E-Readers at $50: A Best Seller, Says Report

If you don’t already own an e-book reader like the Amazon Kindle or Sony Reader, how much would you pay for one? For these devices to attain mass-market appeal, they’ll need to be priced as low at $50, according to a new report by Forrester Research.

Problem is, today’s e-reader costs more than $50 to manufacturer, the report says. A 6-inch e-ink screen alone runs about $60. Larger displays, like the Kindle DX’s 9.7-inch slate, naturally cost more. E-reader manufacturers will have to find innovative ways to bring costs down, such as adopting the subscription model common among wireless carriers and mobile phone manufacturers. Newspapers and magazines, desperate for a workable business model, would be likely partners:

“Device makers should partner with companies that have incentives to subsidize the device in exchange for a content subscription (newspapers like the Detroit Free Press) or service subscription (mobile carriers like Verizon, which already has a similar model for mobile phones and now netbooks),” the report says.

To drive e-readers down to $99, or even $50, manufacturers could “amortize the true cost of the device with a two-year subscription model,” says Forrester, which surveyed 4706 U.S. online consumers for the report. But even the cleverest of pricing schemes won’t turn the e-reader into a mass-market product like the MP3 player.

A key problem is that there just aren’t enough bookworms out there: “…the majority of consumers don’t care enough about reading or technology to invest in this type of single-purpose device at anything close to realistic prices.”

While e-reader prices are falling, they’re nowhere near Forrester’s projected $50 sweet spot. Sony’s new Pocket Reader costs $199, and Amazon recently lowered the Kindle 2 to $299. But that’s still too high, particularly when multi-function smartphones and mini-notebooks cost the same or less.

“With new 3G iPhones selling for $199 and a variety of netbooks selling for $300, devices in adjacent categories put the squeeze on eReaders,” the report says.

Forrrester does offer a ray of hope, however. While e-readers may never be mass-market devices, they can find a successful niche if manufacturers “innovate to bring prices down.”

As I see it, single-use e-readers won’t survive for long in the consumer market. Multifunction devices, namely smartphones and tablet computers, will incorporate e-reading features. Like single-use MP3 players, dedicated e-readers will fade away. However, large-screen readers like the Kindle DX may find a profitable niche in some markets, particularly education.

Contact Jeff Bertolucci via Twitter (@jbertolucci) or at jbertolucci.blogspot.com.

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