Amazon’s Kindle on other devices strategy

Amazon released Kindle for Blackberry yesterday and it’s a good time to come back to the advantages and disadvantages of making Kindle software and eBooks available on various devices.

Here’s what Amazon is offering with Kindle for Blackberry -

  1. US only. 
  2. Supported devices include Bold 9000, Bold 9700, Curve 8520, Curve 8900, Storm 9530, Storm 9550, Tour 9630.   
  3. You get the 400,000+ books in the Kindle Store at their usual cheap prices.
  4. The basic reading and Whispernet functionality is enabled.  
  5. There are 3 future enhancements slated – scrolling in addition to page turns, search, and creating notes and highlights.  

Kindle for Blackberry means that Amazon are now letting Blackberry owners read Kindle books without owning a Kindle.

Is it a good decision to let users get Kindle books without buying a Kindle?

A past post – Are Kindle for PC, iPhone Hedges? addressed this question to a certain extent.

The answer now, as then, is that letting users get Kindle books without buying a Kindle is a great idea -

  1. It weakens the position of competing eReaders if they don’t offer their books on non-eReader platforms. 
  2. Every single Kindle ebook purchase locks users into the Kindle ecosystem. 
  3. Using Kindle software and buying Kindle eBooks makes users likelier to read more and graduate to buying a Kindle. 
  4. There might be some Kindle sales lost - However, they are unlikely to be a lot and those users still buy Kindle eBooks.
  5. The more Kindle eBooks are sold the stronger the Kindle Store gets and the stronger the Kindle gets.

An important thing to keep in mind is that most of these are long-term bonuses.

Amazon is setting up the Kindle for long-term dominance 

People are looking at things in the immediate to 1 year time-frame and assuming it’s a loss for Amazon i.e.

A Kindle for Blackberry user now means that the user will not buy a Kindle.

The other, equally myopic, perspective is that Amazon is hedging its bets and doesn’t believe in the Kindle device.

Actually, Amazon are looking at things with the long-term and very long-term implications in mind -

  1. What happens in 10 years?
  2. Can we dominate both eReaders and eBooks?
  3. How do we get people to read more?
  4. How do we get people who wouldn’t buy an eReader to read more?
  5. What’s an easy introduction to the Kindle eco-system.
  6. What moves are going to be hugely significant 10 to 15 years down the line.

It makes sense to let readers on as many devices as possible read Kindle Books and to introduce as many people as possible to the Kindle eco-system.

Kindle for PC, iPhone, Blackberry work in conjunction with Amazon’s other moves

It’s not just with Kindle for devices that Amazon is showing its long-term thinking. There are lots more examples -

  1. The $9.99 prices and taking losses on books. 
  2. Amazon Encore. 
  3. Mr. Bezos talking about there being a Kindle 10.  
  4. The speed with which Amazon have responded to competition (especially recently in response to Nook and iPad).
  5. Letting authors get 70% of ebook prices.

Amazon intends to be the platform for all of Publishing and it’s certainly moving according to a 10 to 20 year blueprint.

What really happens with Kindle for Blackberry?

Let’s look at various groups of people and consider how Kindle for Blackberry affects them -

People with Blackberries and Kindles

They suddenly get a lot more bang for the buck -

  1. They can read across Blackberry, Kindle, and other devices.
  2. Books are synced and notes made on the Kindle are available on the Blackberry.
  3. They can read more often.

They get a lot more value from their Kindle device and Kindle books purchases.

They also get locked in further into the Kindle’s eco-system and buy more Kindle Books.

People with Blackberries thinking about buying a Kindle  

Let’s say there are two wide sub-categories -

  1. The first category think they don’t need a Kindle any more and don’t buy one.
  2. The second category think a Kindle makes even more sense and buy a Kindle.

While we can speculate endlessly on which affects Kindle sales more, the real bonus for Amazon is that both categories buy Kindle eBooks.

People with Blackberries thinking about buying another eReader (non-Kindle)

This is very similar to the previous category – a lot more people start buying Kindle eBooks.

