This time last year, the new market for e-book readers was really taking off – gold rush style. Following the stunning success which Amazon had achieved with its Kindle reader – firstly with the Kindle 2.0 in February of 2009 and then with the large format DX edition in the summer of the same year – a veritable host of personal electronics manufacturers were either developing, releasing or updating their own e-book readers so as to get their share of the nascent market.

Sony and Barnes and Noble were working feverishly to get their new readers to market in advance of the 2009 festive season and Plastic Logic, Asus and a number of others were rushing to get their readers released as quickly as they could manage. The Computer Electronics Show (CES), held in Las Vegas in early 2010, had a dedicated e-book reader section for the first time ever. E-book readers were a hot developing market.

Right now however, no more than a few months later, it’s an entirely different scenario. The price of e-book reader hardware has been in free fall. Amazon have now introduced an entry level, Wi-Fi only, Kindle priced at $ 139 – not much more than a third of the $ 359 price which the Kindle 2.0 launched. Barnes and Noble have also dropped the price of the Nook reader to S 149 – and this will probably be cut again before the festive season.

A number of e-book readers which were in development – including the Que from Plastic Logic – have been abandoned. The market seems to be entering a new stage in its development – and whether there is any place in it for pure electronics manufacturers or not is highly debatable. Amazon’s business model is very well suited to selling lower priced reader hardware and making a profit on the through life sales of Kindle books. A similar strategy would be available to Barnes and Noble of course, but it’s debatable as to whether or not they can benefit from the same types of economies of scale as Amazon.

Of course, it would be lunacy to suggest that the launch of the Apple iPad had not played a major part in this. It’s certain that the price of e-book readers would have trended downwards anyway – but the iPad’s launch certainly speeded things up a bit. However, based on the fact that the third generation Kindles sold out shortly after launch – even today customers are facing a three to four week wait before their Kindles will ship – it doesn’t look as if the iPad is the long awaited Kindle Killer that it was widely predicted to be.

Even disregarding the debate about e-ink displays being better for reading on than backlit screens, there is – currently at any rate – more than enough daylight between the Kindle price and the price of even the entry model of iPad to make the Kindle a very attractive option for prospective customers whose chief interest is reading books. The monthly connection fees for the iPad will also not be to everyone’s taste.

It does appear that there is ample room in the market for both the Amazon Kindle and the iPad to co-exist – for the short term future at least. Other manufacturers of e-book readers, including big players such as Barnes and Noble and Sony, may well find things tough as hardware prices keep dropping.

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Computer Hardware & Accessories, GPS Devices, Mobile & Cell Phones