Book and Reading News

Kindle 2 for $299

At its release, Kindle 2 was estimated by iSuppli to cost $185.49 to manufacture. Amazon’s top-line margin was $173 at the Kindle 2’s $359.00 list price. Today, the device has been repriced to $299, breaking a price barrier, $300, that’s still too high for many people. The change is significant, because it will force already profit-challenged competitors to price their hardware lower. The move could strangle some competitors before they find traction with readers.

The price of components is likely falling, because of the rising demand for E-Ink displays and growing volume of Novatel EV-DO modules sold for Kindle and other devices. For the most part, though, this is simply an offensive move against “less expensive” readers, such as the $250 Cool-ER and Borders £189 ($314) UK’s Elonex reader.

Amazon is in an excellent position to put price pressure on hardware competitors, reducing the competition it faces in e-book sales from formats the can be read on these devices. It can sacrifice hardware margin to drive content revenues. The danger, from publishers perspective, is the control Amazon seeks to exert over e-book pricing, which Bloomberg reports is increasing.

Unless Kindle opens up to other formats, I think the combined market power Amazon wields will backfire on Jeff Bezos. The publishing industry could shift their support to an alternative e-book device (Plastic Logic, for example) or channel (Scribd or Apple’s AppStore) in a stand against Amazon’s requirement that all books be priced at less than $12.50.

Of course, pricing is a powerful market lever, but it’s not the only factor in the creation and promotion of creative and intellectual works. At some point, quality and features—extending the book beyond the replication of a page in digital form—will become critical factors in the success of a work, and that will shift the entire market’s attention away from the cost of e-reader hardware.

Book and Reading News

Borders UK introduces a £189 e-reader

Borders UK today introduced a lower-priced e-book reader, the Elonex, which it will offer alongside the £400 ($665) iRex Iliad e-book reader. The £189 ($314) Elonex, manufactured by the British PC maker of the same name for Borders UK, is a basic e-Ink screen e-reader with no wireless or other network connectivity. It supports the ePub and Adobe PDF formats and comes pre-loaded with 100 books (presumably out of copyright classics) and an SD memory slot. (A brief, not very informative review is here.)

Borders offers a catalog of 45,000 e-books, which can be displayed on the Elonex or iRex Iliad. Borders executives had previously told the Bookseller they did not consider the iRex, which includes annotation and handwriting recognition technology, “sustainable” at £400.

The dichotomy between the basic e-reader, which does little more than display pages, and a multi-purpose e-reader, like the iRex, is evolving to be the simple distinction made in this market. Amazon’s Kindle 2, however, splits the difference, doing more than a basic reader (notably with the WhisperNet delivery service, but also an increasing range of applications), at a price that, at this point, is so close to the “basic” models, it is poised to crush competitors that try to compete from the low-end. Now, if only Kindle supported ePub documents.