You have to look at the Kindle 3 and wonder how the smaller eReader companies are going to survive - especially since this is so soon after Apple used the iPad to hijack part of the eReader market.
There’s news today that Foxit Corporation is killing off its eSlick Reader to focus on providing PDF technology to eBook providers. Foxit now joins Readius, Cool-er, and a host of smaller eReader companies that have lost out in the eReader Wars and closed down.
Smaller eReader companies are already struggling or dying
There were a few things that combined to make life particularly hard for the Cool-er’s and eSlick’s of the world -
- The iPad forced eReaders to cut prices and also stole some of the casual readers.
- Kindle and Nook improvements (software upgrades) and price cuts put a lot of pressure on other eReader companies.
- iPad stole some of the buzz around eReaders. That meant the remaining buzz and attention focused only on the top few eReaders – Kindle, Nook, Sony Reader. There just wasn’t enough Press attention left for Alex, Entourage Edge, and all the other devices that wanted a share of the eReader market.
Any business goes through consolidation – However, for eReaders it was particularly painful as Apple tried to redefine the eReader market and almost succeeded. Not only did a company like Foxit have to fight Kindle and Nook (and it wasn’t likely to win that battle) it had to fight Apple’s reality distortion field where eInk is suddenly terrible for reading and everyone should aspire to read Winnie the Pooh.
The arrival of the iPad destroyed the weaker eReader companies
Companies like Cool-er and Plastic Logic were already struggling to compete with the Big 3. When the iPad arrived they got hit on brand new fronts – value for money and doing more than just reading.
If the Big 3 already have 80% to 90% of the market and a strong brand like Apple comes in and steals 10-20% of the people who would buy eReaders you have nothing left.
Instead of Kindle vs eSlick it was Kindle vs iPad. There just wasn’t any market share left for small eReaders like the eSlick. Readius closed down. Plastic Logic indefinitely delayed its release. A lot of companies died out.
A culling process that normally takes a year or two took just 3 months.
Kindle 3 may very well finish the job
Kindle 3 and Kindle WiFi set a very high bar.
Take something like the Kobo Reader. Comparing it with the Kindle WiFi is unfair – there’s no other word for it.
Take a larger eReader like the Alex Reader. It’s $299 and suddenly the Kindle 3 is $189 and has the new generation eInk Pearl screen and lots of great new features and just totally outshines the Alex.
The culling that started when Apple began to pretend iPad is an eReader is going to accelerate. All of the weaker eReader companies are going to die out.
What dimension can you compete with Kindle 3 on?
Let’s say you’re a fledgling eReader maker like Alex. How do you compete with the Kindle 3?
- At $189 Kindle 3s are probably losing money. You can’t beat Kindle 3 on price.
- The new eInk Pearl screen is the latest generation. Beating Kindle 3 on technology is ruled out.
- The software is improving at a ridiculous rate.
- It’s thinner and lighter and more compact.
- The Kindle Store has the most new books and cheaper prices.
- WhisperNet means things like free Internet.
- Kindle is getting exclusive book deals.
There are a handful of dimensions left – free public domain books (even there Amazon has begun to advertise the 1.8 million Internet Archive books), ePub, library ebooks, openness, Android.
Keep in mind that a lot of the dimensions that are left don’t matter as much to readers as eReader price and eBook price and ease of use. Most readers don’t know what ePub is and couldn’t really care less what Operating System their eReader uses – to them it’s just a book.
Nook 2 and the new Sony Readers are going to fill the gaps left by Kindle 3
A smaller eReader company might say – Never Mind. We’ll go with ePub and openness and library books and cater to people who don’t like Amazon.
However, Nook 2 and the new Sony Readers are going to do it better - Nook and Sony already have that market cornered. Nook 2 is probably going to come in at $199 with the eInk Pearl screen. It’ll continue with support for ePub and library books and it’ll still have Android. Sony might even incorporate Google Editions. People who don’t choose Kindle 3 or Kindle WiFi will go with Nook 2 or the new Sony Readers.
A lot of casual readers will go with the iPad or with smartphones. There isn’t any market left for the smaller eReaders.
Which eReaders might survive Kindle 3 and Nook 2?
Sony Reader obviously. However, it’s not guaranteed.
Kobo is backed by a lot of strong companies. So, it’ll probably survive. However, it’s lost out on this round of the eReader Wars. In the Kindle WiFi vs Nook WiFi discussion it won’t even get mentioned.
Pretty much every other eReader is under threat. The Alex, the Entourage Edge, the BeBook – all of these eReaders suddenly have a very dismal future ahead of them.
Plastic Logic has hundreds of millions of dollars of backing but its investors might pressure it to sell its technology.
The few remaining markets are country specific markets. There are eReader companies in China and India catering to those specific markets and they’ll still be able to do decently well. The same might be true for non-English markets around the world. You do have to factor in that now Kindle 3 and Kindle WiFi support CJK fonts and Cyrillic fonts. So even these markets might soon be threatened.
Between Kindle 3 and Nook 2 we might see dozens of eReaders killed
The Kindle 3 at $189 and the Nook 2 (probably at $199) are going to kill off lots and lots of eReader companies.
These are companies with great devices (hopefully the Nook 2 is great), very solid bookstores, good services (like 60 second book downloads), and are trusted by readers. In addition to all these things they are providing the best eReader and eBook prices.
There’s no room left for the smaller eReader companies.
eReader companies that try to compete on price are going to feel the pain of competing with a $139 Kindle WiFi that is very, very good. Amazon has probably sealed off the lower end of the eReader market with the Kindle WiFi.