Amazon’s Kindle e-reader is still its best-selling electronic device. But at $299, it’s also still priced too high for most consumers, who are unwilling to pay that much money for an e-reader, according to new Forrester research.
The report surveyed about 5,000 consumers and found that most would pay anywhere from $50 to $100 for an e-reader. Less than 10% said they would buy an e-reader for between $350 and $400. (Though Amazon would probably be pleased with 10% penetration for the Kindle.)
Forrester’s key takeaway: Kindles need to get cheaper, and even then, e-readers will never be as big a market as MP3 players, which 110 million U.S. consumers own.
Is that really surprising though? Most industry-disrupting devices like e-readers are launched at what most view as unreasonably high prices, only to come down to more reasonable prices over time.
Look at the iPod: When it first launched, it cost $400. Now it’s down to a much more reasonable $200. E-readers will be able to lower their prices as sales volume increases, and as costs shrink due to better deals with vendors.
In addition, as e-readers take hold among consumers, most device makers like Amazon and Sony will be able to strike better deals with e-book publishers. These cost cuts will boost profit margins, which will enable the device makers to more easily cut the price without sacrificing too much profitability.
Moreover, the report may not want to jump so soon into the camp that e-readers will not become as ubiqitous as MP3 players.
For example, it doesn’t address in detail the potentially lucrative textbook market, which could easily vault e-readers into mainstream status. The U.S. textbook market is about $10 billion and represents 41% of the U.S. book market. Amazon has already partnered with Arizona State Case Western, Princeton, Reed, and University of Virginia to test its Kindle device with students, so we could already be headed in that direction.
The biggest threat: That “e-readers” will become mainstream as an application on a converged device, such as the tablet device that Apple is supposedly working on, or a smartphone — and not a dedicated device, like the Kindle is today. That’s what’s happening to the MP3 player market, and it’s plausible that it could prevent dedicated e-readers like the Kindle from truly taking off, too.
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