Anyone buying a first generation gadget knows they'll see the price drop in the not-too-distant future. It happens with everything and it's the price of being an early adopter. But how early is too early when it comes to vendors reducing prices? Apple is obviously dealing with this issue right now and it's fascinating to watch the story develop. Isn't it interesting how iPhone early adopters are up in arms over a $200 drop, but when Apple offers to make up half of that, the anger goes down dramatically? (And it's being done via a store credit, not a cash refund.) Does that mean it's OK to hose customers out of $100 but not $200? Apple seems to be testing and measuring the various pressure points.
More importantly, what should ebook device vendors learn from this? First of all, Apple always seems to deliver products with feature sets that totally blow away the competition. It's what could be called a "revolution, not evolution" approach. Even those of us who aren't Apple fans marvel when Steve Jobs announces the next big thing; it's guaranteed to be full of surprises and why-hasn't-this-feature-always-existed(?!) moments.
When have you felt this way about an ebook device? Did anyone sense a revolution when Sony released their Reader? I didn't, and based on the rumors that have been leaked about Amazon's upcoming device, I'm not seeing a revolution on that front either. (For the record, I'm going solely by what's in that article...I have no info or access to any unreleased ebook devices from anyone.)
What should an ebook vendor do to change the playing field? First of all, can we please get beyond a monochrome display?! I'm pretty sure nobody buys monochrome laptops anymore, so can we please move on to full color ebook devices?
Will a full color display drive up the unit price? Absolutely, and although I've been outspoken in the past about needing to reduce these prices to give them mass market appeal, I'm rethinking that opinion based on the iPhone experience. Add full color and totally over-deliver on the feature set. Give customers so much functionality that they're willing to wait in line for it. And as I said earlier about the iPhone, I think Apple should have gone with an even higher price initially; yes, I tend to believe they should have waited longer than 2 months to reduce the price, but Apple loyalists would have paid another $100 or more at launch.
Go ahead and make your ebook device so darned feature rich that it's irresistible. Create something that early adopters will jump all over, even if it is pricey at the start. Then, figure out scaling and component vendor options that allow you to reduce the price down the road. Even if you need to lose money on every unit sold, use the razor blade and game console model: figure that you'll make your money by selling access to more content. Notice I said "content", not just books; make sure this device has all the connectivity features to let customers download the latest newspapers, magazines, etc., at home or in the airport.
Be bold. Come up with something I want to spend $700 or $800 on.