Monday, June 21, 2010

E-Reader Prices Are Slashed; New York Times, 6/22/10

Brad Stone, New York Times; E-Reader Prices Are Slashed:

"A price war is brewing in the growing market for electronic reading devices.

Barnes & Noble, the national bookseller, announced Monday that it was dropping the price of its six-month-old Nook e-reader to $199 from $259 and introducing a new version of the device, which connects to the Internet only over Wi-Fi networks, for $149.

Responding rapidly, then cut the price of its popular Kindle e-reader below the Nook, to $189 from $259.

The price cuts were made as manufacturers of e-readers faced a mounting threat from Apple’s iPad. Even though it is far more expensive than the e-readers, the iPad, which starts at $500, performs a range of functions with a versatile, colorful display that contrasts sharply with the static, monochrome screen of e-book readers. Apple said it sold more than two million iPads in the two months since the tablet’s introduction.

“It was obvious that the price of stand-alone e-readers had to come down,” said James McQuivey, an analyst at Forrester Research, citing the threat by Apple and other tablet makers. “We just never thought it was going to happen this rapidly.”

Analysts had expected the prices of e-readers would gradually fall because of the natural decline in component costs and the increased profitability of e-books themselves...

With recent software upgrades, Barnes & Noble has improved the Nook, which now has features to counter Amazon’s aggressiveness on e-book prices and the brand power of the Kindle. Barnes & Noble allows Nook owners to read entire e-books within stores and lend e-books to friends for up to two weeks. Now, with yet another software upgrade, Nook owners have free access to AT&T’s nationwide Wi-Fi network.

“I don’t see more than two, or maybe three dedicated reading companies in the market for selling e-books,” said William J. Lynch, chief executive of Barnes & Noble, in an interview. “I think you are starting to see a shake-out now.”

Mr. Lynch also predicted that within 12 months, e-reading devices “that people will actually want to buy” could be available for less than $100."

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