Death and destruction amongst eReaders and eReader companies

While the Kindle and the Nook Color continue to do well, there are lots of problems in eReader Land –

  1. Smaller eReader makers are dying out.
  2. Both Amazon and B&N are getting hammered by Wall Street for their investment in eReaders. B&N more so than Amazon.
  3. Apple seems ready to cut off the oxygen supply to eReader apps on the iPlatform.

Let’s take a quick look at each of these.

Kno and Alex are dying

Kno eReader is being phased out and the company is going to focus on making software. It’s a bit ridiculous – that a company making a dual screen tablet is considering selling off its hardware business and moving to making software for other people’s tablets. What a capitulation.

All Things D has a report on No-Kno –

Sources said Kno execs have recently decided that the quicker-than-expected uptake in tablet production by a multitude of powerful device makers had made its efforts to package a seamless offering less critical.

Instead, the company will focus on its robust software and services to offer students on the Apple iPad, …

BoomTown could not determine which two companies Kno was in serious discussions with about unloading its hardware business …

Made its efforts to package a seamless offering less critical?

They ought to be honest – They got destroyed in the Tablet market.

Almost in parallel, the Alex eReader is being phased out. It’s not clear whether the ‘phase-out’ is to introduce a new model or whether Alex is about to join Kno in the Beautiful eReader Graveyard.

B&N stock gets punished for B&N’s focus on the future, i.e. eReaders

Amazon’s stock got hammered after its last earnings release – Wall Street didn’t like Amazon’s focus on the future, i.e. eReaders. The same happened with Barnes and Noble today. Thanks to Roger Knights for the link to Bloomberg’s article on B&N and eReaders.

It’s some sort of joke where Wall Street isn’t willing to look beyond the next 6 months.

Barnes & Noble Inc., the largest U.S. bookstore chain, declined as much as 15 percent after suspending its dividend to conserve cash and invest in electronic books

What alternative does B&N have – Should it forget about ebooks and eReaders and go bankrupt like Borders?

You should be handing B&N a prize. What other company can compete with a giant like Amazon, survive a huge transition in its business, and come up with decent products that speed the democratization of Publishing.

B&N has the best Android tablet released so far. It has it for $249. It has around 20% of the market in both eReaders and eBooks – a larger share than it had in physical books. It should be getting an award for Most Adaptable Company of 2010.

Instead the stock is down 15% as Wall Street worries about its annual bonuses.

The problem is that for both Amazon and B&N this negativity from Wall Street has consequences. Amazon and B&N have to plan out 10 to 40 years into the future but they are hobbled by the geckos of Wall Street and the geckos’ focus on the next 6 months.

The threat of Platforms reneging on their (implicit) promises

So B&N and Amazon made a smart calculation –

  1. If we make eReader apps we reach all these casual readers.

It seems to have worked because, supposedly, 40% of ebook sales on iPad are via Kindle for iPad, and another 20% are via Nook for iPad.

However, B&N and Amazon either disregarded or didn’t realize two other things –

  1. A not insignificant portion of people who wanted a reading device got an iPad because they could get a choice of stores and/or they could get their favored provider (Amazon or B&N) on the iPad. Those were lost Kindle sales and lost Nook sales. It might be just 5% or 10% of iPad sales – but it was sales that Amazon and B&N lost thanks to their own iPad apps.
  2. Apple controls the platform. It can kick out Amazon and B&N any time. It can impose a tax and take all the profits for itself anytime. Now, its trending in that direction.

Basically, Amazon and B&N ought to realize now, if they haven’t already, that they are strengthening the enemy. For two companies that are forward-thinking for the most part, this was an amazingly short-sighted move.

Every platform is the same – a risky gamble. Perhaps not the Web and not the PC. However, Android, Mac, iPhone, iPad, and other platforms are just a gamble.

Not only is the grand ‘reading apps for every platform’ strategy a long-term impossibility, it’s strengthening the enemy.

What happens when the 10,000 hours rule kicks in with eReaders

The Kindle has been in the market for around 3 years and 3 months. It was in development for around 3 to 4 years before that.

Sony Reader has been in the market for nearly 4 years. Perhaps there was 2 years of development before that.

