Saturday, September 5, 2009

Forrester Report: The eReader Price Squeeze

Most Consumers Won't Pay The Real Price Of eReader Devices

Executive Summary

eReader devices like Amazon.com's Kindle face a pricing conundrum: The cost of the display component is high and sales volumes are still modest, yet consumers demand and expect ever-lower prices. [snip] Forrester surveyed 4,706 US online consumers to better understand consumer expectations for eReader pricing and to gauge the impact of lower-cost devices like Sony's new $199 Pocket Reader.

Using a Van Westendorp Price Sensitivity Meter, we found that most consumers substantially undervalue the devices, but the more informed the consumer, the more their price sensitivity approaches reality. The bottom line: eReader product strategists will have to educate consumers and innovate to bring prices down.

[snip]

Source

[http://www.forrester.com/Research/Document/Excerpt/0,7211,53824,00.html]

Forrester Blog / September 02 2009 / Sarah Rotman Epps

A new Forrester report on the eReader market just went live ... . In brief: We surveyed 4,706 US consumers in an online survey to find out what value they place on eReader devices. We used a Van Westendorp Price Sensitivity Meter methodology to ask consumers four open-ended questions:
  • At what price would you consider an electronic book device/eBook reader a bargain?
  • At what price would you consider an electronic book device/eBook reader expensive but still purchase it?
  • What price would be so inexpensive that you would question the quality of an electronic book device/eBook reader?
  • What price would be so expensive that you would not consider buying an electronic book device/eBook reader?

[snip]

What we found was that the price points for how most consumers value eReaders is shockingly low--for most segments, between $50 and $99. (Currently, eReaders in the US are priced between $199 for the Sony Pocket Reader and $489 for the Kindle DX.)

Here you can see the breakdown for how different segments of consumers answered the question, "At what price would you consider an electronic book device/eBook reader expensive but still purchase it?":

Of the 181 million US consumers who are online, 14%, or 25 million consumers, say that eReaders priced at $199 or higher — the current price range for eReaders — are expensive but they'd still consider them for purchase at that price point.

What this means: The maximum addressable market for eReaders as they are currently priced is substantial--but to reach the largest market possible, the prices will need to come way down. And even then, eReader are never going to be as big a market as mp3 players, which 110 million US consumers own. But they will still have phenomenal social and economic impact as they catalyze a new behavior of digital reading across multiple devices.

We're just at the beginning of this revolution ... .

Source

[http://blogs.forrester.com/consumer_product_strategy/2009/09/new-forrester-report-the-ereader-price-squeeze.html]

News Coverage

E-Book Readers Need To Get A Lot Cheaper

[http://www.informationweek.com/news/hardware/handheld/showArticle.jhtml?articleID=219501468 ]

Full Report Available

Price For Non-Subscribers = US $499

[http://www.forrester.com/Research/Document/Excerpt/0,7211,53824,00.html]

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