What really stood out for me is how cheap the screens cost in relation to how much we are paying for e-book reading devices.

    $60 – 70 per screen but there isn’t an eInk reader to be had (currently, at least) for less than MSRP $299.99?!?

    I know corporations need to make a profit and recoup R&D but – Jeepers Crow!

  4. Aaron,
    There’s a lot more to the readers than just the screens. For instance I don’t think I’d get very far with you if I said that “Good Morning Friend Moon” is overpriced because the incremental cost of downoading it couldn’t be more than a few cents, so why are you charging $3.99 for it, I mean I know you “need to make a profit and recoup, but…” :)

  5. Jim,

    Very funny :) (And thanks for peeking at my site)

    I’ll conceed there are probably many additional cost with many of the devices that are not shared. But more than 3X what the main piece of hardware cost?

    And if a readers main cost isn’t the hardware, does a “home-brew” version of Linux cost that much? :S

    I’ll be the first to say you should be able to charge whatever you want for a product or service that the market will bear. But prices should be falling with the ramped up production of the technology.

    Astak is the only company that is using eInk and talking anything about breaking the sub $200 price point.

    Some people decry the high cost of the hardware as diminishing e-book sales and adoption. With the cost to manufacture falling, shouldn’t we be seeing falling prices?

    Or is it, as others counter, pricing these to the “high-end” customer with enough disposable income that price doesn’t matter which stumps more mainstream adoption?

    Either way, it doesn’t matter, it’s more of an academic question at this point anyway.

    With the exception of Amazon, I haven’t seen any e-book reader company pass the savings on to their customers and lower prices.

  6. The iPhone debuts in June 07 for the 8G model at USD $599.

    Three months later, that price is dropped to $399.

    Less than a year after the initial debut, the price for the 8G model is now USD $299 (with more memory and features I might add). A $300 price difference.

    The first Sony Reader had a MSRP of $349 when it debuted in Fall 2006. The new Sony Reader a year later has a MSRP of $299. A $50 price difference.

    Now, with the ramp up of production, this is when we should start seeing price cuts as companies are able to keep making the same profit from each unit sold because the cost to manufacture has fallen.

    And then to further spur sales, and make more money, the price cut is passed on to customers. Which in turns sells more units, which in turn returns more profit to the company which in turn helps to lower production cost and the cycle repeats over and over.

    Amazon seems to be the only e-book maker following a basic business concept.

    My prediction: Amazon will sell more Kindles because they are lowering their price while everyone else continues to sell high.

    By the time other e-book companies catch on, the Kindle will have continued to gain market attention because of its lowering price. If they knocked $10 dollars off tomorrow, that would be reported as news. That kind of free publicity is priceless.

    Am I out on a limb all by my lonesome on this?

  7. I’ve seen a lot of articles of people that are just “shocked, shocked” to find that the COGs for a non commodity piece of hardware is 30-50% of the MSRP – mostly this has happen with iPods, etc… However you are also paying for additional fixed (customization) and non fixed (assembly) costs, that people don’t seem to value that much until you present them with the choice of having the pile of parts or having a fully assembled and working unit.

    Take your comment about using Linux as an example. If I just dumped an raw version of Linux on an eInk device (even one already customized for the processor being used), you wouldn’t be very happy with it, since you wouldn’t be able to do anything at all (no drivers for the screen, no keyboard, so no input, no drivers for the buttons) – you will only be really happy with custom UI sitting on top of whatever OS (Linux/VXWorks/DOS – it doesn’t really matter to you, since you don’t want to interact with it directly) so that you can get to do what you really want which is read books – and customizing the UI is another fixed (actually not so fixed – updates for bug fixes, occasional feature updates, etc…) cost that needs to be amortized over the project run of the unit.

  8. All very good points Jim, and I am not trying to dismiss any of them.

    I think my comment is more about wondering when we are going to see e-reading devices prices start to fall more than they have. Moreover, when we might start to see models debut below $200 USD since the price of production IS starting to fall.

    Not so much about how much company A charges for, or above, the cost of individual components.

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