Are iPads Eroding E-Reader Sales?

The budding e-reader space suddenly sees its work cut out. Apple’s (AAPL) iPad tablet, launched in April this year, is believed to be stealing sales and forcing e-reader makers to slash prices. Even those with a head start are feeling the heat, and with several new entrants flocking into the market, the competition is heating up.

E-Readers out of favor?

Why are e-readers, which promised to be innovative and transformative, suddenly looking out of favor in the crowded gadget marketplace? E-Readers’ limited functionalities and slower interfaces have made them comparatively costlier. In comparison, the iPad’s long battery life, its bigger screen and its connection to Apple’s iBook store have undoubtedly made it a dedicated e-reader. The slate-style device’s success in integrating the functionalities of other devices has pitted it firmly against the traditional e-Ink readers currently on the market.

IPad, unlike Amazon’s (AMZN) Kindle or the Sony Reader, has proved to be multifunctional. Reading updated news feeds, surfing the Web or watching and listening to streamed media – it has all come packed in a single device. A recent survey published by Resolve Market Research showed that 49% of the respondents were against buying an e-reader after purchasing an iPad.

Price cuts to attract buyers

It is no wonder then that Amazon, Sony (SNE) and a number of other players that have presence in the e-reader space have resorted to two rounds of price cuts since iPad’s launch—once in May and then in July, to fend off competition. In early July, Sony slashed the price of its Reader Daily Edition e-reader to $299 from $349. It also slashed the price of its Pocket Edition e-readers to $149 from $169. Amazon was quick to follow suit and slashed $60 off its second generation e-book reader, bringing it down to $299 and putting it in direct competition with Sony’s Daily Edition e-reader.

Going forward

The e-readers have displays that use various gray tones, and speculation has been rife that these companies are working on color display versions. However, if and when these firms come up with the color versions, they will have a second-generation iPad with more sophisticated functionalities to compete with. The situation is even murkier for companies such as Skiff and Plastic Logic Ltd. that have announced plans but are yet to launch these devices.

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