Kindle and Nook eReader Market - iPad eBook Retail Marketing Share Sales Segments Forecast

In the past week we have seen the e-Book market heat up. The consumer looks to benefit with Kindle and Nook Prices Cut in an iPad e-Book Market war. The Kindle and Nook price cut is in response to the iPad e-book market share increase. Whilst the iPad is more than an e Reader with all it’s other features it is taking away market share from the higher end. Apple announced iPad has sold an amazing 3 million since it’s release. Barnes & Noble launched its Nook Wi-Fi and reduced the price of its Nook 3G version. In response Amazon reduced the price of its Kindle electronic readers.

The success of iPad in the space is measured by the success of Apple’s iBookstore. The e-book market is the fastest-growing segment of the bookselling industry. This makes it a very competitive segment for retailers. There are other e-readers to compete with the iPad, the Nook and Kindle. There is Sony Corp's Reader device and a new device from Kobo Inc. Borders Group Inc is launching an e-bookstore compatible with most e-readers. The Kindle and Nook Prices Cut may be just the first salvo in the iPad e-Book market war.

Like CD music sales physical bookstore sales have also been in decline. This adds further to the rush to gain e-book sales. The two major U.S. specialty booksellers have taken different approaches. Barnes & Noble is pushing its Nook Wi-Fi and Nook 3G to tap into huge market as the number bookseller. Borders Group is the number two bookseller and has chosen not to go the e-reader route. Instead it will launch it’s own e-book store that will be compatible with most e-book reading devices. 

Most likely Borders has baulked at the tight profit margins on e-readers. In this competitive environment Barnes & Noble's Nook and Amazon's Kindle are not expected to be making but small margins of profits.  The devices are viewed as vehicles to attract e-book buyers.  It will be interesting how Borders, Kobo and Sony market their products.

Barnes & Noble has seen sales declines at its physical bookstores for several quarters now. During 4Q 2009, which includes Christmas, comparable sales at Barnes & Noble's physical stores declined 5.5 percent. 

Current Prices

• Barnes & Noble has introduced a new Wi-Fi only version of the Nook for $149. B &N also lowered the price on the 3G compatible Nook' to $199 from $259 when Nook was introduced in October
• Amazon responded quickly after the Nook announcement by announcing a price cut for Kindle by $70 to $189, to $10 less than the Nook. Kindle was introduced to the market in November 2007 and initially sold for $399.
• Apple's cheapest iPad, the WiFi-capability model with 16 gigabytes of memory sells for US$499 back in America. This compares to 48,800 yen (US $535) in Japan.

E-Book Sales Forecast

Goldman Sachs forecast in April that sales of e-books in the U.S. would rise by 47 percent each year sequentially until 2015. They forecast $3.2 billion in e-Book sales by 2015.

This would imply e-books taking 12.8 percent of all book sales, Currently e-books account for 3 percent of the total book pie. In that same period to 2015 Goldman expects physical book sales to fall 1 percent each year.

Forecast Market Shares of iPad, Kindle and Nook

• Goldman forecasts Apple's e-book market share to explode to a third of all e-books sold in 2015. Currently they have 10 percent of the market.
• Amazon's has half the market share presently. Goldman expects Amazon sales to fall to 28 percent by 2015.
• Currently Barnes & Noble has just 5 percent market share. Goldman expects this to grow to 15 percent of e-book sales by 2010.

One big attraction for the dedicated e-readers like Nook and Kindle is the energy efficiency angle. They use less power and because of their smaller size relative to the iPad are easier to carry around. The Kindle and Nook price cut in response to the iPad e-book market share increase sets the tone. Consumers are the winners here and there is much buzz about Kobo release at year’s end. We also have Borders e-Book store launch to consider. Be sure to fill out the e-Reader preference poll below.