So I was sitting last night, pondering the Kindle announcement, when I realized that the e-reader price war was over and the company who started the war shot themselves in the foot.
You see, unlike most people I don’t date the beginning of the e-reader price war to when B&N announced the Nook Wifi. No, I think Kobo started the war when they announced their e-reader back in March. They priced it over $100 less than the other leading e-readers; basically they were selling it at cost. Now that they aren’t selling as many as they expected, they are liekly losing money on each sale.
The problem with pricing the e-reader that low is that it forced everyone else to respond. I don’t think B&N would have set the Nook Wifi at $149 if the Kobo had cost more. I think B&N would have been happy to price it higher and make more per unit.
Here’s my point: Kobo aren’t an unfortunate victim of the price war; they are their own worst enemy.
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I can’t really agree that Kobo “started the price war”.
Kobo entered the market with a different value equation for the consumer: simple matters to some customers. They stripped out the dictionary, communications, note taking, recharger … and left in DRM epub and a very simple reader. No bells, no whistles and a dead simple learning curve. The $149 price point was supported by this : buy less, pay less.
B&N Nook started the price war dropping the entry level while leaving many features in place. Yes, the dropped 3G and added WiFi only for their $159 device but it was the $60 drop, falling below $200 for their premium model which forced Amazon’s hands.
Actually, no.
The Kobo e-reader is the stock Netronix model (with Bluetooth added). They didn’t strip out anything. What Kobo are selling fro $149 is the same as what Cool-ER were selling for (I think) $249. Also, Bookeen and Pocketbook are still using the same hardware and both charge more.
the only thing that set Kobo apart was the price.