As a general rule, in the world of consumer electronics, increased competition is good news for customers. It tends to have the dual benefit of giving end users more choice whilst driving prices lower. You can see this pattern repeated in any number of markets – there are very few exceptions.
There is no obvious reason why the e-book reader and e-book market should be any different. This has been heavily dominated by the Amazon Kindle reader and Kindle books. Since the launch of the Kindle 2.0 in February of 2009, the Kindle has been the clear market leader and Amazon have done a lot to develop the market, for both e-book readers and e-books.
Other manufacturers, such as Barnes and Noble, Sony and Plastic Logic, either developed or updated their own e-book readers so as to compete with the Kindle and to secure their share of the developing e-book reader market. There may have been no sign of a Kindle killer, and Amazon certainly held on to the top spot, but the increased competition that for e-book reader prices down. Which is exactly what you would expect – normal market behaviour and good news for customers.
So it seems a li
ttle odd that now the Kindle faces some genuinely tough competition – in the shape of the new Apple iPad – prices look set to rise. Amazon has had a policy of pricing Kindle books at $ 9.99 or lower, something which has created friction between Amazon and the big publishing houses who, understandably to some extent, wish to protect profits from their lucrative hardback publications. However, in parallel with the launch of the iPad, Apple will be unveiling their own e-book store – and they have struck agreements with many of the major publishers which allows them to set the prices of their e-books at whatever level they like – just as long as they don’t allow any other retailer access to that same content at a lower price. The result of this is that Amazon have had to back down and let publishers charge more for newly released books.
Apart from protecting the interests and profits of the big publishing houses, it’s hard to see any logic in this. Even disregarding the fact that increased competition should naturally lead to lower prices, why should customers be expected to pay over the odds for a digital product which costs a fraction of the physical product’s cost and has virtually no delivery fees?
You might be forgiven for thinking that Apple has partnered with the major publishing houses to keep prices and profits high. It may be a tactic that will work in the short term, but it seems unlikely that consumers will tolerate artificially inflated prices for long.