Tech Talk

Enjoy what “early adopter” status you still have while you can, Kindle owners. After this holiday season, owning an e-reader may no longer seem quite so unusual.
According to a report from tech analysis firm Forrester Research published Tuesday, 1.2 million digital readers will be sold in the U.S. in the fourth quarter, bringing the total sales estimate for 2009 to around 3 million devices, fully a million more than Forrester##s previous projection. And in 2010, Forrester expects sales to double again to 6 million. “Over the course of this year, we##ve seen an enormous growth in awareness,” says Sarah Rotman Epps, an analyst with Forrester.
Another survey by online marketplace Retrevo.com found that one in four men and one in six women intend to buy an e-reader before the end of 2009. That puts the devices behind netbooks and HDTVs in popularity, but ahead of game consoles and MP3 players.
The unlikely device behind that e-book boom may not be the Kindle or Sony##s Reader so much as one that few Americans have heard of: a digital reader from British gadget-maker Interead known as the Cool-ER. Rotman Epps points to that no-frills $249 reader as the genesis of a price disruption that##s brought both the Kindle and the Reader into a range that##s far more appealing to U.S. consumers. Since the cheaper gadget launched in the U.S. last June, Amazon has shaved $60 off the price of a Kindle and begun offering refurbished e-readers for as little as $149. In August, Sony launched its own cut-price device, the so-called Pocket Edition, a reader with a 5-inch diagonal screen that retails for just $199.
While the erosion of e-reader prices may have been inevitable, Rotman Epps argues that Cool-ER–built on the cheap by Taiwanese gadget assembler Netronix–has accelerated the process. She says another price drop from Sony or Amazon before the holiday season wouldn##t be a surprise.
Update: Six hours after this story was originally published, Amazon dropped the Kindle##s price again to $259 and announced an international version.
“I don##t think the Cool-ER had any direct influence on consumer perception–very few people have heard of it. But its very existence put pressure on Amazon and Sony to aggressively go after a lower price,” she says. “With the Cool-ER, Interead essentially announced, ##If Amazon and Sony aren##t going after a more price-conscious consumer, we will.##
Price is still the biggest barrier to mainstream e-reader adoption: 60% of respondents to a Forrester study still say they##d only buy a digital reader for less than $100.
But nearly as important as price drops in ramping up of e-reader sales may be the shift from online outlets for the devices to brick and mortar retail. Last month, Dutch display maker IREX released a new e-reader that will be sold in Best Buy stores, as opposed to Amazon##s model of selling the Kindle exclusively online. IREX##s so-called DR800 could represent a real challenge to the Kindle, with access to Barnes & Noble##s library of hundreds of thousands of e-books and a wireless connection provided through a partnership with Verizon that allows content to be directly downloaded. Other e-readers are expected to show up in a Best Buy section known as “Gadgets and E-readers” later this year, according to Forrester##s Rotman Epps.
IREX U.S. Chief Executive Kevin Hamilton argues that hands-on strategy could expose e-readers to an entirely new category of consumers. “We think it##s really essential that users have a chance to touch and feel and look at this new technology up close,” he says. “We##re showing not just a different device, but a different model for doing business.”
Even so, Rotman Epps believes IREX and other Kindle challengers will have an uphill battle. The Forrester report predicts that 60% of all e-reader sales in 2009 will be Kindles and another 35% will be Sony##s Reader devices, leaving just 5% to IREX and other also-rans.
Sriram Peruvemba, the director of marketing for E-Ink, which makes the low-power, easy-on-the-eyes screens used by digital readers, argues that the category of reading gadgets is just getting started. Sure, 10 million units in 2010 may seem small when compared to the 30 million iPhones Apple announced it had sold in March. But Amazon, Sony and their smaller competitors have plenty of space to expand the digital reading market. “E-readers may still seem like a small opportunity from a consumer electronics standpoint,” says Peruvemba. “But replacing books, replacing newspapers … if you get even a percentage of that, it##s huge.”
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Forbes Magazine

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