E-reader Market Update

When Semico released our e-reader report, one of the predictions we made was that Amazon would introduce an updated Kindle this quarter.  They were right on track and are estimating new orders will ship September 10th.  This was a highly anticipated step, considering all the new competition and great products being introduced to the market.

The main purpose of the Kindle is to sell ebooks for Amazon, and it has been a very successful endeavor.   In order to sell more ebooks, Amazon has released a Kindle app that can work on phones, iPods, the iPad, and computers.  As this market continues to mature, publishers have become more interested in interactive books with embedded video and audio.  The Kindle app now supports these features along with Apple’s iBooks app, making cell phones, iPods, and the iPad, decent e-readers, though they lack the electronic ink display.

The e-reader market over the last year has seen a significant shift in market dynamics.  Originally, Sony lead the market with their variety of e-readers, then the Kindle took the lead.  Later, e-readers were displayed in brick & mortar stores such as Best Buy, Borders, and Barnes and Nobel.  After the introduction of the iPad however, the market has splintered into two sub segments – pure ebook reading with e-ink screens, and the more versatile LCD screens for interactive books, movies, and internet browsing.

With the iPad entering the market and now the Kindle being updated with a significant price decrease, other manufacturers are having to follow suit, including Sony’s Reader Pocket Edition, now selling for $150, their Touch Edition, selling for $170, and their 3G Daily Edition, selling for $300.  The Nook was also reduced in price, with their Wi-Fi device reducing to $150 and their 3G going down to $200.

However with all these great additions and price decreases, there have been some casualties -products that have been unable to be anything beyond vaporware.  The Que & Skiff are two of those fallen by the wayside.  Both of these products had sleek designs, large electronic ink displays, and lots of consumer interest.  Neither was able to compete with the price of the Kindle or even the iPad.

As for the future, we know Barnes and Nobel filed with the FCC for two new e-readers that both appear to have 3G and Sony is rumored to be coming out with another 3G e-reader soon.  Will 4G e-readers with color e-ink be next?  Here’s looking to next year.

Michell Prunty, Consumer Analyst