Competition of the E-book Readers

In the last couple of months, its been clear that Apple has made a success of the  iPad and has exerted pressure on Amazon's Kindle and other e-book reading devices. My original thinking was that given the diverse range of capabilities built into the iPad, it would not be a direct competitor for conventional e-book readers. Added to that is the fact that the iPad was more expensive. In my view, I was partly right in my reasoning because the effect of the iPad has been markedly different from was predicted.

It is clearer now that the iPad has indeed altered the market for e-book readers first by intensifying competition between the readers such as the Kindle and the Nook reading devices. in addition, the arrangement with publishers has placed Amazon under pressure in terms of pricing of electronic versions of the books. As the story by Brad stone confirms, the major sellers of conventional readers Amazon and Barnes and Noble are engaged in competition and have reduced prices by large margins. What this implies is that the cost of the products has not only come down much sooner than was anticipated, but also that the e-reader market is getting consolidated around a recognized number of gadgets.

To my mind, this is all for the good and is a lesson to students of price theory generally and competition in particular on how markets work. What remains unresolved is the degree to which the iPad will then compete more directly with these devices. All in all,  the economics of the market for e-book readers is being driven by competition between firms making independent decisions.