E-Reader Content Deals Signal Increasing Competition

In a sign of the rising competition in the e-reader space, Sony has signed a deal with News Corp to make content from the Wall Street Journal, MarketWatch and the New York Post available on its e-readers.

Amazon.com and Barnes & Noble already offer periodical content on their respective Kindle and Nook lines, while other companies such as Plastic Logic are reportedly in talks with publishing companies.

According to Reuters, Sony will offer monthly subscriptions to the Wall Street Journal for $14.99 (£9.32), MarketWatch for $10.99 (£6.83) and the New York Post for $9.99 (£6.21).

Meanwhile, Amazon.com claimed that December was the best sales month so far for the Kindle line, and said it would ship the device on an expedited basis to customers for free. However, the online retailer continued its tradition of refusing to break out exact sales figures. Amazon.com CEO Jeff Bezos has previously been quoted as saying sales of the Kindle and associated e-books account for roughly 35 percent of the company’s book-related revenue.

A 1 December research note by financial advisory group Collins Stewart estimated that Amazon.com could sell as many as 550,000 Kindle devices in 2009. The note’s chief author, Sandeep Aggarwal, broke that down as 450,000 Kindle 2 devices and 100,000 Kindle DX devices, although there was no mention of how those figures were reached.

Overall, Aggarwal predicted about $301.4 million (£187 million) in Kindle revenue in 2009, increasing to $671.4 million (£418 million) in 2010, $1.2 billion (£746 million) in 2011 and $1.8 billion (£1.2 billion) in 2012.

Earlier in the year, a report from Forrester Research predicted that about 3 million units would be sold in the United States in 2009, although that was before the introduction of Barnes & Noble’s Nook and the massive holiday-related marketing push by Amazon.com. The increased competition between device makers has been driving the price of e-readers down, with Amazon.com reducing the price of the Kindle 2 to $259 (£161) to match that of the Nook. Sony’s e-readers retail roughly within that range. Amazon.com and Barnes & Noble have also been introducing applications that port their e-reader functionality onto devices such as the iPhone in an attempt to gain a little more market share and mind share.

“The cost of the display component is high and sales volumes are still modest, yet consumers demand and expect ever-lower prices,” Sarah Rotman Epps, a Forrester analyst, wrote in the 1 September research report. “The bottom line: E-reader product strategists will have to educate consumers and innovate to bring prices down. Even if they are entirely successful at both these feats, e-readers will never be mass-market devices like MP3 players.”

If manufacturers want e-readers to become ubiquitous within the marketplace, Epps added, the price will have to come down drastically, perhaps even to as low as $50 (£31). At that point, though, the relatively high cost of components would become a larger factor, possibly forcing manufacturers to seek what Epps referred to as a “subsidy.”