How Sony blew the chance to make a Kindle killer (updated)

Sony’s planned August update to its Reader line of e-book devices is the company’s last shot at reclaiming the market it pioneered in 2006. But it may already be too late.

Despite having a multi-year head-start, Sony’s Reader has lagged behind Amazon and its wildly successful Kindle for years. Even the last-generation Sony Readers — which added features that the Kindle doesn’t have, like a touchscreen interface — have failed to catch on much with buyers.

And considering the other major competitors, like Barnes and Noble’s Nook and the iPad, it seems like Sony will have an even more difficult time with its Reader over the next year.

Sony is planning to update its Reader line in August, VP of digital reading Phil Lubell at Sony Electronics told Bloomberg on Thursday. (Update: Sony has issued a statement below, saying this information is incorrect. We’re keeping the original report because Sony may just be covering for an unannounced leak.)

Judging from the Bloomberg report, it appears that Sony is rushing to get the new e-readers out before it releases its first Android tablets later this year. Lubell said the new Readers are expected to offer the usual software and hardware upgrades, so they’ll likely look a bit nicer and perform faster. But there’s no sign that Sony is doing anything significant to chip away at the Kindle’s dominance.

Amazon has never released any Kindle sales figures, but estimates from last year projected that the company sold more than 8 million units in 2010. Kindle sales were mostly driven by the new $139 third-generation model, which Amazon said was its fastest-selling Kindle ever. Amazon also said late last year that it held around 70 percent of the e-book market, though those numbers could look a bit different today. By comparison, Barnes and Noble said its Nook had 20 percent of the e-book market late last year. If those numbers are correct, that leaves a measly 10 percent for Sony and other players, like Kobo, to scrap over.

Sony could score big by lowering the price of its Readers, which are currently priced between $180 and $300. A sub-$140 reader seems necessary at this point, especially since recent rumors suggest that Amazon will offer an even cheaper Kindle soon.

But it may be that there’s nothing Sony can do to make its e-readers matter any more. Sony only sells e-books via its online store, and it has no apps to give users access to their Sony e-books on other devices. (Update: Actually, there is a Sony Reader Android app, and it appears that Apple pulled the initial Reader iOS app due to issues with in-app purchasing. I’m sticking with my following points though, since Amazon has spent considerably more effort getting Kindle on other platforms.) Amazon, on the other hand, has made Kindle apps available on iOS, Android and other platforms, giving users seemingly universal access to their Kindle content.

For Amazon, it’s clear that e-book sales are more important than device sales, and that’s something Sony may never be able to compete with.

Update: Sony has responded to this post, saying that the Bloomberg report is “inaccurate.” Sony issued the following statement:

It is true that Sony is committed to the Reader category and believes there is a market for both tablets and dedicated e-readers. And, since we have historically released new Readers every year since our initial launch, it is reasonable to assume we will do so again this year. However, the details about a new Sony Reader included in this article are inaccurate. We have not released any pricing, timing or features of a new Sony Reader. When we do have Sony Reader news, we will share all the details with you.