Quote:
Originally Posted by Kumabjorn
As for the price, won't this begin to gravitate towards equilibrium?
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Uh, no.
It might be off-topic here but ebook reader pricing, moving forward, is going to defined more by business model than by capability or component cost. This will lead to a fracturing of the marketplace into two camps (much as the cellphone marketplace is fractured into contract-based and unlocked contract-free phones).
The direct-download readers that are directly tied in to a large ebookstore (Amazon, Borders, possibly Kobo) can and (likely) will maintain *substantially* lower hardware prices because, as pointed out, their primary function is to serve as mobile storefronts; reading is secondary to selling. They can sell at (or close to) cost and rake in substantial profits via ebook sales. (As pointed out by the OP.) Especially now that the Price Fix Five are looking to abolish price competition in ebook sales and force large retailer margins in the industry. (30% of US$123 is $40 profit on a $189 reader; about 20% extra profit. In three days. And the OP is hardly unique.)
Unless the other vendors can establish an added (commision-based?) revenue stream for their "unlocked" readers, the odds are their products will have to sell based solely on features and quality and since the ebook reader is *definitely* price-sensitive (if not outright price-dependent) they're likely to end up with much lower volumes than the walled-garden readers, even the ones with porous gardens (like Sony and Nook).
It's early in the ebook game, but things are moving way faster than expected and the rules are changing so fast we're seeing products become obsolete before they hit the US market. (C.F. Samsung, Acer)
I don't think price equilibrium is possible at this time.
And the disparity is likely to grow bigger before any semblance of balance emerges; Amazon isn't done with Price drops. Not if the "Shasta" Kindle is real and there is a WiFi-only K3 on the way. If it is, we could be looking at a US$129 Kindle by the holidays.
Walled garden-direct download is a powerful business model.
Just ask Apple and Microsoft and (less so) Sony and Nintendo.