Why Sony’s E-Reader Won’t Do Well at Catch a Gideon

February 27th, 2007 by digerati

Sony has the best e-reader ever produced. You can see it here. The reader is tiny, thin, light, and has excellent readability. It solves most of the problems e-books have had in the past.

I like e-books because they are search-able. Also, I tend to underline as I read, and with electronic books that process is very easy, both to capture the important information, but also to copy it for other uses. An e-book also allows you to carry multiple books at the same time without carrying a large bag or backpack. I am someone who reads several books simultaneously, so being able to carry multiple books is a big plus. Older e-book readers were too large, too heavy, or difficult to read. I experimented with Microsoft Reader on PPC and found the screen to be too small. The Sony Reader has solved these problems wonderfully. They even developed an iTunes-like store to sell e-books for the reader.
Despite this, Sony’s Reader will never take off. Sony has made the mistake of not choosing a good marketing strategy to entrench the Reader into American culture. Sony has set the price of the Reader at $350. This isn’t bad, especially considering the amount that we spend on iPods, and second iPods, and other electronics. That price is probably perfect for their target markets.

But Sony didn’t take into account the price of the e-books for the reader. The books still cost about the same as Amazon or Borders sells them for. The biggest complaint I hear about people who “want to read more” is the price of books. Instead they borrow them from the library or just don’t read at all. Not reading is a tragic offense, but I watch my friends forgo buying any books (even for classes) because they are too expensive.

Unfortunetly, Sony has a high priced reader and also high priced books. If I already had the reader, I might as well buy the books for it rather than in print, but if I don’t have the reader it will never make sense to get one. If the books were even 10% off I might be inclined to purchase the Reader with the assumption that eventually it will pay for itself.

Sony would be better off with the Gillette business model - give away the razor and charge a ton for the blades. Such a strategy would ensure their cut on all of the books (since it is a proprietary format). But the best method would be to copy Apple’s marketing plan, sell the device above cost, and practically give away the media. Here’s why it works…you make back the cost of producing, researching, and developing the device through device sales. But then you dramatically increase sales of books because they are that much cheaper than the paper equivalent. Frankly, this should be easy for them to do. The e-book has a marginal cost of $0! Those costs should be passed on to the customer, if for no other reason that encouraging them to buy more. If this was the case I’d have bought the Reader long ago.