What Developments Will We See In The E-Book Business Sector?

This time last year, the new market for e-book readers was really taking off - gold rush style. Following the enormous success which Amazon had achieved with its Kindle reader – firstly with the Kindle 2.0 in February of 2009 and then with the large display DX model in the summer of the same year – a small army of personal electronics firms seemed to be developing, releasing or updating e-book readers of their own in order to grab a share of the new and rapidly developing market.

Sony and Barnes and Noble were bursting a gut to get their new readers launched before the 2009 festive season and Samsung, Plastic Logic, Asus and a host of others were rushing to get their readers on the market as fast as they could. The Computer Electronics Show (CES), held in Las Vegas in early 2010, had a dedicated e-book reader section for the first time ever. E-book readers were a hot new emerging market.

Right now however, no more than a few months later, it's an entirely different scenario. The price of e-book reader hardware has plunged. Amazon have now introduced an entry level, Wi-Fi only, Kindle priced at $ 139 - not much more than a third of the $ 359 price which the Kindle 2.0 launched. Barnes and Noble have also dropped the price of the Nook reader to S 149 - and this will probably be cut again before the festive season.

A number of e-book readers in development – including Plastic Logic’s Que – have been shelved. The market appears to be entering a new phase in its development - whether there will be a place for pure electronic manufacturers in future or not is somewhat debatable. The Amazon business model lends itself very well to selling lower priced reader hardware and making a profit on the follow up sales of Kindle books. Barnes and Noble could benefit from a similar business model of course, but it’s doubtful if they would be able to take advantage of the same economies of scale as Amazon.

Clearly it would be somewhat naive to ignore, or even play down, the impact of Apple's iPad in this. There's no doubt that the price of e-book reader hardware was going to fall anyway - but the arrival of the iPad on the scene has certainly hurried things along. However, based on the fact that the third generation Kindles sold out shortly after launch – even today customers are facing a three to four week wait before their Kindles will ship – it doesn’t look as if the iPad is the long awaited Kindle Killer that it was widely predicted to be.

Apart from the debate about e-ink displays being easier to read on than backlit screens, there is - for the moment at least - enough daylight between the price of the Kindle and the price of even the entry level iPad to make the Kindle the more attractive option for anyone whose primary interest is reading books. The iPad's monthly connection fees will be a stumbling block for many customers.

It does start to look like there is enough room in the market for both the Amazon Kindle and the iPad to co-exist - for the foreseeable future at least. Other manufacturers, including major players like Sony and Barnes and Noble, will probably struggle badly if e-book reader prices keep falling.