Potential for Kindle for mobile in China, India, Russia, Brazil

Amazon have released Kindle for iPhone and Kindle for Blackberry and, if the Dell Streak flyers are accurate, are set to release Kindle for Android. Have been pretty critical of the sales potential for ebooks via these channels because they don’t compare well with dedicated eReaders – May or may not be under-estimating their potential.

Where I’m definitely wrong in terms of sales potential of ebooks via mobile is China, India, Russia, and Brazil. Mostly for two reasons -

  1. Most mobile owners in these countries can’t afford a dedicated eReader and might not be able to for a long time (2 to 4 years or more). This was pointed out in a comment (thanks!).
  2. The sheer numbers of mobile subscribers means that even single digit ebook reading adoption rates would translate to huge ebook sales. 

The number of mobile subscribers in these countries is highlighted by a recent post titled ‘Staggering mobile stats in Brazil, Russia, India, China’ at eMarketer.

There really are Ridiculous numbers of mobile phone subscribers in China, India, Russia, and Brazil

Here are the stunning numbers for mobile subscribers in BRIC -

  1. China – 747 million. It’s projected to grow to 1.3 billion subscribers by 2014.
  2. India – 525 million. Projected to grow to 853 million by 2014.
  3. Russia – 174 million. Projected to grow to 200 million by 2014.
  4. Brazil – 174 million. Projected to grow to 212 million by 2014.

Even 1% of that number (16.4 million) would be a tantalizing market. However, we can do better than just randomly guess at the market for books in these countries.

What are the sizes of the book market in China, India, Brazil, and Russia?

The numbers are really enticing when you dig a little deeper -

  1. Beijing Review estimated China’s Book Market at $5.6 billion a year in 2004.
  2. Russia’s book market is estimated at $3 billion a year in 2008 (courtesy the Frankfurt Book Fair website).
  3. The Bookseller estimates Brazil’s book market at $1.7 billion a year in 2008.
  4. India’s book market is estimated to be at $1.5 billion a year (courtesy Prayatna, figures are for 2005). The English segment is estimated at between 20% and 45%.

That adds up to $11.8 billion a year. Factor in the growth in India and China since 2004/2005 and these markets probably total up to about half the size of the US market ($25 billion a year).

Another point worth considering is that there’s a significant English-speaking population (courtesy Wikipedia’s list of countries by English-speaking population, the usual disclaimers apply) -

  1. India has the second largest population of English speakers in the world (232 million). 
  2. Even China and Russia have sizeable English-speaking populations – 10 million or so for China (alternate sources claim a 20 million figure) and 7 million or so for Russia.

The percentage of the population that understands English has been growing in both India and China and allegedly so has the reading population.

We have huge populations and huge book reading populations

The intersection between the book reading population and the cellphone owning population in BRIC ought to be reasonably high – Factors like living in cities, being middle class or better off, and knowing English probably increase the probability of both owning a cellphone and of reading books. 

It would be reasonable to estimate that at least the same percentage of mobile phone subscribers are book readers as is the case in the general population. Given that over 50% of the populations of BRIC have mobile phone subscriptions we ought to be able to reach 50% of the book reading populations in these countries.

If you don’t like that random estimate just cut it to 25%. It still leaves us with users who spend $2.95 billion a year on books.

Will all these mobile phone subscribers read books? Will they use Kindle for mobile?

We’ve already established (by means of totally random guesswork ;) ) that 25% to 50% of the book reading populations of the BRIC countries are available as potential mobile ebook customers.

Which brings us to some questions (with answers/guesses included) -

  1. Will users actually read on phones? Perhaps. People in Japan love to do it though they probably have very advanced phones.
  2. Will users pay for books? This is a good question. It’s possible that wider availability of titles and reasonable prices encourage more book purchases. It’s also possible that book piracy takes off.
  3. Will users use Kindle for Mobile? Given that the Kindle Store has lower prices than anywhere else (and that BRIC will be price conscious) it’s likely that they will choose Kindle for Mobile if/when they pay for ebooks.

This is the sobering part. We have a potential $11.8 billion market and 25% of that ($2.95 billion a year, a conservative estimate) is available via their mobile phones. However, there are several barriers to getting them to read on the phone and to pay for ebooks. We might only be able to capture 10% of the market.

How could Amazon leverage Kindle for Mobile in BRIC?

There are a few big weaknesses of the way English books and books in general are sold in these countries -

  1. Unrealistic prices for books. For example – Books in India are priced close to their prices in the US.  
  2. Low range and poor availability. A lot of books never reach BRIC countries and when they do the numbers are limited. All the transportation and storage issues affect availability (and probably the prices too). 
  3. Not enough targeting of non-English speakers. If you have an ebook store you can sell books in other languages and add ‘shelves’ at minimal cost.
  4. Low number of bookstores. Plus they’re difficult to get to and they’re not open 24/7. If you’ve driven in China or India you’ll realize that every trip to a bookstore is an adventure (that promises to be of the abruptly ending kind).
  5. Lack of Infrastructure – The publishing and bookstore model is built for countries with very good infrastructure (roads and transport) and where lots of people have their own cars or other reliable means of transport. It breaks down in most parts of the BRIC countries.
  6. Very high inefficiencies. Consider books that aren’t published in a BRIC country – They have to be shipped all the way, stored, displayed and sold. With mobile books it’s just a mobile download.

