Tidbits:
1. Technology tends to be disruptive at 20% market share. Yea… a nitpick versus your 25% guess… And since the market will go from 15% to 25% really quickly, academic at best.

2. You didn’t include the fall out effects of less revenue. I think that will do two things:
a. Fewer physical bookstores, thus pushing more people to e-readers.
b. Amazon’s model of ‘if you discount elsewhere, we get to discount your book.’

2a will reduce the competition a little.

The big question is ‘will amazon hold onto the indie publisher market’ enough to hold the $2.99 price point?

Tim: There has always been an ‘underground’ and discount market for books. My parents in the 1960′s and 1970′s would loan books to others and they have books that are one step from a rag on their bookshelf. It was a matter of pride to have 12+ people read your book (and get it back). So I agree with you that there is a portion of the market un-accounted for that has always been there.

I think the market will have a shake up and revenue destruction… But not as bad as some fear. I just paid for *two* high priced e-books from an author I love. Well edited and rather *long* novels that are just too heavy to truck to work in paper form.

Personally, I think the Kindle app for Android is the game changer (as far as market share). There will be 400 to 600 *million* smart phones sold in 2012. The gateway to Kindle will be those little screens heavy readers mock. But if it starts at a book or two (perhaps $25/year), 100 million * $25 is quite a bit of revenue.

E-book growth is ‘device limited.’ I have trouble getting excited about the Ipad (expected 2010 sales of 10 million) when 100+ million sales are almost here…

I’m not ignoring my Kindle 2. I love it as a reader and I persuaded two people to buy them this weekend. But it isn’t an easy sale for ‘casual readers.’

After ‘Chinese new year’ 2011, there will be enough smartphones out there for Amazon to ‘rock the world.’ Not before… So expect some rapid change in the next 6 months.

Neil