We also get a small number of people who decide to get a Kindle instead of another eReader as the Kindle with Kindle for Blackberry offers more value.

People without Blackberries choosing between Blackberry and Kindle

Here we run into a bit of a problem. Suddenly the Blackberry becomes the clear choice. It does lead to losses in Kindle sales.

However, there isn’t really much loss in Kindle eBook sales.

The Net Effect of Kindle for Blackberry

We get a net impact that is very interesting -

  1. Kindle sales probably go down a bit. 
  2. Kindle eBook sales probably go up a bit.

That, however, is in the short-term.

In the long-term Kindle for Blackberry users are likelier to buy a Kindle. Also, the number of Kindle for Blackberry users is going to be a lot more than the number of people owning a Blackberry that are considering buying a Kindle.

That means that in the long-term we get a lot more Kindle Sales and a lot more Kindle eBook sales.

The net impact of Kindle for Blackberry is going to be very positive for Amazon.

A Very Useful Online Reading Tool – Readability

It’s amazing that as the Internet has evolved we’ve done precious little to improve the readability of various sites.

Readability changes that.

The Internet is getting worse and worse for reading

Instead of it becoming easier and easier to read websites it’s becoming tougher and tougher -

  1. There are more and more ads – including advertisements hiding in content and targeted ads.  
  2. Hardly any websites allow you easy options for changing the font size or type.  
  3. Some websites even lock out the browser’s font size settings.
  4. The text is competing with other design elements.

Now, we have a big step forward.

Readability is Making Reading Cool Again

Readability is an absolutely great tool for reading sites and blogs.

Here’s what they have to say -

Readability is a simple tool that makes reading on the Web more enjoyable by removing the clutter around what you’re reading.

What does Readability let you do?

Readability lets you strip away everything except the text and put the text into a style, font size, and column width that suits you.

At the Readability site you choose -

  1. One of 5 different styles included an inverted colors style.  
  2. One of 5 font sizes.  
  3. The width of the columns.

Then you save the specified link as a bookmark.

On any page or site or blog press the bookmark to convert the site to your very own Readability enhanced version.

You can also easily print and email the text only version. The difference really is spectacular.

How do you set up Readability?

Here are the steps for Internet Explorer 8 -

  1. Go to the Readability Page.  
  2. Choose a style from newspaper, novel, ebook, inverse, and athelas. Remember to scroll down and see how the example text looks with your chosen style.
  3. Choose a size from extra small, small, medium, large, and extra large. Again remember to scroll down and make sure you like the setting. 
  4. Choose the margins – you have extra narrow, narrow, medium, wide, and extra wide.  
  5. Right click on the Readability button/badge on the right side of the page and in the options choose ‘Add to Favorites’.
  6. You’ll get a warning that you’re adding a favorite that might not be safe. It’ll ask you - Do you still want to continue? Click Yes.
  7. The dialog will have the name Readability. Leave that and look at the option below which says ‘Create In’. Click that and select the Favorites Bar directory within Favorites.  
  8. This will create a new Favorite in the Favorites Bar of your browser. That means it’ll show up right at the top near where the address bar and search box are (the browser’s search bar). You might have to adjust it so that it’s showing.

To use it – At any page just click on the Readability Button in the Favorites Bar (or you can click on favorites and then go down to Favorites Bar and then the Readability link). 

The site/blog/page will be instantly converted into text only with the style, size, and margin settings you chose.

Hopefully Readability proves useful to you.

Killer Apps for App enabled eReaders

Keep running into Apps that turn the iPhone into an entirely different device and just add a ton to its value proposition. It’s finally made me realize - 

eReader Apps are going to be big and they are going to destroy companies that don’t have apps.

Don’t know how eReader companies fail to see the huge benefits apps provide. 

Why eReader Apps will be powerful

Once a company has set context and put in rules you’re left with a blank canvas.

