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You are here: Home / Personal Tech / Amazon Is Reaping Short-Term Gains
Amazon Is Reaping Short-Term Gains in E-Reader Market
Amazon Is Reaping Short-Term Gains in E-Reader Market
By Patricia Resende / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
DECEMBER
01
2009
Consumers have already heard they won't have a nook e-reader from Barnes & Noble nor a Daily Edition Reader from Sony in time for the holidays. Amazon is cashing in on its rivals' blunder, reminding consumers that its Kindle is not only a hot device, but available now.

The delay in getting e-readers into the hands of consumers by Christmas is a big mistake for Barnes & Noble and Sony, analysts say. The delay will force consumers to buy from Amazon.com during what is predicted to be a busy season for e-reader sales.

Forrester Research is predicting e-reader sales of three million this year, with 30 percent of those sales in the holiday season of November and December.

"What this delay has done from a U.S. perspective is it has put Amazon in the driver's seat because two of the strongest brands that it was going to compete with have sold out or have limited supplies," said Jeff Orr, ABI Research's senior analyst for mobile devices. "One of the great opportunities they had ahead of them was the use of their retail stores as a channel -- early Kindle owners didn't have that luxury."

Worth the Wait

Barnes & Noble said it hasn't broken any promises. "Due to the high demand, we are prioritizing our pre-orders and we continue to offer a holiday certificate to customers who want to give nook as a gift for the holiday," said Mary Ellen Keating, a Barnes & Noble spokesperson. "We are starting to ship this week and are committed to doing everything we can to ensure everyone who ordered a nook before Nov. 20th will receive it in time for the holidays."

Barnes & Noble announced on Nov. 20 that it was out of stock for the holidays and told customers from that point on that orders would be delivered the week of Jan. 5.

People placing orders on Monday should expect the devices to ship on or around Jan. 11, according to Keating. Demo devices are scheduled to be available in the highest-volume stores during the week of Dec. 7, Keating said, but those stores will only receive a very limited inventory.

Lesson Learned

Because Amazon had two holiday shopping seasons where it experienced delays in getting Kindles into the hands of consumers, it was better prepared this time around.

Amazon had to make a lot of changes to set up for the buying season, say analysts. One of those changes was ramping up production to avoid delays and have enough devices ready for the season. Another was preparing for competitors coming into the market, including iRex, ASUS, Plastic Logic, Sony and Barnes & Noble.

Amazon doesn't need to worry about those competitors right now, Orr said, because Amazon won't lose its monopoly on the e-reader market until there are aggressive shipments from competitors.

"The threat of competition has not materialized for Amazon and they are going to keep the lead," Orr said.

He noted that e-readers were first adopted by business users who wanted to read in between flights without carrying around bulky books. But now there will be opportunities to use the devices in a variety of different applications. College students could use e-readers to read textbooks, and medical and health-care professionals could research medical information without having to carry laptops or clipboards.

A Noisy New Year

While Amazon is reaping all the benefits now, the game will change in the new year.

There will be a lot of noise in the electronic reader market in the coming months as big-brand e-reader sellers begin to compete with new players offering cheaper and market-focused devices. Various players will enter the market in January when they unveil new e-reader products at the Consumer Electronics Show, Orr said.

"Amazon's concerns should be different then than they are now," he added.

Amazon's family of Kindle e-readers will not only be up against Sony's and Barnes & Noble's products, but it will also have to face competition from vendors offering less-expensive devices and devices that offer books in various languages.

All players will be vying for a piece of the e-reader market, which is expected to top six million in sales in 2010 and 10 million by year-end 2010, according to Forrester.

And if that competition isn't enough, Amazon and others will face another change that will make things complicated, Orr predicts. "Consumers who are buying Kindles now and are satisfied will soon be asking, 'What more can I do with this?'" Orr said. "The question breaks the business model of e-book readers."

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