You knew it had to happen. With the iPad shaking up the e-reader market by bringing to users full color screens, the ability to watch movies, surf the Internet, and run all the apps that the iPhone runs, the e-ink product makers have to be feeling the heat. Now Barnes & Noble and Amazon are slashing prices on their e-readers with two different strategies that may or may not succeed.
The Wall Street Journal has all the gory details. With Barnes & Noble’s Nook coming late to the game after Amazon had such a long time to try and sew up the market, they’ve had to be more innovative in their struggles to get a toehold in the e-book world. On Monday, the bookstore chain dropped the price of their Nook from $259 to $199 and added a Wi-Fi-only model for $149. Within hours of this, Amazon matched the Nook’s 3G/Wi-Fi model in price. With the iPad showing such strong sales, there’s little chance Apple will join in this price-cut spiral to the bottom.
What’s interesting about the directions both Amazon and B&N are opting for is that they seemingly are targeting different markets. Said Tony Astarita, vice president of digital products at Barnes & Noble, “You really start opening up the device to people who are not necessarily heavy readers.” Astarita’s comments, hoping that some people would be willing to shell out over a hundred dollars for a device that allows them to do an activity they don’t do much of in the first place, seem a bit unlikely until you consider the exercise equipment market. Quite a bit of money can be made from suggesting people who don’t exercise would feel better if they did, but can B&N make the same argument appeal to those who don’t read much? Color us skeptical.
At the other end of the spectrum, Amazon’s Jeff Bezos suggested that his company would be targeting "serious reading households," who in our opinion are likely to either prefer paper books or who will be affluent enough and tech savvy enough to go in for an iPad. While Amazon still dominates the market, having gotten into the e-reader game long before Cupertino or B&N, they’ve at least recognized the threat of Apple devices. They’ve also hedged their bets with early apps for the iPhone as well as additional software for the iPad and the Mac, while Barnes & Noble’s Nook equivalent eReader app is also available on Apple mobile devices.
As the WSJ notes, digital bookstores are now beginning to make actual profits from the sales of e-titles rather than e-readers. The incentive to keep the prices high on e-readers is less pressing now, and by getting more of these devices into more hands while they still have a chance, Amazon and Barnes & Noble might be able to stop the iBookstore from becoming the next iTunes.