  1. Developers and Creators in general can come in and address any problem they see. 
  2. They can focus on any use case. 
  3. You suddenly have tens of thousands of people working to add value to your device.  
  4. You get lots of different perspectives.

Basically, you get tens of thousands of developers who only get paid if they’re successful, you don’t pay them, and you can cut off their work anytime if it’s terrible or dangerous.

An eReader company allowing apps gets to still define vision and boundaries – they just get 100 times the developers and creators and artists to work with.

eReader Apps create killer features

Here are a few examples of Apps that aren’t that hard to create -

  1. An app that uses the Nook’s LCD screen to turn the cover flow feature into a folder feature.
  2. An app that uses the Kindle DX’s accelerometer to create a Sleep Cycle like app that wakes up you at the best possible time each morning.
  3. Using the Entourage Edge’s LCD screen as a game screen and the eInk screen for a level map which updates periodically.
  4. An app that measures how much time you spend on various features and recommends tips and shortcuts specific to your usage.
  5. A RescueTime like tracker that lets you know what percentage of your reading time goes into what type of book.
  6. An app that automatically sorts all your purchases and books into bookshelves that you can edit and share.

With eReaders we are now getting a lot of features – writable screens, touchscreens, dual screens, wireless connectivity, accelerometers, and more.

If you let developers utilize these features to create apps they’ll definitely come up with features that become killer features - it’ll make your eReader irresistable to readers.

eReader Apps can negate Killer Features

Consider a few killer features that are easily implementable as apps -

  1. Kindle’s Text to Speech.
  2. Alex’s ‘Grab on LCD and Read on eInk’ WebGrabs feature.
  3. Nook’s Cover Flow (for eReaders that have LCD screens).
  4. AutoScrolling.
  5. Speed Reading.
  6. Library Finder Feature.
  7. Support for a particular format.

You could have developers come in and nullify two of your competitors by coding in those competitors’ main killer features.

Users don’t care who did it or even if they have to pay $5 for it.

What are some potential Killer Apps?

There are infinite Killer Apps.

There might be a feature that is a killer feature for 5,000 people. An eReader company might never be able to prioritize and implement such a feature. 

However, an App Developer definitely can – and will.

Here are some examples -

  1. Instapaper – Capture articles to read later on your eReader.
  2. Comic Reader – Something that takes a bunch of images, scales them automatically and scrolls through them. 
  3. Exercise Journal. 
  4. Photo Rotator - When your eReader is plugged in and in sleep mode it circles through your photos.
  5. Alarm Clock and Reminder – Everyone can use one.
  6. Grocery List App.
  7. Create Your Own Newspaper – Readers pay the eReader company and the eReader company pieces out payments to newspapers.
  8. Virtual Pets – Please don’t make it recurring payment based.  
  9. Aquarium App, Zen Garden, and apps that help people relax.
  10. Education Apps.
  11. Music Sheets that scroll to the side at an appropriate pace.
  12. Dog/Cat Owner App – Keep your photos, a journal, health records, training tips, shopping lists.
  13. An app that converts any book into a read-along book i.e. adds photos and images and increases the font and has 1-2 lines per page.
  14. Horoscope App.
  15. Quotes and Voacbulary Apps – Give you a new quote and a new word either every day or with each book.  
  16. Health Apps – Virtually unlimited apps here including apps for remembering to take medicines, apps to track vitamins, apps to keep health records, and more.
  17. Music Companion App – Figures out and plays the right music based on words of the book you’re reading, its genre etc. Next level up would to be gauge mood in each section of the book and play appropriate music.
  18. Flight Tracker and Flight Booker – App that helps you get travel deals, flight status and more.
  19. Password App – Keep all your passwords in one easy to reference app.
  20. Language Apps – Dictionaries, Phrase-books, Spoken Word Tutorials, and more.
  21. WiFi Finder – Finds the strongest connections, finds open connections, and more.

It’s a never-ending list and it keeps adding to the value of the eReader.

When will we see eReader Apps?

