Sony's New Touchscreen Readers Unlikely to Shake Up Market

Sony (NYSE: SNE) has updated its e-reader family of devices: the Reader Pocket, Reader Touch and Reader Daily. The new Readers offer touchscreen functionality based on infrared sensors that read taps made by a finger or a stylus. They are smaller and lighter, and have redesigned user interfaces.

In some respects, the upgrades represent a significant leap forward. The previous version of the Pocket, for example, didn't have a touchscreen at all. The previous versions of the Touch and Reader had a touchscreen overlay that critics viewed as too slow and unresponsive.

Sony's new Readers use E-Ink Pearl displays for better contrast.

Whether Sony's new offerings -- which in the case of the Reader Pocket and the Reader Touch do not include Internet connectivity -- are enough to realign buying trends and market share in the rapidly growing e-reader market is an open question.

Then there is the matter of price. Going against market trends, Sony increased the price of its devices by US$29, $59 and $49, respectively.

Already viewed as expensive, Sony's new price points put even the low-end device in this group -- the Pocket, at $179 -- beyond the price of competing products. A Kindle device that includes WiFi can be had for just $139.

A Closer Look

It is difficult to justify the price increases when taking a closer look at the changes.

"None of these enhancements are really that earth-shattering," Jim McGregor, chief technology strategist with In-Stat, told the E-Commerce Times.

For example, the Pocket's new touchscreen has allowed Sony to eliminate the controls on the side. It also has quadrupled the storage to 2 gigabytes of memory.

The Touch has been upgraded with the ability to play MP3 and AAC audio files. There are also Memory Stick PRO Duo and SD media slots. The high-end device, the Daily, has added WiFi and Web browsing to complement the AT&T (NYSE: T) 3G connection it already offered.

There are some interesting new touches, though: Users can take notes with the stylus or type them in via the keyboard and then export them to a computer. The devices are also compatible with several e-book formats.

Big in Japan

The bottom line is that the changes are not significant enough to move the needle much in terms of market share, said James Brehm, senior consultant with Frost & Sullivan's information and communication technology practice.

Fortunately for Sony, its e-readers have a huge presence in Japan and other countries that will ensure its long-term viability in the market, he said. "They will always be there -- they just will never be a market leader in terms of functionality."

Content Rules

Sony has a reputation for having the highest prices, so the price points won't wield a death blow to these devices, McGregor noted.

What is weighing Sony down in the e-reader market is not the hardware or the price points, but rather its arms-length relationship to content, he explained.

"It is a problem that both the tablet and e-reader market faces," said McGregor. "The companies that are best positioned to succeed are the content owners -- the Apples, the Amazons, the Hulus."

Sony's problem is amplified by the fact that the tablet market is encroaching on the e-reader space, he pointed out, and without native content to differentiate it, it is unlikely to make much progress.

"Right now, there are different price points, [plus] user segmentation in the e-reader and tablet market," McGregor said. "Eventually, though, those lines will blur, and it will become that much harder to compete."