Price war? B&N gets aggressive: Nooks at US$149-199

[DJHARKAVY]

I am very fond of my JBL, and I like the reflective LCD over the eInk of the Nook.

That said, had this been available last year when the Nook came out, I would probably own a Nook now instead of the JBL. The higher price was one of three factors that pushed me away.

[Bittybye]

While I love my Kobo, I think of the Nook came to Canada at that price I might give in and buy one. Especially considering that they've taken care of the biggest stumbling blocks from their initial release.

[jmac1]

Originally Posted by SensualPoet

The 5" Sony is not the PRS-600 Touch Edition and it does not offer anywhere near the same screen size, dictionary, text-to-speech, 3G, social networking or bookstore breadth of the Kindle at $189.

Bookstore breadth? That's just incorrect.

I got the pocket edition for $144 (from Amazon) and have little to no use for everything else you mentioned because I have an iPhone. If I had to choose today, I would either make the same decision or go with the wifi only nook at $149. Even at $189, the Kindle isn't the best choice for everybody. I'm glad that you enjoy yours, however.

[J. Strnad]

I happened to be traveling in Mexico between Puerto Vallarta and Guadalajara on a bus last winter....

How on earth did you read while riding on a bus in Puerto Vallarta? The one and only time I tried that, I practically got seasick! Swaying and bouncing over those roads was like being in a rowboat in a squall.

Y'all obviously travel a lot more than I do. I'm rarely away from my desktop computer for more than 8-14 hours, and I have already, after about two weeks' ownership of my Kobo, loaded up more books than I could read in a month. So none of the buy-a-book-on-the-go stuff means anything to me.

[dedo]

Originally Posted by SensualPoet

Kindle's 3G is all the more visionary in this context: 3G just works, and just works everywhere -- at minimum, delivering new content. WiFi -- not so much. WiFi requires conditional access, and pass codes, and complications. Yes, at hoe, it's easy ... but on the road? Not so much.

Great point (plus the obvious case of traveling/commuting)

And remember that in other parts of the world free wi-fi is not so widespread as in USA.

Given similiar technical conditions, the looser of the price war is the one who starts the price war.

[BenLee]

Originally Posted by J. Strnad

I have already, after about two weeks' ownership of my Kobo, loaded up more books than I could read in a month. So none of the buy-a-book-on-the-go stuff means anything to me.

Yea that's how I do it too. Once I'm in the mood, I buy like 5+ books at a time that I eargerly want to devour. It's so hard to just buy 1 and call it quits. I often times end up only reading half of what I bought before I feel the urge to buy some more. It's quite unhealthy in ways.

[BenLee]

Originally Posted by dedo

Given similiar technical conditions, the looser of the price war is the one who starts the price war.

You may be right. I think right now we're all ecstatic about the lower prices, but Barnes and Noble may soon regret the cut after the initial buy craze dies off. Nook sales will return to normal and so will ebook purchases, except they will be earning less upfront now. Plus, they dragged Amazon along for the ride as well.

[Scott Nicholson]

I feel it's a content war, and B&N is too far behind to ever catch up. The Kindle app on the iPad virtually guarantees short-term dominance to Amazon. Devices will soon be an afterthought.

Scott

[dmaul1114]

Agreed. Amazon was VERY wise not to play the hardware game and instead to get the Kindle app on every gadget under the sun. Their store can thrive regardless of what happens to the Kindle or the dedicated reader market in general.

[BenLee]

True. I hear may people are giving up their Kindle devices in favor of an iPad, yet they are still using the Kindle APP on their iPads! Amazon's decision to make their content cross platform was indeed genius.

[fjtorres]

Originally Posted by BenLee

You may be right. I think right now we're all ecstatic about the lower prices, but Barnes and Noble may soon regret the cut after the initial buy craze dies off. Nook sales will return to normal and so will ebook purchases, except they will be earning less upfront now. Plus, they dragged Amazon along for the ride as well.

Maybe not.
The ebook industry is only *now* starting to reach mainstream awareness.
For us 'rounds these parts ebooks are stuff we've been doing since the last century but for many, ebooks started when Oprah held up the Kindle on her show.

