What a Day for e-Book Reader Market

In a matter of hours, consumers gained at the expenses of e-book reader makers' profit margin. I am talking about the price war initiated by Barnes and Noble this morning on its Nook e-book reader device and the swift action taken by Amazon.com to lower the price of its low-end Kindle. by the end of the day, the entry-level Kindle is $70 lower, from $259 to $189, while a new Wi-Fi only Nook costs $149. Even the price of the 3G Nook was lowered to $199.

I have tracked the portabl CE market for years but the past six months are also an eye-opener for me when it comes to the young mobile Internet device market. First we got a string of CES news of more than half a dozen new e-book reader brands to hit the market this summer. Then came the iPad debut and a new e-book distribution model that changes the game rules set by Amazon.com. The subsequent iPad success sent a clear message to standalone e-book reader makers that they have to adjust their products' market positioning and pricing in order to square off competition from multimedia Internet tablets. The precipitous price cuts by Amazon.com and Barnes & Noble are so far the clearest evidence that the standalone, monochrome e-ink panel-based e-book reading device market is in great danger of being marginized.

Will other device makers follow suit? Irex is already struggling; Plastic Logic's Que is nowhere to be seen; Copia's devices are still just Web descriptions; and Spring Design's $399 Alex reader looks expensive given today's news. Even Sony may have to re-design its e-book reader product line to survive the new competitive environment.

As an analyst, I am already revising my mobile Internet device forecasts in light of the latest developments after publishing a report on this topic in early April. And wait, iPhone 4 is coming up this Thursday, and don't forget that iOS4 now supports e-book reading function on iPhone and iPod Touch. Great!