This BusinessWeek article about Sony's ebook reader and the market in general pretty much sums up what everyone has assumed up to now: Sony's device isn't exactly flying off the shelves. What really got my attention though is the tidbit about a Borders store in midtown Manhattan only selling about five units a month. In midtown Manhattan?! I'm guessing that means all the stores in the entire state of Indiana are probably selling anywhere from zero to two units in a good month.
I'm still not sure what I found more troubling: (a) the fact that such a popular store would have such a low sales rate or (b) that the store manager was "very happy" with those results.
It's hard to say what's more to blame for the dismal performance of this device. You could start with the ridiculously high price. I tend to believe Sony managed to price themselves out of the early adopter market. It's one thing to charge an arm and a leg for an iPhone, especially with Apple's insanely loyal fan base, but Sony is no Apple. Not by a long shot. And let's face it. An ebook reader isn't anywhere near as sexy as an MP3 player, regardless of who produces it. Even if they would have launched with a lower price, the closed system, something Sony is so famous for, has also undoubtedly hurt sales.
Maybe Amazon will get the formula right and prove to the world that ebooks can be a high-volume market. Longer term, regardless of device price point, closed/open model or overall form factor, there's one critical element that will make or break this segment: the price of the ebook itself.
Generally speaking, there are two schools of thought on this subject. You either feel the ebook must be priced at a similar level as the print book or that it needs to be significantly less than the print book. The first group talks about "the value of the intellectual property" and how the latter group is too enamored with fire-sale pricing.
The BusinessWeek article gets it right by suggesting that some significant percentage of book lovers "are just not ready to curl up with a hard plastic screen." Nobody brings visitors into a special room to show off their CD collection but just about every serious book fan proudly showcases their library. The pass-along factor is huge as well; I've handed off at least 3 or 4 books I recently read to friends and family who I thought would enjoy reading them as well. Good luck doing that in the DRM world of ebooks!
Even if a killer device existed today there are far too many cons working against the ebook platform for it to succeed at print book pricing levels. In fact, if something doesn't change soon, the entire concept of a meaningful ebook sector (as opposed to the rounding error it is in the publishing world today) will be laughed at the same way we all chuckle when we think about the "paperless office."
Does that mean that publishers and authors will have to accept life with significantly lower income levels? Not necessarily. The initial transaction price might just be one component. Advertising, subscriptions and any other reasonable model will have to be considered. Yes, I know most (all?) of these suggestions run counter to the traditional model of book publishing but the future does indeed belong to those who aren't afraid to tinker with the playing field. If that sounds like the essence of The Innovator's Dilemma it's only because that book is so appropriate for this topic.