It’s hard to say as eReader companies have either shunned Apps or are ambivalent about them.

Where do eReader companies stand on Apps for eReaders?

Various companies have various stances -

  1. Amazon haven’t shown their hand.
  2. Txtr have said they’ll add Apps.
  3. B&N have stated that they’re open to adding Apps.
  4. All the Android based eReaders (Alex, Entourage Edge, Nook) probably will get a shared eReader App store.
  5. Sony have been non-committal.

They might all get a big surprise at Apple’s January 27th announcement. At that point they won’t have a choice – they’ll need Apps to compete.

Perhaps their biggest advantage – Only Apps can beat Apps

Take two eReaders.

  1. The first one allows Apps. The second doesn’t.
  2. In 6 months there are 50 additional features, including 4 that are bona-fide killer features.

At that point the second eReader is in big trouble -

  1. To develop that many features they’d need to increase their development team ten-fold.  
  2. If they do start on Apps they still have 6 months of catching up to do.
  3. More and more developers keep joining the first eReader’s App Store.
  4. The second eReader has to compete for developers’ attention. 

Only Apps can beat Apps and the first company to start with Apps usually gets an insurmountable advantage. In both social networks and cellphones we’ve seen this.

eReader Companies need to roll the dice soon

The first big eReader company to open up their eReader to apps (whether it’s Kindle or Nook or Sony Reader) might end up being one of the two big players.

The other will be Apple as it’s already got hundreds of thousands of developers working for it.

  1. In the end it comes down to the value proposition an eReader offers.
  2. Books are a big part of it – However, lots of stores sell books at reasonable prices.
  3. An eReader company that allows Apps will add so much to its value proposition that even if its eBooks are $2 more it’ll still win.
  4. Plus it doesn’t have to put its eBooks at $2 more since it’s making money off of Apps too.

Apple and the first of the big three to allow Apps – those are your two likely winners of the eReader wars.

eReader Apps are the new 60 second wireless downloads - Companies won’t realize they’re a big deal until they’ve already lost.

How big is the Kindle ecosystem?

As the Kindle grows in popularity the Kindle eco-system is exploding. NorthJersey.com covers one success story - Eric Fisherman who is the maker of the Persicope Book Cover and Light.

The Kindle Periscope Story

It’s a captivating account with a great back-story -

Eric Fisherman acquired rights in 2006 to sell the Periscope, which his father, Carl Fisherman, invented more than 20 years ago and sold through other companies.

Eric re-worked his father’s design to work for the Kindle.

This holiday season the covers sold out. It’s not a surprise as they address two of the biggest Kindle needs i.e. cover and reading light, in one device.

  1. Eric says he tripled his business last year but won’t give out figures. Smart move.
  2. He runs it all himself – covers are manufactured in China, sales, marketing, packaging was outsourced to freelancers, and UPS handles shipping.
  3. The article says his rivals, M-Edge of Maryland, and Gold Crest of California (Mighty Bright Lights), are much bigger companies.
  4. It was interesting to find out the Periscope can hold a notepad and pen on the left side, and that there are twin LED lights that last 40 hours on 3 AA batteries.
  5. Based on sales volume Amazon invited Eric to sell in the Kindle Store (though it shows up in Electronics).
  6. A Periscope for the Kindle DX is planned. As is one for the Nook.

By the way both M-Edge covers and Mighty Bright Lights are excellent products – there’s a reason they’re the bestselling Kindle accessories. The Periscope’s big advantage is that it combines the two functions into one device – although the price could be $10 less.

As Kindle Sales increase Kindle Accessories become a huge market

The Consumer Electronics Association has these estimates for eReader Sales -

 estimates 2.2 million e-readers were sold last year, nearly four times the 2008 number and up from 20,000 in 2006.

“We are estimating the market will more than double to more than 5 million in 2010, with more than $1 billion in sales.”

Whether you think the Kindle is 40% of that or 80% of that it’s a huge number.

