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The new Kindle 3 is killing off competitors even before it arrives.

Yesterday, we had looked at how eReader makers are selling their eReaders at $99 to compete with Kindle WiFi and Kindle 3 and today there’s news that Plastic Logic has killed off the Que ProReader (Pro since it’s so special that eReader isn’t good enough for it).

Credit to Plastic Logic for realizing they didn’t have a chance

At some level it’s smart of Plastic Logic to realize they missed their window of opportunity. They have been talking about their eReader and showing it off for years without releasing it – Meanwhile everyone else was releasing eReaders, cutting prices, and improving relentlessly.

The improving competition forced Plastic Logic to position itself as a business eReader. Then, in January, the iPad was announced and suddenly the Que at $649 seemed too expensive – even for a business eReader.

So Plastic Logic delayed things and then when the iPad mania was finishing and it almost seemed safe to release the Que Amazon announced the Kindle DX 2 for $379 and the Kindle 3 for $189. The Kindle 3 basically marked the end of the road for Que – You can’t sell an eReader for 3.4 times the price of the market leader. You can call it a business eReader or a luxury eReader or whatever you want – There just aren’t going to be many people willing to buy it at such a premium.

CNet covers Plastic Logic’s explanation for ending the Que

It’s pretty cool that Plastic Logic is quite candid about killing the Que -

“We recognize the market has dramatically changed, and with the product delays we have experienced, it no longer makes sense for us to move forward with our first-generation electronic reading product,” Plastic Logic CEO Richard Archuleta said in a statement.

Plastic Logic said it will work on a next-generation product and continue developing its plastic electronics technology.

“We plan to take the necessary time needed to reenter the market as we refocus, redesign and retool for our next-generation ProReader product,” Archuleta said.

Let’s hope they don’t call it the Que 2.

Plastic Logic might get some Russian funding

The Financial Times writes about Plastic Logic’s talks with Russian state-owned company Rusnano which would give Rusnano control over Plastic Logic -

Plastic Logic – which has received $200m (£125m) in investments since it started in 2000 – is owned by a consortium of venture capital firms and large groups including Intel of the US and BASF of Germany.

A key condition of Rusnano’s investment would be that Plastic Logic’s production facility for the next phase of the technology is based in Russia.

If the deal goes through Plastic Logic would be a company founded in Cambridge (UK), with factories in Dresden (Germany) and Russia, offices in Cambridge and Mountain View, and financed by Intel, VCs, and Russia. It would be the United Nations of eReader manufacturing.

Apparently, the Chinese Government was also trying to invest in Plastic Logic at some point of time.

It seems that the biggest potential pay-off for Plastic Logic would be to leverage its plastic electronics technology to create plastic chips that are 90% cheaper than silcon chips. Plastic Logic thought the eReader market would be an easy market and that its eReader’s success would help prove the viability of its plastic electronics technology - except Kindle and Nook replaced ‘easy market’ with fiendishly difficult market.

Is there any company that can take on Kindle 3 and Nook (2)?

Let’s consider the avenues a new entrant could use to attack Kindle 3 and Nook 2 -

1. Does more than just read. That’s out since the iPad has that covered.  
2. Cheaper. How do you beat the $139 Kindle WiFi?  
3. Better Screen Technology. Unlikely since it seems eInk Pearl is the only viable screen technology at the moment. Qualcomm has been talking about trying to figure out how to mass produce its Mirasol screens. Pixel Qi hasn’t shown up in any products yet.
4. Better ebook store. Except for Google Editions no one has more books - Partnering with Google is a potentially effective strategy. 
5. Better Infrastructure. How do you compete with Amazon’s free 3G Internet and WhisperSync?
6. Better Customer Service. Just read about a Kindle DX owner who got sent a new DX because her 5-way button broke. Not many companies can afford that level of customer service or even think it.
7. Openness. Sony and B&N are already using it.

There just aren’t very many possible angles of attack. Amazon has enough economies of scale with the 6″ Kindles to make it particularly difficult for new entrants to match it on price. Add on the fact that Amazon is willing to lose money to build up market share and the eReader market is no longer looking very promising for new companies.

The new Kindle 3 and the new Nook 2 (whenever it arrives) are going to be fighting it out and any other eReader company (including Sony) probably doesn’t have a shot. Makes it even more important for Amazon to buy B&N now that it possibly has the opportunity.

Filed under: eBook Reader Devices Tagged: | kindle vs plastic logic, plastic logic