Since e-book readers will not receive any significant updates, pricing will still be the major attraction to stimulate sales growth. With Amazon further reducing its e-book reader prices to complete, its major competitors Barnes & Noble and Kobo are already unable to follow suit, according to Digitimes Research senior analyst James Wang.

Therefore, if e-book readers see further price declines in 2012, it will not be a result of competition within the industry, but rather from the tablet PC market. Competition among tablet PCs will be the key to deciding the extent and timing of any price drops, Wang noted.

Digitimes Research estimates that a 10.1-inch tablet PC will see its price drop to an average of US$299-399, with 7-inch models to drop to US$199-249 in 2012. Amazon, to maintain the price gap of its Kindle Fire with tablet PCs, may reduce Kindle Fire's price to US$149 and drop Kindle's price to US$49 to avoid the products from biting shares off of each other. The price drop is also expected to trigger competition among the upstream supply chain.

E-book reader shipments are estimated to reach 28.9 million units, up 31.4% on year with the US to still be the major contributor to growth. As for Europe, although the region has potential, since the overall market scale is still rather small, its contribution to shipments will be limited.

Source: Digitimes Research, November 2011