Since the Kindle 2 doesn’t come with a cover or a reading light we’ll literally get millions of people looking for -

  1. Kindle Covers. There are 167 different varieties of Cases (including variations in color) for the Kindle 2 in the Kindle Store.
  2. Kindle Reading Lights. Just 3 models here and lots of opportunity.

We’ll also get some Kindle owners looking for -

  1. Headphones. A few models are in the Top 25 Kindle Accessories.
  2. Car Chargers.
  3. Kindle Screen Protectors.
  4. Kindle Skins. 

There are just a lot of opportunities.

Any accessory company not targeting eReaders, especially the Kindle, is really missing out.

The 2 Big Prizes: Kindle Covers and Kindle Reading Lights

Kindle Covers are booming

There are a huge number of options for Kindle 2 cases in the Kindle Store -

  1. A standard leather cover from Amazon.
  2. Neoprene cases from Belkin and Built. 
  3. Lots of cases from M-Edge – leather, sports, etc.
  4. Nylon sleeve from Timbuk2.
  5. Cole Haan premium leather cases for $100 each.
  6. Kindle sleeves from Octo.  

M-Edge has a ton of product lines (including New Yorker themed covers) and dominates with 18 of the top 24 bestselling Kindle 2 cases.

If we sell 2-5 million Kindles in 2010 (and it’s pretty likely) M-Edge stands to make a ridiculous amount of money.

In addition to these options we also have Kindle cases being sold at Etsy, eBay, and at many stores and sites online (like sfbags.com).

Kindle Reading Lights are the least competitive market

It’s puzzling that there are just 3 featured reading lights in the Kindle Store -

  1. Mighty Bright’s XtraFlex 2 which has been #1 forever. 
  2. M-Edge’s eLuminator 2. 
  3. Great Point Flex Neck Light.

Even if just 25% of Kindle owners buy a reading light that’s a market ig enough to support more than 3 companies.

The Bigger Prize: eReader Accessories in General

The Kindle is booming as part of the boom in eReaders.

We’re going to see the following devices sell well this year -

  1. The Kindle. 
  2. Apple iSlate. 
  3. Sony Reader.
  4. The Nook.
  5. Kindle DX.
  6. Entourage Edge.
  7. The Alex.
  8. Hearst’s Skiff.
  9. Que.
  10. Kindle Electronic Pen ;) .

Plus a lot of the other eReaders will sell decently. 

People will be spending -

  1. $20 to $100 on a cover.
  2. $5 to $20 on a reading light.
  3. $5 to $10 on a screen protector.
  4. $10 to $20 on an ereader skin.
  5. $10 to $25 on car chargers and replacement chargers.
  6. $40 to $60 on an eReader warranty.

That’s a ton of money up for grabs.

eReader Accessories are the third most important revenue stream in the eReader ecosystem.

The Biggest Prizes are way too competitive

The biggest prize of the Kindle ecosystem is obviously books. Even more than the eReaders themselves (which are 2nd).

However, there’s way too much competition.

With Books you’d have to take on -

  1. Google. Who’d want to take on a company brave/reckless enough to take on China ;) .
  2. Amazon.
  3. Barnes & Noble.
  4. Borders and Kobo Books.
  5. Online giants like Scribd and Lulu.

With eReaders you have to take on -

  1. Amazon. Who’d want to take on a company brave enough to take on WalMart.
  2. Apple – potentially. Not a good idea to take on Apple while Mr. Jobs is around.
  3. Sony. Even the runner-up companies are dangerous, dangerous enemies.
  4. Barnes & Noble. 

Which leaves us with the third most valuable revenue stream.

eReader Accessories are the market to get into

How much could you make off of eReader Accessories?

  1. Assume $25 per year on eReader accessories per eReader owner – a pretty reasonable estimate.
  2. Assume 5 million eReaders sold in 2010.
  3. That’s an easy $125 million business.
  4. Assume 2.5 million eReaders sold so far and you can make $10 per year from them.
  5. That’s an extra $25 million.