Nook has been in the market for 1 year and 3 months. It was in development for around a year before that.

We’ve seen eReaders evolve and improve over that time period. However, you have to wonder how close we are to a truly glorious eReader. An eReader that is timeless.

Let’s consider two questions that might help us figure out how long we have to wait before the superstar eReaders arrive –

  1. Does the 10,000 hour rule apply to products people make (in that same way that it, perhaps, applies to skills people learn)? 
  2. When would eReaders hit the 10 years/10,000 hours mark?

And after that we’ll wonder –

  1. What happens when eReaders hit the 10,000 hour rule?

Let’s start by jumping into the 10,000 hours rule and our assumption that such a thing as the 10,000 hour rule exists.

10 Years/10,000 Hours = Mastery

A concept brought up in numerous books like Talent is Overrated and Outliers is that it takes a certain amount of ‘deliberate practice’ to attain mastery in a skill.

These books talk about the process of mastering a skill as something very distinct from randomly doing something for fun.

  1. They claim Mastery requires deliberate practice. Deliberate Practice is a special type of practice that involves a very conscious, almost painful, focus on improving/learning.
  2. They also claim it usually takes 10,000 hours of deliberate practice to master a skill. For some areas it takes 20,000 or more hours.
  3. Additionally, they claim that this 10,000 hours of deliberate practice is usually spread out over a period of 10 years.

If we make a giant assumption that such a 10,000 hours rule exists, we have to ask ourselves what happens when a person has attained mastery. One possible answer is that the person starts working on her/his masterpieces.

How long does it take an ‘expert’ to make a masterpiece?

We have an expert. She has spent 10,000 hours over a period of 8 to 10 years and attained mastery in her craft. Now she sets off to create her masterpiece.

How long would it take her?

That’s a good question, and one assumption we could make, one that seems awfully convenient, is that it would take her another 10,000 hours of ‘deliberate application’ of her skills to create her masterpiece.

Let’s run with the assumption because, well, it is rather convenient. Plus it’s better to overshoot the figure than undershoot it.

It’s better to assume a 10 year period than a 2 year period

Let’s take eReaders. If we say that truly skilled people can create a masterpiece in just 2 years we would have the Nook 1, the Sony Reader, and the Kindle all labeled masterpieces. While they’re all good, it’s doubtful that any of them represent an eReader masterpiece.

If, on the other hand, we assume a 10 year period, we can hope that in around 2013 the best Kindle ever made will arrive. That in 2013 Sony too will exceed itself. That the best Nook ever will arrive in 2015.

What happens then?

What happens when eReaders get 10,000 hours of deliberate application?

We haven’t really gotten close to where we could be with eReaders.

Kindle – 6 to 7 years. Sony Reader – 6 years. Nook – 2 years.

Yet, already, we have around 10 million eReaders sold. We have eBooks at 10% or so of the US Book Market. We have the beginning of the democratization of Publishing and the rise of indie authors. We have a fall in book prices.

What happens when eReaders get their full 10 years and become true masterpieces?

Everything accelerates – the quality of eReaders, the adoption of eReaders, the spread of eBooks, everything.

Perhaps these are the main improvements we’ll see by 2013/2014 (when at least Kindle and Sony Reader have hit their 10 years) –

  1. Prices around $50. 
  2. Color support.
  3. eReaders you can also use as eWriters. 
  4. Unbreakable eReaders.
  5. Flexible eReaders.
  6. Availability of 90% of books that are published.
  7. eReaders that can be folded out into screen sizes that are larger than their carrying sizes. 

It’s hard to say what features we’ll see over the next 3 to 4 years. Text to Speech wasn’t really a feature many people anticipated. Neither was the free-hand drawing that Sony Reader added in its second generation eReaders. Hopefully, there will be lots of good surprises.

We are still in the beginning stages

Perhaps the biggest takeaway from this ‘eReaders still have to hit 10,000 hours’ post is that we’re still only 50% or 60% into making good eReaders. By 2013/2014 we’ll get our first superstar eReaders. The real masterpieces.

By then lots of other things will have improved too – resources for authors, publishing, platforms, services, software.

It’s going to be a very different world and it’ll be interesting to see how the people who are predicting 25% market share for ebooks by 2015 handle the new reality.

