Bloomberg News

Sony Preparing New E-Book Reader to Challenge Amazon

July 14, 2011

(Updates with closing ADR price in fifth paragraph.)

July 14 (Bloomberg) -- Sony Corp., Japan’s largest exporter of consumer electronics, plans to introduce a line of upgraded digital book readers in the U.S. as early as next month to challenge Kindle maker Amazon.com Inc.

The current Sony Reader, now priced from $180 to $300, will probably be offered with hardware and software improvements in August, Phil Lubell, vice president of digital reading at Sony Electronics, said yesterday in an interview in San Francisco.

The new products will be introduced to U.S. consumers before Sony’s first tablet-computer models, which are scheduled to go on sale later this year. The Tokyo-based company, whose readers trail behind the Kindle and Barnes & Noble Inc.’s Nook, plans to continue its push to sell dedicated digital readers because they are cheaper than tablets, Lubell said.

“Sony appears to be struggling to expand its e-reader business as fast as it had originally planned,” said Nobuo Kurahashi, an analyst at Mizuho Financial Group Inc. in Tokyo. The digital-book operation may be pressured further with the introduction of tablets later this year, he said. “There are some overlaps between tablets and e-readers.”

Sony’s American depositary receipts fell 33 cents to $26.73 at 4:15 p.m. in New York Stock Exchange composite trading. They have dropped 25 percent this year, compared with a 4.1 percent gain for the Standard & Poor’s 500 Index.

The number of Americans who own an electronic reader such as Kindle doubled in the six months to May as college graduates and adults in the highest income category choose the devices over tablet computers, according to a survey by the Pew Research Center.

Less Expensive

Twelve percent of those surveyed owned an e-reader in May, up from 6 percent in November 2010, while 8 percent owned tablets in May, up from 5 percent six months earlier.

The reason for the faster adoption of e-readers may be that they are often less expensive than tablets, with the Kindle starting at $114, compared with the iPad 2’s $499.

“We think there will still be a market for dedicated readers as long as tablets remain in the $500 price range,” Lubell said.

Apple Inc.’s cheapest iPad is 67 percent more expensive than Sony’s high-end reader.

Sony also plans to incorporate its online book store and e-book technology into its two tablet-computer models, code- named S1 and S2, later this year as part of a group of Sony multimedia applications, Lubell said.

Tablet Latecomer

As a latecomer to the tablet market, Sony is betting on Google Inc.’s Android operating system to help it compete in the fastest-growing segment of the computer industry. The company plans to differentiate its products from rival Android-equipped devices made by Samsung Electronics Co., HTC Corp. and Motorola Mobility Holdings Inc. by adding the ability to download PlayStation Suite games, movies and music from its subscription services, Phil Molyneux, president of Sony Electronics, told reporters yesterday in San Francisco.

Sony may price its two tablets -- one clamshell-style with dual 5.5-inch screens and the other with a 9.4-inch touchscreen -- higher than some rival products, he said, without elaborating.

Sony, which expects the global tablet-computer market to reach annual sales of 50 million to 60 million units this year and 70 million to 80 million in 2012, is also considering developing a model with three-dimensional display, the company said in April.

--With assistance from Mariko Yasu in Tokyo. Editors: Young- Sam Cho, Terje Langeland

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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