Will Kindle 3 end the eReader wars?

The one question the Kindle 3 has made me ask myself more than any other (well, besides Graphite or White?) is – Does Kindle 3 end the eReader wars?

The easy way to answer that question is to hide behind ‘Kindle 3 will sell millions’. However, lots of eReader companies are going to sell millions of eReaders before and after the eReader Wars are decided.

The real question is – Which eReader is going to win the eReader wars and end up with an overwhelming (90% market share) or dominant position (70% market share)?   

Kindle 3 is the first eReader (including the $139 Kindle WiFi under the ‘Kindle 3′ umbrella) that threatens to provide a firm answer.

How would we know Kindle 3 has ended the eReader Wars – What’s the criteria?

Let’s say there are two possible criteria for announcing an end to the eReader wars -

  1. A Microsoft Office like dominance with 90% or more of the market. A situation where there isn’t really a viable competitor. 
  2. A Google Search type dominance with 70% or so of the market. A situation where the 2nd and 3rd best companies in the market are not really a threat.

Forget the companies and the market – The 70% to 90% market share and the cemented #1 position are the key criteria.

If Kindle 3 and Kindle WiFi help Amazon get to 70% market share AND cement the Kindle as the #1 eReader then we can safely say the Kindle 3 has ended the eReader wars.

Please note that we are talking about dedicated eReaders. So number of iPhones sold or number of cigarette lighters with LED displays sold doesn’t factor in.

Kindle 3 and the Invisible Competitors – Nook 2, Sony 606, iPad 2

There are bound to be strong reactions to a ‘Kindle 3 as decider’ post.

People who read on the Nook or Sony and people who read on the iPad (no jokes please, we mean the 5% who actually do read) will be aghast. As will a lot of people with an axe to grind (Press) or whose future depends on the death of the Kindle (Publishers, Paper manufacturers).

Well, they have a valid argument – We haven’t seen what Kindle 3 competitors will bring to the table.

We have the iPad 2 which will try another round of ‘LCD (this time with Retina Display) is better than eInk’.  It’ll also keep drumming on ‘the number of people who could possibly read on their device’ as opposed to ‘the number of people who actually read a lot on their device’.

The Nook 2 already has FCC clearance and this time it is Amazon that has made the mistake of announcing its features in advance – though you have to suspect (with the microphone etc.) that Amazon might have kept a few things in reserve. Nook 2 may have the eInk Pearl screen, it might have some new feature that blows us away, and it’s likely to match Kindle 3 in price (even if it bleeds B&N dry).

Sony offers a big threat – An alliance with Google Editions would add the missing range of books and supply some much-needed infrastructure. Sony’s new devices might figure out a way to do touch without sacrificing visibility. Sony has been delivering good devices – It’s the store and eco-system they mess up and perhaps they finally realize it and figure out a solution.

Perhaps the biggest threat is the giant search company and who knows what they might bring to the table.

All these companies face a few big challenges.

Kindle 3 has set a very high bar

There’s little doubt that Amazon had the best store. It also had amazing infrastructure – Free 3G wireless is pretty impressive no matter how you put it.

It was the Kindle that was the weak link. Firstly, the improvements were all incremental. Secondly, the Kindle 2 was 1.5 years old and had old eInk screen technology. Thirdly, Amazon’s avoidance of ePub and lack of openness and lack of library books and lack of WiFi were real disadvantages.

Kindle 3 changes most of that – We’ve gone from a state where the Kindle Store and WhisperNet were letting Kindle edge other eReaders to a Kindle 3 that can stand on its own. In fact, it beats the other eReaders handily (unless ePub or library books are a must-have for you).

As we go through this list of Kindle 3 improvements keep in mind that Nook and Sony Reader will probably match the Kindle 3 on some (perhaps even all) of these improvements -

  1. The eInk Pearl screen is better than any other eReader screen available. The graphite casing adds to the contrast and Amazon has added tweaks to further improve the contrast.  
  2. Kindle 3 is lighter, thinner, and more compact.  
  3. Kindle 3 has double memory and double battery life with wireless off.  
  4. The PDF support has been extended to include search and taking notes and making highlights. You can adjust the contrast and can do incremental panning when zoomed in.
  5. There’s a microphone that’s going to be used for at least 1 killer feature (nothing yet).
  6. There’s a Kindle App Store in the wings and it will almost certainly make a difference.
  7. New Accessible menus combine with the super size fonts to make it very usable by blind and low vision readers.
  8. There’s finally WiFi.
  9. Support for CJK fonts and Cyrillic fonts lets Amazon sell in China, Japan, Russia, and lots of East European countries.

