Will tablets knock the eReader off the shelf?

POSTED BY Global Administrator
Amazon's eReader came out a year and a bit ago and represented a genuine new experience and captured the imagination because of it. A year or so later, the iPad reaches the market, offering a bewildering array of apps, including, of course, the ability to download eBooks and eReader software. So does the new tablet form factor herald the end of the eReader device?

Well, not really, though it is already having an effect of eReader manufacturers' strategies. There are several reasons why eReaders will endure- they are cheaper, more manageable and have a battery life which would make any tablet owner green with envy- up to two weeks.

The display, using E-Ink, is also much easier on the eyes for its buyers. But those are not the only reasons: Amazon, as a specialist book retailer, is more about eBook sales than shifting eReaders, though eReaders are a handy way of reaching the market.
In light of this, its not at all surprising that book sellers Amazon and Barnes & Noble have brought down the prices of their eReaders in recent months.

Ultimately for the book sellers its all about reaching the eBook reading public and there are several ways of doing that. Creating the eReader may have been a master stroke last year but now eReader apps on the application stores and lower pricing of eReader hardware is just as important. After all, though eReader sales are expected to be impressive at 5 million shipments in their second year, eBook sales are "off the scale."

According to The International Digital Publishing Forum, US trade wholesale electronic book sales reached $91m in the first quarter of 2010, and that excludes retail sales which could account for a similar volume. If such volumes can be sustained, revenue from hardware sales becomes secondary. Using third party App stores and competitive pricing to sell eReaders makes sense- it could even make sense to sell the hardware as a loss leader, subsidising the device in order to achieve revenues from content, in a similar way that operators subsidise handsets to achieve revenues from voice and data traffic. The eReader is unlikely to be offered free like some handsets are, but it could become very cheap...