Are we going to see a color eReader from Samsung soon?

The Kindle uses eInk Pearl with Mr. Bezos saying color is a long ways off.

At the same time we have –

  1. PVI saying eInk Triton is not far off. Hanvon agrees, and is releasing a color screen eReader this year in China.
  2. PocketBook releasing a color eReader, based on Qualcomm Mirasol, in Q3, 2011. 
  3. Samsung buying Liquavista, which has its own color ePaper technology, and offering 50 Euro discounts on both of its existing eReaders.
  4. Fujitsu selling its second generation color screen eReader in Japan.
  5. Adam shipping with a Pixel Qi powered multi-mode screen, which includes a reflective mode for reading in sunlight.

That’s 5 separate companies and 5 separate screen technologies. 2011 will definitely see interesting color eReaders and reading tablets. The things worth wondering about are –

Will Amazon release a color Kindle? What will PocketBook’s Mirasol screen eReader be like? Is Samsung going to soon release a color eReader?

This post will consider the third question.

Signs that a Samsung color eReader is closer than we think

There are a few –

  1. It just bought Liquavista outright. That might mean it’s getting ready to produce color eReaders and wants to get a lock on the technology, and also guarantee there is enough supply.
  2. It’s started discounting its existing eReaders massively. Samsung E60 is now half-price at 50 euros. If there’s one thing we’ve learnt about eReaders it’s that a big discount is usually quickly followed by a new eReader release.
  3. It’s stayed in the eReader market and it’s launching worldwide. If nothing else, that suggests it has intent to compete all over the world.

You also have to factor in the fact that Samsung is a monster and it’s bound to keep fighting in eReaders. A few facts courtesy Wikipedia

  • Samsung Group accounts for 20% of South Korea’s exports.
  • It had $173.4 billion in revenue in 2008. Also, in 2008 it had $252.5 billion in assets.
  • It’s everywhere – world’s second largest shipbuilder, world’s largest electronics company, the 14th largest life insurance company. It even has the fifth most popular theme park in the world.

With over 10 million eReaders sold, and a potential market of tens of millions of eReaders a year, Samsung must feel it’s now worth it to commit fully to the eReader market. Which would explain it buying Liquavista.

Is it possible that Samsung might lose interest in eReaders and color eReaders?

Well, it’s rather unlikely.

It has eReaders out. It is selling them all over the world. It just bought a company that makes color eReader screen technology.

There are probably some reasons why Samsung might quit eReaders –

  1. It might think that reading tablets or tablets are a better market to compete in. Note that the Tablet market has very little competition at the moment (just Apple) while eReaders have the Big 3 of Kindle, Nook, and Sony Reader.
  2. Strategically Samsung might feel it’s important to focus on markets other than ereaders first.
  3. It might decide to get into the business of providing eReader technology like eReader screens and memory – as opposed to eReaders themselves.
  4. The eReader market might stall at around 10 to 15 million units a year.
  5. Samsung might decide it doesn’t want to get into the hassles of dealing with Publishers for books. It might feel there’s just too much work involved in providing a complete device+store+channel solution of the type Amazon and B&N provide.

While it’s not inconceivable that Samsung leaves the eReader market, it’s a bit unlikely.

Only the US eReader market has reached anything close to maturity – it’s still penetrable via a color eReader or a very cheap one. The whole world awaits and Samsung has a lot of advantages worldwide. It’s obviously got some big advantages when it comes to Asia and especially South Korea and surrounding countries. There is the possibility that the eReader market keeps growing – Samsung can’t risk missing out on a 40 million eReaders a year market.

When might Samsung release a color eReader?

Q3 or Q4 of 2011 would be the most likely time. All signs indicate that a Color Kindle won’t arrive until Fall 2011 or later. eReaders powered by Qualcomm screens are also not going to be available until then. eInk Triton is only arriving in China in the first half of the year – It might not even arrive in the US by end 2011.

Now that Samsung owns Liquavista it can speed up timelines and ramp up production – It gets a chance to beat Qualcomm and eInk Triton to the US market.

The most likely release date – Fall 2011.

If Samsung decides it needs to be first to market – a June 2011 release date.

Anything before then is rather unlikely.