Maintaining Competitive Advantage in the
E-reader Industry

Amazon’s competitive advantage in the e-reader industry due to their top selling ‘Kindle’ electronic reading device, still in its infancy, will be difficult for any rival in the industry to achieve. While electronics design and manfacturing are not Amazon’s core competency by any means, Amazon’s Kindle e-Reading device has beat out its biggest rival, electronics heavy-weight Sony, by an estimated 30% higher device sales in 2008. What’s more is that the Sony Reader has been available since 2006, while the Amazon Kindle (only available from amazon.com) just launched in late 2007 and was hugely popular from the start, selling out in the first 5 and ½ hours. Why does Amazon have
Wireless delivery of e-books from anywhere, huge e-book selection & competitive e-book pricing, and customer service are the competitive factors that set Amazon Kindle apart from all other companies’ e-Reader’s, including Sony’s.

Application of Porter’s Five Forces model to the e-Reader industry:
Competitive rivalry is the strongest force within the e-reader industry. There is a large and growing number of competitors. However, a company like Amazon is unmatched as far as what it can offer, as well as their ability to turn around a next generation device that is exactly what the users ask for, which currently makes them the strongest competitor. Competing companies are looking for ways to match Amazon’s device, offer lower prices, and differentiate themselves.

The Bargaining Power of Suppliers is also relatively strong, though some companies overcome this easier than others. E-book suppliers (publishers, magazines, newspapers) have been slow to make e-books available, though Amazon has been the most successful because of already established strategic partnerships with publishers. Free e-books can be found on the web from various sites, but these are not best sellers. Suppliers of magazines and newspapers have also been reluctant to go to electronic format. Suppliers of the E-ink technology are also limited (currently only one company) but not all of the companies use this technology (e.g. PlasticLogic has