E-Reader Explosion, Changing Behavior (AMZN, BKS, AAPL, SNE, RIMM)

The number of adults using e-readers like the Kindle from Amazon.com (NASDAQ: AMZN) and the Nook from Barnes & Noble Inc. (NYSE: BKS) has nearly doubled in the past year, from 8% to 15%. That’s got to be good news for Amazon and B&N, well as Apple Inc. (NASDAQ: AAPL) and its iPad, Sony Corp. (NYSE: SNE) and its Reader, and Research in Motion Ltd. (NASDAQ: RIMM) and its Playbook.

Not only are more people buying the e-readers, but they are also reading more books. That’s the latest report released from research firm Harris Interactive.

How long will the spree last? That’s where the Harris research leaves something to the imagination. The survey found that just one in six of those who did not own a reader were likely to buy one in the next six months. That suggests that another doubling by this time next year is not likely.

The 15% of e-reader owners could well be the sharp point of the spear —  the early adopters — and the rest of the reading public will be much slower to pick up the readers and tablets.

Certainly one issue will be price. Full-featured tablets with internet connectivity still cost as much as (or more than) a laptop computer. Prices for an e-reader-only device are much lower, but still above $100 in all cases. That $100 level is an important price point in gaining widespread adoption. Remember that DVD players cost more than $1,000 when they were first released and didn’t generate a lot of mass adoption until prices fell to $100 or less. That took about three years.

Amazon’s rumored Wi-Fi tablet device is expected to cost about $250 and to be available by as early as next month. That’s half the cost of an entry-level iPad. And Amazon is taking a page out of Apple’s book and designing the tablet as the centerpiece of a whole ecosystem of related Amazon products like its cloud music service and its instant video player. B&N’s color version of the Nook with Wi-Fi hits the same price point. That’s still pretty high for

The second thing that could be slowing adoption down somewhat is the still relatively high cost of e-books. Best sellers go for around $10, a significant discount to the hardbound price of a physical book, but still more than a mass-market paperback. Unless a person just have to have the latest book from a particular author as soon as its available, it could be cheaper to wait.

That’s especially true in some of the more popular categories like mysteries, thrillers, and crime stories, from which nearly 50% of e-reader users bought titles last year. Popular books from popular writers often cost $12.99 or more from either Amazon or B&N. Of course there are plenty of e-books that cost less than $5 or are entirely free because they are out of copyright.

But e-books are still most attractive to those who can afford to make the initial investment for the reader and who can afford to buy the e-books themselves. Of course the e-book sellers have to charge what the books’ publishers essentially force them to charge, so unless publishers come up with a different way to make money, prices for new books, in e-versions or on paper, are not likely fall.

Paul Ausick