Those are just the big improvements – We also have faster page turns, better button placement, sharper fonts, three font types, auto-disappearing book title bar, a webkit browser, and an article mode in the browser.

Keep in mind that this has arrived 4-6 weeks after a massive Kindle 2.5 upgrade that added PDF pan and zoom, Collections, sharper fonts, super sized fonts, and the ability to share passages on Facebook and Twitter.

Kindle 3 is an eReader which, on its own – without factoring in Kindle Store and Kindle Whispernet, is clearly better than the competition. It’s almost unfair that it gets the backing of the best eBook store and the best eBook/eReader eco-system and infrastructure.

Nook 2, Sony 606, iPad 2 have to beat Kindle 3 by a margin

Here we’re assuming the iPad 2 is going to pretend to be a dedicated reading device which just happens to have a screen optimized for playing games. So we consider it a competitor.

When the Nook 2 and Sony 606 arrive later this month, and when the iPad 2 arrives later this year, it’s not enough for them to match or beat the Kindle 3. They have to beat the Kindle 3 by a wide enough margin that Kindle Store and Kindle WhisperNet and free 3G can’t make up or exceed the difference.

This is perhaps the biggest thing people are going to misunderstand when they get upset about the ‘Will Kindle 3 end the eReader wars?’ question. Kindle 3 just needs to make sure it’s not worse than the competition. The Kindle service/ecosystem (including Kindle Apps on other devices) and Kindle Store will take care of things if there’s a tie between devices or even if another eReader is slightly better.

Which means Nook 2 doesn’t just have to match the 10 to 15 solid improvements the Kindle 3 has made – Nook 2 has to find an additional 5 to 6 improvements and implement them successfully.

It’s the same with the iPad – especially since Kindle 3 has improved on almost every advantage Kindle 2 had over iPad. Kindle 3 is cheaper (well, the WiFi model is), lighter, has battery life of 1 month with wireless off, its more compact, and the eInk screen has amazing contrast. Kindle 3 also cuts down on Kindle disadvantages – there’s double the memory, page turns are faster, there are 3 font types now, PDF support is better, and there’s a WebKit browser. 

Quick Synopsis – Where we stand on our Kindle 3 argument

We’ve established a few things so far (feel free to disagree in the comments) -

  1. Kindle 3 is much better than Kindle 2 and also much better than Nook and Sony Reader.
  2. Kindle 3 has the support of the best ebook store (Kindle Store) and the best eBook/eReader infrastructure (Kindle WhisperNet).
  3. Nook 2 and Sony 606 would have to beat Kindle 3 handily to make up for their comparatively poor ebook stores and for their weaker infrastructure.

We’ve also set 70% or higher market share and a cemented #1 position as the criteria for Kindle 3 to end the eReader wars.

Now, let’s look at why it’ll be exceptionally hard to catch up with the Kindle 3.

Kindle 3 and Amazon’s Kaizen Strategy are hard to beat

Amazon is in the enviable position of having the current best eReader (Kindle 3), best store (Kindle Store), and best infrastructure (Kindle WhisperNet). However, it’s biggest advantages are its kaizen philosophy, its focus on reading, and its deep pockets.

Sony cares only about gadgets. Apple cares only about selling beautiful things to cool people. Apple sells iPads to us strange people despite us wanting to read books – not because they care about books or reading but because they care about iPad sales. Nook is hampered by B&N’s financial struggles.

Amazon is running faster than all of them in the race to develop the best reading solution – Apple could catch it but Apple doesn’t want to run in this race. Sony thinks it’s in the race but it only cares about making a great gadget for reading (it couldn’t care less how, what, or if people read on the gadget). Nook is the only real competitor and unless Google saves it (or buys it) it won’t last (B&N just doesn’t have the resources to compete long-term).  

Amazon has basically done a few key things -

  1. It has focused on reading. The iPad was perhaps the biggest temptation to veer from that path and Kindle 3 shows Amazon has resisted it.  
  2. It has set itself up to invest in the Kindle for a long time.
  3. It has improved relentlessly. Until Kindle 3 we only saw the impact of the Kaizen philosophy in the service and the bookstore and in Kindle Apps. You have to look at the sheer number of improvements in Kindle 3 and realize kaizen is beginning to show up in the device too.

