The Kindle Killers Are Coming

Competition is heating up in the market for handheld electronic book readers. Amazon.com (Nasdaq: AMZN  ) and Sony (NYSE: SNE  ) had better get nervous -- and get busy.

The latest entry will be the iRex DR800SG, a promising model that raises the bar on specs (with a trendy touchscreen that is sorely lacking on Amazon's Kindle, but will be available in the next generation of Sony's Reader) and price points (at $399, it will be slightly more expensive than the entry-level Kindle).

The iRex brand isn't a household name outside of Europe, but iRex is riding in on the shoulders of giants. It will be sold through Best Buy (NYSE: BBY  ) and Barnes & Noble (NYSE: BKS  ) . Its 3G wireless connection to receive digital books and newspapers is being powered by Verizon Wireless.

The iRex isn't the only potential Kindle killer in the offing, either. The hyped-up Plastic Logic reader should hit the market next year. It's also just a matter of time before Apple (Nasdaq: AAPL  ) coughs up a tablet that may make today's e-book readers obsolete.

The industry is still in its infancy, with roughly a million readers sold last year. That's changing quickly. Market trackers iSuppli and In-Stat see 18 million readers selling in 2012, and 30 million in 2013.

Austen, we have a problem
Those sales targets are ambitious. To reach that mass audience, e-readers' prices need to head lower, and potential buyers need to see a clear leader. Neither will likely happen anytime soon.

As cool as the readers are, a consumer needs to read a considerable number of hardcovers to justify the $300-$400 investment. Digital newspaper subscriptions are helping shorten the break-even point, but the high price still makes Kindles and their kin a hard sell for anyone other than bookworms and early gadgetry adopters.

Wireless carriers won't subsidize these devices, the way they do smartphones. The battle lines have been drawn. Kindle has Sprint (NYSE: S  ) , Sony has AT&T (NYSE: T  ) , and iRex has Verizon, but network connectivity is a freebie. The carriers aren't collecting chunky wireless bills, the way they do with cellphone owners. Premium data plans may arrive once the devices can do more, but that's only going to make electronic readers harder to justify as a consumer indulgence.

Potential buyers will also want to make sure that they're not buying the next Betamax or HD-DVD. Kindle may wear the crown today, but the flooding marketplace is going to confuse audiences.

Readers may love to be surprised by literature, but before they invest hundreds in an e-book platform, they'll probably want to know who's going to be left alive at the end of this story.

What will it take for e-book readers to go mainstream? Post your thoughts in the comment box below.

Apple, Amazon.com, and Best Buy are Motley Fool Stock Advisor recommendations. The Fool owns shares of Best Buy. Sprint and Best Buy are Motley Fool Inside Value picks. Try any of our Foolish newsletter services free for 30 days.   

Longtime Fool contributor Rick Munarriz has been a Kindle owner since last year. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 23, 2009, at 2:47 PM, networkgarden wrote:

    This stuff is interesting, but my thesis is that whereas Kindle and iRex seem to be predicated on the construct of the book as less than the current experience (i.e., mostly text), the industry is headed for a full-blown re-boot that takes advantage of interactivity, touch/tilt, social engagement, movies, pictures, animation and sound, a topic that I expound upon in:

    Rebooting the Book (One Apple iPad Tablet at a Time)

    http://bit.ly/zOoEu

    Check it out, if interested.

    Mark

  • Report this Comment On September 23, 2009, at 4:22 PM, Riden05 wrote:

    Stop it...just stop. The overreacting needs to stop. The same thing happened in the digital music market and Apple still dominates. Amazon will continue to consume the market share regardless of what the incumbents such as iRex are bringing to the table. Books are synonymous with Amazon and they have spent the last decade developing respect in the industry. Where Sony will definitely give Amazon a run for their money, all the copycats entering the eReader world will not pose a significant threat. The overreaction is ridiculous and I really hope the dip today isn’t a direct reflection of the iRex news…

  • Report this Comment On September 23, 2009, at 8:29 PM, beadgrrl wrote:

    I didn't buy a Kindle to save money on books. I bought a Kindle to save space.

    I believe that saving money on books is not likely to motivate many potential e-reader buyers as much as the potential to have a whole library that weighs less than a pound.

    I don't know what that might mean for the industry, except that perhaps the e-reader audience is larger than hardcode bookworms and early adopters.

  • Report this Comment On September 24, 2009, at 8:36 AM, squidblob wrote:

    I buy too many books as it is to buy hardcovers. I usually have a backlog of books that I need to catch up on, and I almost always wait for the paperback to come out at $7 or $8 a pop. So buying a Kindle so I can buy books for $10 doesn't do me much good.

  • Report this Comment On September 24, 2009, at 9:07 AM, razormd wrote:

    ...Kindle killers??...hardly...no one seems to get it...Amazon planned their strategy well and have achieved such dominance in the field that they are practically unassailable...my Kindle does everything I want it to do...Amazon makes shopping for books EASY and QUICK plus Kindle books typically sell at a LARGE DISCOUNT...and, at least for me, Amazon offers great service...the last time I had to deal with Sony, they told me my problem was "an act of God" and not covered by warranty!...Amazon has pretty much covered all the bases...any aspiring "David" better have God on his side before trying to take down that "Goliath"...

  • Report this Comment On September 24, 2009, at 9:08 AM, sbrian2003 wrote:

    squidblob,

    Amazon has a major backlog (your words) of books that are $7 or $8 a pop, or less. Plus the added advantage of saving space.

    Just sayin...

  • Report this Comment On September 24, 2009, at 12:47 PM, kwill10 wrote:

    I guess I don't see how an Apple tablet would "make today's e-book readers obsolete". If one wants to read books on a computer, why not get a netbook that is $300 or less instead of waiting on an Apple tablet that would likely be >$1000? Or, just read the book on an iPhone for that matter, since the technology already exists. The e-book readers aren't supposed to be full-fledged computers. They use electronic ink that is easier on the eyes than a computer screen, they are lighter, and one doesn't have to wait for a full OS boot up just to read a book.

  • Report this Comment On September 28, 2009, at 2:25 PM, snafflekid wrote:

    "Austen, we have a problem"

    haha! kudos

  • Report this Comment On September 29, 2009, at 11:26 AM, kquaker wrote:

    I think that this will be a really good e-reader, But for now I like my kindle 2 which i got from here: http://www.computersncs.com/rd_p?p=191614&t=9544&a=2...

  • Report this Comment On October 06, 2009, at 6:30 PM, SonyFlack wrote:

    Sony Readers already have touch screens. Last year's PRS-700, the current Reader Touch Edition and the future Reader Daily Edition with 3G wireless all have a touch screen interface.

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