E-Readers Drop Below $100 â€"- But That Won't Save Them

Last Updated Jul 13, 2010 5:10 PM EDT

E-book readers have finally dropped below the $100 price. Books-A-Million sold a Sony (SNE) 505-LC for $99 ($89.10 for members). Almost at that level, Amazon.com (AMZN) had a "warehouse special" on a refurbished Kindle for $109.

Granted, both the sources apparently have run out of stuck, so it's not as though Amazon, Sony, Barnes & Noble (BKS), or Borders (BGP) has set a sub-C-note list price. Still, it's a critical step. However, it may be immaterial at this point. E-book readers have too much competition from devices that people either already own or plan to buy. Why spend extra money on another piece of electronic crap if you don't have to?

The need for low prices came into focus during a Forrester study from last fall. Look at the graph below and it's clear that $99 is the magic number, according to more than 4,700 consumers who answered the question, "At what price would you consider an electronic book device/eBook reader expensive but still purchase it?"

Forrester found that consumers value e-readers at "shockingly low" prices between $50 and $99. As of then, the analyst firm thought that there was a "substantial" market for e-readers, but only if prices plummeted.

But "then" was before the iPad. Apple's (AAPL) device has shown how strong tablet sales could be. A tablet can already act as an e-reader, and then provide a touch interface for annotation, to say nothing of more general communications and web surfing.

The price difference will have to swing to the low end of the scale to tempt people -- something a person could count almost as an impulse purchase. Copia International says that it will introduce an LCD, non-touch screen reader for $99 in the fall.

It's not clear to me whether any manufacturer has the cost structure to do this and break even, let alone profit. That would suggest that it will be the book sellers' devices that move forward, because the companies want to lock consumers in when it comes to actually buying the e-books. That said, how much of a loss will the retailers accept, especially when tablet and smartphone users are able to download e-reader apps?

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Image: Sony. Editing: Erik Sherman.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.