Sony fires latest salvo in e-reader war

August 4, 2009: 7:37 PM ET
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Sony Reader

In what is fast shaping up to be a war in the e-reader marketplace, Sony (SNE) has launched the latest salvo, a sub-$300 touch-screen "Reader Touch Edition" and the $199 "Reader Pocket Edition," which features a 5-inch display. The company is also lowering prices of ebooks. New releases and best-sellers will all be $9.99, matching Amazon's (AMZN) price point for the first time.

In addition to lowering prices, adding a touch-screen and trimming form factor, Sony is also attempting to differentiate itself by opening the ebook market place. It offers free access to the 1 million public-domain books digitized through the Google Books Project, and ebooks purchased at Sony's store, which use the standard EPUB format, can be shared on any combination of six PCs and e-reader devices. Owners of the Sony devices can download ebooks in the library for 21 days.

It's ironic that Sony would play open-standards champion, given its rich history of proprietary technologies (Betamax, Memory Stick, etc.), but Steve Haber, president of Sony's Digital Reading Division, says the company is committed to openness as a way to hasten the move from paper to digital.

"A year and a half ago, when we mentioned ebooks, people would say, 'That's not going to happen.' But it's a very hot category right now and it can grow tremendously," he says. "Our plan is for a ubiquitous content for consumers. It's not about one store/one device. It's many stores and many devices."

Sony's e-readers, Amazon's Kindle, and the forthcoming Plastic Logic device (which will partner with Barnes & Noble and be available sometime next year), all use E Ink technology. Unlike Kindle, the Sony devices, available later this month, will sell at many retail outlets, including Best Buy, Costco, Target, and Wal-Mart. Also unlike Kindle, the Sony devices aren't wireless. Downloading content requires consumers to connect the readers to PCs.

But Haber says the company has been working on a wireless device and plans to announce availability soon. The Christmas selling season would seem a safe bet. "We will be sharing more things later this month and more later in this year," he says. "We're breaking a brand new price zone with a pocket-size reader. It's a really wonderful experience. It will introduce ebooks and epaper to a whole new audience. But this is the beginning. This is not the whole story."

As of last January, Sony had sold more than 400,000 e-reader devices, at which point it stopped disclosing sales. Haber intimates that the company adopted the policy in reaction to Amazon's reticence. "We were giving out numbers and realized we were the only ones," he says. "but we've sold a significant amount since January, and the momentum is only getting faster and faster."

One Forrester analyst estimates that as many as 3 million e-reader devices will have sold by the end of this year.

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Jeffery O'Brien
Jeffery O'Brien

Jeffrey O'Brien joined the San Francisco bureau of FORTUNE in June 2006 as a senior editor covering the intersection of science, technology, culture, and business. From 1999-2006, he was a senior editor at Wired magazine. As a writer, his work has been anthologized in The Best of Technology Writing 2007 and in The Best Science and Nature Writing 2005. As an editor, his features have been featured in The Best American Science Writing 2006, The Best American Science and Nature Writing 2006, and The Best Technology Writing 2006. He is also the recipient of a Jesse H. Neal Award for editing best single issue, which he earned in 1998 as the editor of Marketing Computers (Adweek). O'Brien is a graduate of the SI Newhouse School of Public Communications at Syracuse University and was a 2006 Templeton fellow in science & religion at the University of Cambridge (UK).

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