Thursday, June 24, 2010

Price War in E-readers


When Barnes & Noble cut the price of its Nook e-book reader just a few days ago, Amazon responded quickly by slashing the price of its Kindle (above) to $10 below the Nook's price. Suddenly e-readers are priced below $200 and the price war is attracting consumer attention.

Meanwhile, the iPad is being touted as an e-book reader (among other functions). And Toshiba is one of many manufacturers launching new e-readers with buyer-friendly features and pricing.

CNBC asks an intriguing question: Why doesn't Amazon just give Kindles away? Amazon, after all, makes most of its money from selling content. Razor manufacturers price new razors low to get consumers to buy their high-margin blades. This is what CNBC suggests for Amazon, especially given the intense competition from Apple's iPad, which some predict will crowd one-function e-readers out of the market in the very near future.

In my opinion, the shakeout in e-readers is leading to consolidation that only the strong will survive. That's good news for buyers, who will get better products at lower prices. And ultimately it's good news for marketers, who will concentrate their efforts on fewer but better e-readers. Only the strongest will survive.

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