Monday, August 8, 2011

How ereaders will become cheaper

We discuss the sub $100 ereader in the comment section of various blogs, but the question should be "how can anyone sell a cheap ereader?"

1. Economy of scale. E-ink inc. is increasing shipments

25million to 30million ereaders plus the Nook color and other device reading! Plus a new factory coming online...

2. Touch screens are the most costly component for many of the devices. Two finger and other low cost touchscreen solutions will be popular with ereaders.

3. Frame costs among other components A $5 savings might not sound like much, but it adds up.

4. Weak chip sales estimates for 3q2011 should reduce the build costs. Next year it will be the new 28nm chip manufacturing process.

5. Software profits (e.g., for Amazon, B&N, and Apple) Do I really need a link for my typical audience? In the long run the profit will be in the media, not the device. Thus vendors will cut profits.

6. Size. I wonder why no vendor has come out with a fractionally smaller e-reader? There is nothing magical about 6" or 7" screens. Oh, 3.5" is too small (too many page turns), but some middle ground would sell.

7. Cell Phones. Sales of these are exploding. Why isn't there an ereader cellphone subsidized by the carriers? Seriously, we've already had the 3G e-readers for $189. Increase the battery size a little and the ereader could be a free cellphone with data plan on any US cellphone network.

In conclusion:
I keep reusing this link. One item to note again and again is the 'elastic market' of ereaders. Look at the bottom of page 22. Currently over 53% of the potential ereader buyers are 'priced out' of the market. Note: That isn't the only growth; there is a huge market considering ereaders who remain on the fence. Ideas like Amazon's offers will further cut the price.

Ereaders are an elastic market. While some of us want higher end devices, there needs to be a gateway drug.

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