On the e-reader price war and the shake-out of the market
Best Tablet Review has an interesting article on the ereader price war and the current state of the market.They argue that
The first point I want to raise is when the price war started. BTR assumes (like most people) that the Nook Wifi started the price war. I disagree. Kobo started it when they launched their $149 ereader. I still don’t think much of the hardware, but at the time that was a very good price.
BTW, the second battle of the ereader price war wasn’t the Nook Wifi; it was when Sony dropped their prices (before the Nook Wifi). They called it a sale at the time, but that was just to hedge their bets. Also, I think they were responding to the price of the Kobo ereader, not anticipating the B&N price drop. They were trying to find a better price point for their ereaders (whoops).
BTR goes on to predict that only the big three (Amazon, Sony, B&N) will survive and it will be hard for anyone else to enter the market. This is very likely true, but it is only true if you ignore the rest of the world.
The ereader price war has so far been confined to the USA. It has yet to affect the other major markets in Europe, Asia and Australia.When you add them to the pot the prediction is false. And the Big Three soon becomes the Big Four, possibly even the Big Five.
One company that BTR left out was Pocketbook. Pocketbook will survive the US based price war just fine. In fact, they’re in a better position than Sony because they don’t depend on the US market for survival. Pocketbook is based in the Ukraine and Russia, and the USA is actually their least important market. I mentioned last week that they lowered their prices. You might have noticed that I didn’t comment on the fact that their prices are higher than everyone else. I passed because their prices staid slightly more expensive than everyone else. If they’re happy with that price point, then they must know what they’re doing.
Pocketbook was one of the Big Four. I have the feeling that there is actually a Big Five, but I’m not sure yet who that last company is. It’s not Bookeen or Bebook, but it might be Hanvon or Gajah. Hanvon was working towards a $100 ereader before the Nook Wifi, and Gajah is the most widely distributed ereader manufacturer that you’ve never heard of.
So who’s going to survive? My prediction is that all will survive just so long as they can stay financed. Once they have money troubles they’re dead. No one will finance them because of the price war.