How Sony e-reader lost to Kindle
and how it’s battling its way back
Exceptional marketing needed to avoid becoming the Zune to Apple’s iPod
By BETH SNYDER BULIK
bbulik@adage.com
AMAZON KINDLE VS. SONY READER
Here’s the book on the dueling e-readers
AMAZON KINDLE
PRICE: $299
SONY READER
PRICE: $199
(READER POCKET)
ESTIMATED
SALES:
$1.2
BILLION BY 2010
400,000
UNITS THROUGH JANUARY 2009
MEASURED $170,000
MEDIA: IN THE FIRST QUARTER
OF 2009
$449,500
IN THE FIRST QUARTER
OF 2009
Sources: TNS Media Intelligence, Sony, Forrester Research, Citi
MARY STEWART IS A digital-book
convert. Her 9-month-old Kindle
quickly and permanently replaced
the paperbacks the York, Pa., dentist
used to tote everywhere. When
asked why she chose the Amazon
Kindle over a Sony Reader, she said,
“I’m on Amazon on a regular basis,
and every time you go on, something pops up about Kindle. … I saw
a Sony Reader at B.J.’s and looked at
it a little, but I don’t even know how
you download books on it. Do they
have an online store like Amazon?”
Her reaction isn’t uncommon.
Sony introduced its Reader more
than a year before Amazon launched
the Kindle, backed it with marketing
and received better hardware
reviews than the competition, but
it’s the Kindle that has managed to
grab far more mind share—and very
likely market share. Neither company is forthcoming with its sales figures. Amazon won’t release Kindle
sales, though Citi analyst Mark
Mahaney estimated they could
reach $1.2 billion by 2010. In
January, Sony said it had sold
400,000 Readers to date, but it has
not updated that figure since.
Sales aside, one thing’s clear:
Kindle’s winning when it comes to
awareness. “Amazon has the mind
share for Kindle, much like Apple
had the mind share for iPod long
before it had any significant sales or
market share numbers. … [It will
take] excellent marketing and a significant budget to overcome that,”
said Rob Enderle of Enderle Group.
Despite spending more than double what Kindle laid out in measured
media (see chart), Sony lost momentum by not sustaining its marketing
and pressing its product superiority
or first-mover advantage, experts
said. Sony was “the pioneers … and
then Amazon came along and said,
‘A-ha, we understand readers—
people, that is—better, and we can create
something better for them,’” said
Peter Glaskowsky, analyst for the
Envisioneering Group.
“Sony never offered a compelling
reason to buy, there weren’t enough
titles, and their store was not that
easy to use,” said Alan Siegel, chairman-CEO of Siegel & Gale. “Kindle
jumped them with a wireless product with a larger array of titles available, backed with strong advertising
and good PR.”
But Sony isn’t ready to let
Amazon drown out its Reader story.
The electronics giant plans a fall
marketing campaign, has dropped
prices and opened up standards in an
aggressive bid to grow market share.
The fall push, part of a bigger Sony
Electronics umbrella effort running
through the holiday season from
180 LA, will include an aggressive
retail presence, with stand-alone displays and interactive kiosks in stores
from Best Buy and Borders to
Walmart and Target, an in-person
experience Amazon’s Kindle can’t
reproduce.
The price cut, moreover, to $199
for the Reader Pocket due out at the
end of this month, makes it the low-est-priced device yet in the e-reader
category. And open standards make
it appealing for those afraid of locking into a proprietary system. Sony
has a deal to offer Google’s 500,000
digitized book collection to Reader
users free, and recently announced a
commitment to convert the Sony
eBook Store to the ePub format, an
open standard backed by the
International Digital Publishing
Forum, by year’s end.
Michiko Araki, director-market-ing for the Sony Reader, said the
strategy this year will focus on
expanding to a more mass audience,
aided by the price cut, and using TV
and online advertising to drive customers to retail, where they can get
hands-on with the device.
When Sony announced the
Reader with a big splash at CES
2006, where it was extolled onstage
by “The Da Vinci Code” author Dan
Brown, the company did not follow
up with a marketing campaign in the
U.S. In fact, the first push for the
Reader came only last year, in
October—around the same time
Oprah Winfrey obliterated Sony’s
message by naming the Kindle one
of her favorite things.
Sony’s first effort, called
“Reading Revolution,” was meant to
be experiential, with the emphasis
on trials, not advertising, Ms. Araki
said. More than 1,000 “Reading
Revolutionaries” were dispatched to
3,000 locations, including malls, airports and train stations, to demo the
device and offer hands-on trials to
people. Ms. Araki said the three-
month campaign reached more than
2 million people and resulted in both
awareness and purchase-intent
increases.
In one way, the Kindle’s rapid
rise has actually benefited Sony.
“The president of our division has
said many times that Kindle has
been great for expanding awareness
for digital reading,” a Sony spokeswoman said. “Now everybody
knows about it, so we don’t have to
market that.”
While analysts agree Sony will
have to work hard to win share
either against or along with the
Kindle, the task isn’t impossible.
“Sony’s success will depend on how
well they went to school on Kindle,”
said Kevin Joy, VP at BrandProtect.
There is room to grow in the
e-reader market. By the end of 2008,
only 1 million e-readers had been
sold, with another 3 million estimated to be in users’ hands by the end of
this year, according to Forrester
Research. That’s only 3% of the
adult book-reading population and
$197 million in U.S. sales. But the
category is expected to grow rapidly,
to 32 million devices, or about $1.8
billion in sales, reaching about one-third of that total by 2014.
“Sometimes it doesn’t hurt to let
another company introduce a new
product category to the marketplace,” said Joe Calloway, brand consultant. “Now that people are aware
of electronic readers, it can become
anybody’s game.… With penetration so low, I think they’ve got the
time and space to work to establish a
decent share of market.”
But Sony isn’t the only one looking for a piece of that pie. Samsung
has announced an e-reader, and
Plastic Logic and partner Barnes &
Noble plan to roll out their own
e-bookstore-connected product.
Analysts also said Apple could be a
significant market disrupter with its
rumored large, touch-screen “iPad”
said to be coming soon.
