Sony Opens New Chapter in Rivalry With Amazon Over E-Book Readers

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By GEOFFREY A. FOWLER and NIRAJ SHETH

Sony Corp., hoping to steal some of Amazon.com Inc.'s thunder in the electronic-book market, unveiled a wireless reader that could be the strongest competitor to Amazon's Kindle this holiday season.

Priced at $399, the Sony Reader Daily Edition is $100 more expensive than the entry-level Kindle, but one-ups the market leader with a touch-sensitive screen and access to books from a range of sources, including libraries. Kindle users are largely limited to books from Amazon's online store.

The new Sony device also closes a critical gap with the Kindle. Unlike earlier Sony readers, it can be used to download books and periodicals using AT&T Inc.'s wireless network. The Kindle has offered similar wireless features since its debut with Sprint Nextel Corp.

The gadget, which will be in stores in December, adds to the increasing competition in the small, but fast-growing, digital book business. Although Sony was first to market with a reader, Amazon has dominated the business since introducing the Kindle in 2007.

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Apple Inc. could further disrupt the market with a tablet device, expected to debut by early next year, that will let people read electronic books and newspapers as well as watch movies.

Sony's device works with e-books and newspapers from stores other than Sony's online store, which also gives access to free books from Google Inc.

"The point is not one device to one store," said Steve Haber, president of Sony Electronics's digital books business. "Readers can shop around for what interests them rather than be locked into one store."

An Amazon spokesman declined to comment on the Sony device. Earlier this year, the company released a Kindle with a larger screen targeted at textbooks, and also reduced the price of the smaller Kindle to $299.

Sony brought out its first e-reader for the U.S. market in 2006, but analysts say it has fallen behind Amazon because it lacked the Kindle's integrated wireless bookstore. Previous Sony readers had to be plugged into a computer to download books.

The Daily Edition prototype that Sony showed off at its New York launch displayed a blank screen without any text, and the company did not make a version available for hands-on handling. In contrast, when Amazon released its newest Kindle in May, it used a working version to demonstrate features and let reporters handle prototypes.

The new device "will help Sony narrow the gap between itself and Amazon, but Amazon will maintain its market lead into next year," said Sarah Rotman Epps, an analyst for Forrester Research Inc. She estimated that more than two million e-readers will sell in the U.S. this year.

Sony disclosed Tuesday a marketing partnership with Cleveland-based OverDrive Inc. that will let users of Sony's wireless device enter their Zip Codes and library card number to see what e-books are available from their local library; they can then download e-books remotely to the device until the loans expire.

Sony's Daily Edition can be held vertically to display one page of a book or turned horizontally so that it shows two pages, which Mr. Haber said makes it feel "more like a real book." The sample Daily Edition that Sony showed at a press event Tuesday had a blank screen.

Book publishers are counting on digital books to revive their stalled industry. Newspaper and magazine publishers, too, are hoping that dedicated reading devices will offer new venues to expand readership and collect revenue for news and information, although e-reader subscriptions remain a fraction of circulation.

Sony didn't disclose any newspaper or magazine publishers that would support the Daily Edition. "We are working with a number of newspaper and magazine publishers and will reveal more information about this closer to the time the product is available," a spokesman said.

The Sony device will give publishers their first mass-market alternative to the Kindle to sell e-reader editions of their periodicals. Publishers say Amazon keeps 70% of the revenue from sales of Kindle subscriptions for newspapers and magazines, and Amazon controls all the customer data.

Newspaper and magazine executives have said Sony is amenable to striking more favorable partnership terms, though several publishers also said Sony has been slow to reach agreements, such as whether their relationships with Sony would be exclusive.

—Shira Ovide contributed to this article.

Write to Geoffrey A. Fowler at geoffrey.fowler@wsj.com and Niraj Sheth at niraj.sheth@wsj.com