Kindle Review – Kindle 3 Review, iPad Review

It’s fun to wonder what the biggest eReader developments for the rest of 2010 will be. Here are the 10 developments that, in my opinion, would have the most impact.

Potential new Kindle for Christmas

This is wild speculation – and yet, if Amazon releases a super Kindle or a color Kindle for Christmas that wins it the holiday season then Amazon would get a death grip on the dedicated eReader market.

Amazon’s first option is to create a game changing new super Kindle that has one or more killer features that absolutely destroy the competition (color, an absolutely brilliant new screen, dual-mode screen, flexible touch-screen). This combined with the Kindle Store and the Kindle service (WhisperNet, free browsing, etc.) would make the Super Kindle the clear #1 option. It would also entice more casual readers to buy the Kindle as they could get over non-reading related objections such as the lack of color and the lack of touch.

The second option is to create a multi-purpose Kindle (in addition to the dedicated Kindles) that takes on multi-purpose devices directly. The default reading app would be Kindle for Kindle (perhaps the new Kindle should be called Kindle Impure) and Amazon would lock in ebook revenue from casual readers. Strategically, it’s the most effective approach to counter the iPad (though an expensive one) as it changes the Kindle vs iPad conversation to - Kindle Impure vs iPad if you want a multi-purpose device and Kindle vs Nook if you want a reading focused device.

The third option is to ensure that Kindle 3, software updates, and service updates are enough to keep the Amazon Kindle the #1 reading option for readers. This is the riskiest strategy as Amazon risks losing casual customers to multi-purpose devices and also faces the risk that B&N or Sony release a super Nook or a very impressive new Sony Reader and that new eReader becomes the #1 eReader for the holiday season.

eBooks hitting 15% of Book Sales Revenue

eBooks were 2.84% of the market a year ago, now they’re 8.48%, and they are probably going to keep growing.

If they hit 10% by the end of the year it’ll be a landmark event – though not important enough to be #2 on this list. The really big event would be if they could hit 15% market share by end of the year. That would really shake things up.

Authors are making only 8 to 15% from physical books. They are making 25% or so from ebooks when they are signing over rights to Publishers. With the Kindle Store they can make as much as 70% by going solo. Compare 15% of 85% (physical books, 12.75% of book sales revenue) with 70% of 15% (ebooks, 10.5% of book sales revenue) and you realize the difference isn’t that much.

When ebooks hit 15% of the market Authors start making almost as much from ebooks as they do from physical books.

Authors will start wondering a lot more about a world where it’s all ebooks and they can get 70% or even 50% of book sales revenue rather than the current 15%.

At that point something will change – Authors will either decide to start focusing a lot more on ebooks or they will rebel and force Publishers to give them more from both ebooks and books.

Google Editions

Much like Judge Chen (who’s making the settlement decision) everyone seems to have forgotten about Google Books and Google Editions.

Its arrival is going to be a seismic event – It’ll be the first time that another eBook store has more new books than the Kindle Store. In fact, Google are claiming 2 million new books. Sony is probably going to make Google Editions its main store, the Nook supports ePub (there’s also the browser option), and there will be an iPhone App.

We’ll also see Google Editions’ model of read from any browser work well and they’ll make Google Editions the default option for Android and the 1st search result for every book search. It’s going to be huge and if the rumored Google Tablet arrives before end of the year it’ll provide another channel on which Google can set Google Editions as the default.

If the Book Settlement is approved then it also leaves Google as the only (for now) store with orphaned works. People don’t seem to realize just how big of an advantage that would be.

iPad Mini

We have to go through this with every Apple product release – The supposed death of eReaders.

Will the iPad Mini succeed where the iPhone and iPad have failed? Will people prefer to read their books on a LCD screen because it has color and animations and videos and more pixels and is sprinkled with magic pixie dust?

This is mostly important because it leads to more ebooks bought by people who would never buy a dedicated eReader and less ebooks bought by people who buy the iPad Mini instead of a dedicated eReader.

It also weeds out the smaller eReader companies and forces eReader companies to improve their products and the value for money they offer. It’s great for readers.

If the rumors are true we will see a 5.6″ iPad Mini and a 7″ iPad Mini by end of 2010. They are also supposed to be more focused on reading and that probably means shiny, happy people getting all teary eyed in libraries or at graduation and Sam Mendes choosing Apple money over making meaningful movies.

Kindle App Store

This is the dark horse of 2010.

A lot of people point to Facebook Apps and iPhone Apps as a major reason for the wild success of each. It’s hard to argue as there are a lot of reasons this is probably true – features customized to small groups of users, lots and lots of value add, developers working for free, all those developers buying and promoting the device, differentiation from competitors, the device/platform being taken in amazing new directions.

Basically, there’s nothing like providing a platform on which developers can play freely and also make money - you get all their best ideas and their hard work and you get it for free. There’s also nothing quite as effective as letting users vote on features with their money – users choose apps that add the most value to their experience.

Finally, you have the ‘individually tailored device’ angle. Each person can choose what they most value and developers can make apps targeted at niches so small that they would never get served without an App Store.

The Kindle App Store has arrived rather late for the App Store party. It does, however, promise to provide a few things we haven’t seen before in eReaders – lots of individual developers and companies of all sizes offering new features to users, attempts to expand the usefulness of the Kindle without taking away too much from the focus on reading, use of the wireless for features other than book downloads and basic browsing, the ability to cater to the needs of specific demographics, personalization and customization.

All it takes is a few killer features - killer features that give the Kindle an unassailable lead over every other eReader. We’ll probably get at least 3 killer apps - if the Kindle App Store releases this year Amazon might have to do nothing to win the 2010 Christmas season.