The Kindle 3 is the best current eReader – and still Amazon is improving the device, store, and infrastructure relentlessly.

Not only do Nook and Sony Reader have to catch up to the Kindle 3 they have to do it given that Amazon is improving faster than they are. It’s a race where the runner in front of you suddenly reveals bionic legs and starts accelerating.

With eReaders the inflection point is going to become apparent like it did with ebooks – 6 months after it has occurred. We’ll look back and realize the inflection point has long since passed and will try to piece together exactly what happened.

Well, the Kindle 3 happened.

The only question left is – Is it an inflection point only for the survival of eReaders OR Does it also cement the Kindle 3 as the winner of the eReader wars?

9 Responses

  1. I’m pre-ordering my kindle right now. Amazon’s Kindle has reached the milestone that I’ve been waiting for. The price, the WiFi and the microphone sets this kindle on the place I was waiting: it will be my only reading device (for books, but also for mail and blogs through WiFi). The microphone is a clear indication that kindle apps are coming soon, so I’m expecting this generation will be on market and supported for a long time.

    I’m not going to buy another reading device (well, maybe a DX edition) until the next milestone is reached: color eInk and touchscreen without compromising the readability and battery consumption reached with this kindle. But this milestone, in my opinion, is still 2 years away, maybe 3 if we want an affordable price.

    So, in my opinion, this kindle is the device that will put Amazon in the dominant position with no problem.

  2. My original case is the same. If K3 cannot accomodate page numbers (unique/hard/true) along with locations, then I cannot buy books. I read books and make notes. It is fundamental to have a page number. The e-reader that allows this is the one I will buy.

  3. The iPad isn’t competing with Amazon. Note that I said Amazon, not the kindle. Amazon isn’t a hardware company, and they don’t really care about the kindle. They want to sell books. That’s why they priced the kindle3 at such tight margins. That’s why the kindle doesn’t support epub files. That’s why they invested in high-quality kindle apps for literally every platform available.

    Amazon is HAPPY if you buy an ipad and read amazon books on it.

    Sony is a hardware company. They’re probably going to leave this market entirely. It’s too competitive to play without a stake in the game. All the hardware companies will.

    B&N competes directly with Amazon. They’re the only real threat.

    • Rodalpho:
      I kind-of disagree with your statement that Aamzon doesn’t care about the kindle. I think Amazon cares deeply about the Kindle device as well as the Kindle store. I think that even if the majority of sales were to go to non-Kindle devices (which would surprise me quite a bit if it were true), Amazon would continue to make the Kindle. If they didn’t care about the device, I think they would sell books in epub as well as the kindle format because then they could reach the people with sony readers and nooks.

      • I think that Amazon cares a lot about the Kindle. They were working on it for three years before its release. We know they think and act long-term. They are sowing seeds. First the plain text market and then note-taking and education to encompass a paperless society and then the fact that you have an Amazon vending machine in your hand will come into play. At that time, the Kindle will be everywhere and we will be buying tangible goods from Amazon.

        Yeah, I think they care.

  4. Amazon doesn’t want to be just another venue selling ebooks, because then they have to compete on price. They want to control the entire experience and develop an ecosystem that locks users into their DRM and their software. That’s why they don’t let devices support both epub and mobi formats.

    The kindle is a part of that strategy, to be sure, because it’s high quality hardware that supports mobi. But it will very shortly no longer be essential, once we have android/iOS tablets with screens suitable for reading books.

    • Rodalpho – While Amazon will gladly sell through any channel – don’t you think they’d rather sell through a channel they control completely. Who knows what restrictions Apple and Android present down the line.

      • We know Apple could shut down Kindle for iPhone and iPad from his app store, whenever they want. They’ve already done so for other apps, I’m surprised they allowed kindle on iphone in the first place. I doubt that they will continue allowing kindle in his OS for a long time, considering they have iBooks competing directly with Amazon.

  5. Sheesh… Sorry about the typos. Can’t wait for Kindle to birth a note-taking/writing machine so that I can use it outside instead of my HTC with its disappears-in-the-sunlight screen

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 9,809 other followers