For a company like Amazon that loves kaizen and quality and improving things this is a fantasy. There’s almost no way to get into mobile books in BRIC and avoid greatly improving the status quo.

The question on potential market size is interlinked with the question of whether a good range of books is available at good prices and conveniently. The answer to the latter is most definitely not and it’s hard to answer the first.

The mobile ebook market in BRIC is a mystery

While we can say that there’s a huge potential market worth billions of dollars and that the current options and choices in BRIC (for reading on mobiles and reading in general) are terrible it’s hard to say what the reaction would be to a very good offering.

It’s the type of opportunity that might turn out to be colossal or might end up nowhere.

The good thing is that by selling ebooks and by targeting the major platforms (Nokia etc.) Amazon or another company could explore the BRIC market cheaply and quickly. It wouldn’t cost much to figure out whether the BRIC mobile ebook market is worth pursuing.

4 Responses

  1. Very interesting overview.
    I’m in Brazil, I own a Kindle 2 and can comment on that a little.

    About eReaders not being affordable, in Brazil that’s mostly because importing taxes for electronics goes for as much as 100%. In essence, I had to pay double to get my Kindle 2. To circumvent that Amazon would need to manufacture it in the country, which would either require them to open a local branch or enter distributing contracts with some local bookstore chain for it to sell the device. Doesn’t seem likely.

    Some things are vital if Amazon (or anyone else) wants to tap on the Brazilian potential ebook market, be it via Kindle app for mobiles or whatever delivery method:

    1. Amass a huge offering of titles in Portuguese.
    2. Localize its website.
    3. Review its contracts with major publishers so to make more books in English available in Latin America.

    1 and 2 are pretty straightforward. I notice you didn’t include Brazil when talking about English-speaking populations; that’s because it doesn’t compare to other BRIC countries. So localizing the website (or at least the Kindle store) and offering books in local language is critical. (But it isn’t unreasonable to expect this to change in 5 to 10 years.)

    But there’s still a reasonable market to be mined for point 3, and you’re right in concluding there’s a significant cross-pollination between people who speak English, own cellphones and buy books. But this is also a somewhat demanding audience, compared to the general consumer.

    I own a Kindle because I prefer reading material in its original language if I can; I’m a translator and a literature student. While books are free of import taxes in here, shipping costs still add a significant amount. Even when buying from Amazon at a 30% discount, I need to buy in bulk to make the end cost even out. So eBooks are a boon – not only they cost less to begin with, but I need not pay half their value again in shipping costs.

    Problem is, not all of the 300,000+ titles in the Kindle Store are available to me as a Latin American. Only about 100,000 are actually being sold.

    It’s still a lot, but there are some significant misses. For example, I can’t get any of the books in the Dexter series. Considering that most of the English-speaking Brazilians who buy books and own phones also have cable TV and watch TV shows, that’s pretty much like not offering Twilight books in a brick-and-mortar bookstore.

    The problem is compounded by the fact that a couple local b-n-m bookstore chains *do* sell imports now. I can find those Dexter books in English occasionally, and even if they aren’t in stock at the moment I can order them. This means even the English-speaking crowd will usually go for those bookstores instead of Amazon for their foreign books needs.

    Now, tell this customer who wants that Dexter book in English he/she can get it for less than half the cost by downloading it on his smartphone, and he can also keep that book in his/her computer using the Kindle for PC app. Why wouldn’t he jump on it?

    A couple of years ago there were rumors Amazon was going to either localize their site or buy some local online retailer service and turn it into Amazon.br. I wonder if this is still part of their plans (if it ever did). They’re surely missing out. I’ll try to find a source in English for this, but I remember reading an article recently about how the local publishing industry has grown significantly in the last two or three years despite the overall perception that people don’t read anymore (you think we wouldn’t have our own Steve Jobs? :P)

    Also, one of those two bookstore chains which deals with imports has announced it’ll open its own ebook store next month. But it’ll work with ePub only, and the chain is already talking to device manufacturers to sell eReaders in its stores. That is, it probably will hook a portion of the audience already. This portion shouldn’t be too big for a while since the devices will still be expensive imports (Sony doesn’t build its eReaders in here yet and Barnes & Noble doesn’t have local branches), but that means Amazon is a couple steps behind if it wants to tap the Brazilian market.

    I’ll be interesting to see how this develops.

    • thanks a lot for your comment. Interesting to know you like Dexter – Six Feet Under is one of my favorite shows and it’s got Dexter – albeit in a different role. It’ll definitely be interesting to see what Amazon do in Brazil.

      • Six Feet Under is pretty much the TV show that got me interested in modern American TV series at all, actually.

        I’ll try to keep you posted about eReader/ebook market development in here if something interesting happens. I wouldn’t bet on it for the short run, but anyway.

  2. I read a lot of books on my mobile phone, Nokia 5800. I am currently reading Crime and Punishment. I really want to buy an ebook reader but can’t afford one because the Kindle is much costlier here due to the shipping charge and the customs duty.
    The Infibeam Pi available here is crap for the price it demands.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 9,768 other followers