Kindle 3 

This doesn’t make the Top 5 (it’s 6th) because it seems rather likely that Kindle 3 will be Kindle 2.7.

If the rumors of an August release are true and the Kindle DX 2 is a reliable indicator we’ll be looking at the Kindle 2 getting the Kindle DX 2 eInk Pearl screen and not much else. It’ll be cheap, have the Pearl screen, and may add 1 or 2 killer features. It’ll be the best eReader around - yet it’ll be incremental evolution rather than a revolution.

Kindle 3 will be death by relentless incremental progress – in both the good way and the bad way.

Amazon may very well surprise us and release an absolutely astounding Kindle 3. Yet the release of an incremental Kindle 2 and the release of an incremental Kindle DX 2 indicates that Amazon would rather focus on improving the Kindle service and software than put a lot of effort into improving the hardware.

It almost seems as if Amazon has decided that the aim is to replace paper and not to produce a revolutionary new eReader for $300.  

At the end of the year it wouldn’t be a surprise to see a $125 Kindle 3 with pretty much the same features as Kindle 2 plus the new eInk Pearl screen and a $250 to $299 super Kindle that adds on a lot – including, perhaps, the ability to do more than just read. Qualcomm’s Mirasol screens look really pretty and a 5.6″ color Kindle would fit in very well next to the 6″ Kindle 3 and 9.7″ Kindle DX 2.

Nook 2 for Christmas

Nook was a huge hit last year – except for the part where they announced features 5 weeks before release and sold out of stock in the middle of Christmas shopping season.

It’s hard not to be impressed by how the Nook’s features included nearly all of the features on Kindle owners’ ‘Most Wanted Features’ list – PDF support, LendMe, SD Card slot, ePub, WiFi, replaceable battery, custom screensavers. It also came in at $259.

Amazon got enough time to respond and added PDF support and some other features to fight back. It also pulled off the biggest magic trick – staying in stock while Nook and Sony Reader ran out.

B&N also hurt themselves by releasing a Nook that wasn’t very polished – bugs, freezing, slow page turns, sluggishness in the controls, and unintuitive user interface.

The questions are – Will Nook 2 be as much of a surprise as Nook 1? Will B&N take Amazon by surprise or will it again reveal its strategy months in advance? Will there be enough Nook 2 stock? Will B&N release a very polished Nook 2?

This would be right at #2 if it weren’t for my low confidence in B&N’s software abilities. B&N’s software team is costing it the eReader War and the recent delayed launch of the B&N iPad App seems to indicate B&N either doesn’t realize it or doesn’t care.

New Sony Reader models

Sony has had to watch as a market it first ventured into has been stolen from its grasp by Amazon and then B&N and Apple have almost made Sony an after-thought.

Most of Sony’s problems stem from two simple, fundamental mistakes -

• Valuing features over readability and thus releasing two consecutive generations of products (Sony 700, Sony 600) that were hampered by the reflectivity of the touch screen. What use is touch if the glare and reflection makes the screen hard to read?
• Thinking of it as a contest to produce the device with the most features as opposed to a device and service that help create the best reading experience. Sony produced the most impressive eReaders and then promptly ignored the fact that people want lots of cheap ebooks to read and they want a service (like WhisperNet) that adds value through easy downloads and syncing.

You have to think that at some point Sony will stop repeating the same mistakes and figure out that it has to let the eInk screen shine figuratively not literally. That people want to read books on the Sony Reader and not show it off (there’s an iWhatever for that).

Nook opening up to Android Apps

The Kindle App Store might give the Kindle an unassailable lead. There are a few reasons that isn’t a certainty – there may not be enough developers participating, Nook can play the Android card.

If the Kindle App Store is released before the end of the year B&N should, and almost certainly will, open up the Nook to Android Apps – probably to a sub-set it feels are relevant to reading and the Nook. It may or may not be enough - the Kindle App Store has been in beta since February 2010 and Android Apps are not built for eInk.

A Nook App Store may damage B&N more than help it - B&N might rush to release a Nook App Store before Amazon’s App Store is out and release a half-baked version, it may open up the Nook to lots of reading apps including Google Editions, Android brings a very strong culture of free and B&N may inadvertently create a loophole for piracy.

There are also certain reasons a Nook App Store might be very powerful – There are a lot of Android Apps and a lot of Android developers, people who prefer a dual-screen ereader with a second LCD screen are likelier to be open to apps, B&N might give apps a lot more freedom than the Kindle App Store (perhaps even let them create PDF readers and ePub readers).

Sooner or later B&N will have to open up the Nook to Apps – there’s no way around it. The good news is that by choosing Android as their OS they are well placed to move quickly.

End of the Agency Model

The Agency Model is not working and it’s working. There aren’t very many $14.99 books doing well and there are lots of $9.99 books doing well – there are also a fair number of $12.99 books doing well.

The Greedy 5 are still sticking to the Agency Model – However, we haven’t had much in terms of ebook sales figures from them which hints there isn’t much good news to share.

There is a chance that by the end of the year Publishes give up on $14.99 entirely and shift to a mix of $12.99, $9.99 and $7.99 for new books. There are a few reasons this isn’t as far-fetched as you may think – lots of backlist books being released as ebooks, indie authors continuing to sell books at $1, smaller publishers and new publishers taking advantage of Amazon and Apple’s 70% cut model.

The competition is brutal.

The Agency Model is based on the assumption that there is a limited supply of quality books – with every passing day this assumption becomes weaker and weaker. The promise of a 70% cut, publishers like Open Road and Rosetta Books that offer 50%, Literary Agents that want to try selling ebooks themselves – there’s an endless stream of quality books about to flood the market.

The end of the Agency Model in 2010 is quite possible – There are, however, 9 developments (the above ones) that might mean more to the future of eReaders and eBooks.