In immature, growing markets the normal price elasticity of most markets is amplified by the added visibility and network effects that come from a larger installed base. (More people get to see the product in the wild. Eventually, most likely buyers either have one or know somebody who does.) The increased sales (of readers and books) just may offset the price cut, assuming (big assumption) the build costs *haven't* come down since last November. Which, odds are, they have.

Truth is, we don't really know how the economics of these walled-garden readers work out. Except for the screens, the things are built with smartphone components and tech so there's a lot of leverage driving component costs down. And the components are relatively cheap to start with. (We're not talking 500 million transistor 3GHz chips, after all.) Beyond that, only the actual vendors know what the business looks like.

Anybody out there know the attach rate of ebooks/per reader? B&N does.
Anybody out there know how a $50 price cut affects sales volume? B&N does. (Remember the $50 gift cards? The offer ended just before the $60 Nook cut.)

Odds are, B&N knew, going in *exactly* what they're doing.
And Amazon matching (and even going a tad lower) was hardly a surprise.
Again: how much does it cost to build a Nook/Kindle? B&N knows *their* costs and probably can make a good guess at Amazon's. *We* know Kindle is cheaper to build (slower CPU, membrane keyboard instead of touch panel, no WiFi) but not how much cheaper. Its pretty clear that its at least $10 cheaper.

For all the fun of the "price war" talk, so far its more like Nook fired a shot across Kindle's bow and Kindle shot back their own warning, with both parties moving on to survey the damage to the bystanders. Given that B&N *hasn't* matched the $189 it's clear they're satisfied where things stand.
And, unless somebody else gets aggressive (say, Sony introducing a connected reader that can sell for $99) the current truce should hold at least until K3 is announced.

By contrast, last year's three way bestseller price war between WalMart, Amazon, and Target lasted several rounds until they all ended up at the exact same loss-leader price.

Personally, I suspect that, screen aside, these things are really really cheap to build in large lots (say hundreds of thousands a year) and getting even cheaper. After all, the electronics in all of them are far from leading edge tech. And that is why, as I've said before, the future of dedicated ebook readers is both small and cheap.

Even without price wars, ebook readers are headed for drugstore blister-pack marketting, sooner or later.

The only questions are how long til we get there, and will there be enough profit (mostly from the book sales) that the vendors will want to rush to get there.

In fancier terms: what's the slope of the adoption curve today? Are we at the base of the sigmoid or the top? I think B&N's price cut may be an experiment to see how the market reacts.

[dedo]

You don't need to know the costs structure to understand why B&N shouldn't be satisfied at all. You just need to know they're quite similiar (probably Amazon has even some advantages, as you said). B&N only showed that Nook is more price-sensitive than Kindle without stealing any actual/prospective market share (i.e. installed base) since Amazon replied immediately doing even better.

[fjtorres]

Originally Posted by dedo

You don't need to know the costs structure to understand why B&N shouldn't be satisfied at all.
<snip>
B&N only showed that Nook is more price-sensitive than Kindle without stealing any actual/prospective market share (i.e. installed base) since Amazon replied immediately doing even better.

Uh, my point is/was that there is more to the market than Nook and Kindle.
(And that is true even in the US, to say nothing of the rest of the planet.)

They may very well *be* satisfied to poach on the *other* guys.
You know; Sony, Kobo (forced to throw in a gift card), Astak, Bookeen, whatever remains of iRex...
And they *may* be happy to preempt, maybe block; Samsung, Acer, Asus, iRiver, and other significant would-be CE players.

The ebook world doesn't revolve around Amazon and a Nook win doesn't *require* a Kindle loss. Even if it really was a two horse race, more sales are more sales regardless of the share number. Plus, a market that is mostly Amazon vs B&N suits B&N fine even if they gain no significant traction against Kindle. (Which they should. They *are* $30 cheaper on the WiFi side and there *are* a lot of people for whom WiFi is just as useful as 3G.)

I think it's a bit early to be saying they got nothing out of it.

[kevinp]

I'm still disgusted that paperbacks are almost half the cost of the ebook version. When will any of the retailers do anything about that?

[dmaul1114]

Originally Posted by kevinp

I'm still disgusted that paperbacks are almost half the cost of the ebook version. When will any of the retailers do anything about that?

I've still not ran into that in the Kindle store. Granted I only buy a book or two a month.

But all the stuff I've bought was the same, or a little less, than the paperback price on amazon.com