We get a total potential market of $150 million. That’s off of a very conservative estimate.

Just the Kindle accessories market might be that big. 

eReader accessories as a whole will definitely be. Plus you don’t have to take on Amazon or Apple or even Plastic Logic for this $150 million.

Why aren’t more companies getting into Kindle accessories and eReader accessories?

How could eReader companies bypass cellular networks?

If we envision an ideal future for Publishing it might look something like this -

  1. Authors. 
  2. Publishers (when Authors choose to engage them). 
  3. A Platform that facilitates creation, editing, buying, and distribution of books.
  4. Readers.

We would want an equitable distribution of profits -

The Platform gets 10-30%, the Publishers get what Authors deem proper, and authors get the rest.

There’s one huge problem here -

As opposed to most middle-men who are just hoodwinking authors and readers into believing they provide value, we have cellular networks which do provide a lot of value.

The only way to eliminate cellular networks and the share they get is to build out your own network.

How could eReader companies build out their own network?

There are no easy solutions.

You either create your own network –  

  1. Consider a WiMax network like the one Sprint and WalMart  are building. It’s potentially workable. 
  2. You could attempt to get devices to talk to each other and interconnect to form a mesh network. 
  3. You try to buy out a wireless network – not an easy task.
  4. You buy up infrastructure from a lot of the fiber optic infrastructure companies that are struggling or bankrupt.
  5. You develop or promote new wireless technologies to the point that they can form viable networks.

OR

You carve out a piece of an existing network –  

  1. You could use a ‘Net Neutrality’ strategy and claim that wireless networks are supposed to allow some free traffic or some ridiculous argument.
  2. You could lobby to carve out a portion of the networks as ‘open’ for the greater good.
  3. Strike a deal to get a set amount of bandwidth per year.
  4. You tie up with WiFi networks.
  5. Strike a deal with the cable networks and mesh that with WiFi.

Platform companies usually go for the former set of options and create their own network. They should – sometimes they don’t.

The constant war between content creators and networks

We have an interesting conflict going on -

Every element of the eco-system is trying to maximize the value it can get.

In terms of the cellular networks and content creators -

  1. Cellular networks want to make content cheap or free. They want to get all the money for delivering content while portraying content as not very valuable.
  2. Content creators want to turn the cellular networks into dumb pipes. They want the infrastructure to be cheap or very free.

The Platform aims to provide and own most of the pipeline. Thus, the natural evolution of the platform will be to supplant the networks or merge with them.

The most powerful Platform is one that has its own Network

We’re talking -

  1. Apple with its own 3G network.
  2. Amazon with a WhisperNet built on its own servers and towers.

The opposite direction is possible too i.e. the networks evolving to become the platform -

  1. Vodafone opening its own ebook store is a first, big step.
  2. AT&T and Sprint will begin to do this too.

At that point there is NO ONE else between authors and readers.

A joint Platform-Network becomes the sole channel between authors and readers and gets the type of power even monopolies marvel at.

Will any company be able to pull it off?

 At the moment it doesn’t seem likely.

There are a few reasons why it’s extremely hard to create a platform-network hybrid -  

  1. It’s very expensive to build up the infrastructure.
  2. Wireless Networks have a lot of money to fight off challengers.
  3. You need some amount of domain expertise in each area. 
  4. The Platform companies are very powerful and can fight off encroachments on their domain.
  5. The margins aren’t high enough.
  6. It’s hard to imagine tech companies getting into running mobile kiosks and repairing wireless towers.

The easy option is to play the openness and net neutrality game and that’s why you have a lot of tech companies doing that.

  1. It’s amazing to see some of the most profitable companies in the world plead in favor of turning wireless companies into dumb pipes.
  2. Internet users are keen to sympathize as it benefits them.
  3. There’s a lot of lobbying going on so there might still be some hope for the Net Neutrality circus.

It’s quite remarkable what you can get people to believe by including an element of self-interest.

Who would have thought the biggest threat to wireless networks would be a completely made-up story.

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