Sony Turns the Page with Its New Reader

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"The fact that these two devices don't have wireless suggests that Sony isn't trying to beat Amazon at its own game, but is trying to redefine the terms of engagement," says Forrester Research analyst Sarah Rotman Epps.

Shortly after the August Reader launch, Sony plans a heavy marketing campaign that will include in-store demonstrations, videos, and online ads to showcase the features of each product. The Pocket Edition device offer a 5-in. screen and comes in red, blue, and silver. The 6-in. Touch Edition lets users tap a word to pull up a dictionary with its meaning, and use their fingers to scribble notes. It will come in red, black, and silver.

E-Readers Are Poised for Growth

Sony says Americans will purchase 2 million electronic readers this year alone, vs. 1.5 million sold since the format was introduced. Its new Pocket Edition is expected to appeal in particular to first-time buyers and women because of its small form and ease of use. Unlike earlier iterations of the Sony Reader, the new devices, and the company's updated online bookstore, will be compatible with Apple's (AAPL) Macintosh computers.

For all the hype, digital sales accounted for only $113 million, or about 2%, of $32.4 billion in U.S. book sales last year. But consumer awareness is rising sharply around the world, forcing authors and traditional bookstores to rethink their distribution models.

Sony will need all the extra heft it can get to catch up with Amazon. Analysts say in the two months after the Kindle 2's February introduction, the retailer sold more than 300,000 units. Amazon recently cut the price of the device, which sports a 6-in. screen, to $299 from $359, and introduced a larger-screen version called the Kindle DX.

The e-book reader market is expected to get even more heated in coming months. Samsung recently unveiled its own electronic reader in South Korea and has said it will expand to other markets soon. Meanwhile, book retailing giant Barnes & Noble (BKS) is partnering with hardware maker Plastic Logic to deliver a device early next year.

Edwards is a correspondent in BusinessWeek's Silicon Valley bureau.

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