Are Kobo and Pocketbook the dark horses of 2011?

The Kindle and the Nook Color are both on a roll.

Kindle 3 and Kindle WiFi are clearly a step ahead of other dedicated eReaders – Unless B&N produces a stellar Nook 2 the majority of hard-core readers are going to end up as Kindle owners.

Nook Color has managed to create a unique niche for itself – the Reading Tablet. It’s going to win over a lot of casual readers. Unless iPad 2 is focused on reading, or a Kindle Reading Tablet materializes, Nook Color is going to dominate the ‘casual reader’ segment.

There are, however, two rather unlikely candidates that promise to give the Kindle and the Nook Color a run for their money – Kobo and Pocketbook.

Kobo as a threat to the Kindle Store, and to the Kindle

Kobo has a few things going for it -

  1. It fights on eReader price. It released the $150 Kobo eReader when other eReaders were around $200. Its Kobo Wireless eReader is currently on sale for $119 at Borders (thanks to a commenter at MobileRead for the tip).
  2. It fights on eBook price. Kobo’s ebook prices are close to prices in Kindle Store and Nook Store. Kobo Store always has offers and coupons.
  3. It has good backing. Borders is almost bankrupt, but it does provide exposure. The other backers are solid, solid companies.
  4. Kobo has extensive international reach. Its backers own a lot of retail stores around the world – which could all end up selling the Kobo Reader. Here’s a post on Kindle vs Kobo strategic advantages which details the ridiculous worldwide retail advantage Kobo has.
  5. It’s very, very persistent. Look at the rate at which it sends out coupons. Or the fact that it realized not having a wireless eReader was an issue, and released a new wireless version of its eReader.
  6. Its ebook store and its apps are well-designed.
  7. It sells in ePub, and it sells internationally. Combine that with the decent prices, and a lot of Nook and Sony Reader owners will choose it. Also, Kobo Reader supports ePub from any store using Adobe DRM.
  8. It’s leveraging existing brands – Borders in the US, Indigo in Canada, REDGroup in Australia, and so forth.

The primary reasons Kobo is a threat to Kindle are – It fights on price, it fights all over the world, it doesn’t give up, it’s been improving regularly, it has good backing, it sells ePub books.

Also, it isn’t afraid to compete. It isn’t ‘focusing on quality’ or ‘choosing international over US’. It’s going head to head with Kindle in reading apps, in eInk based eReaders, and in ebook stores.

Kobo is likelier to survive the eReader wars and thrive, than Sony.

PocketBook’s 2011 eReader as a Nook Color rival

Qualcomm has talked about how it has won a major client for its Mirasol color ePaper screens. Apparently, the client is so major that Qualcomm has invested $2 billion in production facilities. This plant is going to begin volume production in the beginning of 2012 – You have to wonder whether that’s when we’ll see a color Kindle 4.

Qualcomm also has a production joint venture with Foxlink which has been producing 5.7″ Mirasol displays in small numbers since April 2010.

This production source is probably what PocketBook will use for a color eReader it will show off at CES 2011, and which it promises to release in the third quarter of next year.

PocketBook’s Qualcomm Mirasol powered Color eReader might be just as big a threat to Nook Color as Kindle Tablet - unless Kindle Tablet uses Mirasol color ePaper.

A few things are worth pointing out -

  1. PocketBook’s color eReader would have much better battery life than Nook Color.
  2. The newness factor can’t be underestimated.
  3. We have no idea what the price would be – At $299, it’d be a big threat to Nook Color. At $400, it’d not be a threat at all.
  4. PocketBook has been making eReaders for quite a while. It’s one of the few smaller companies to not get decimated in 2010. In fact, it’s one of the few companies that has a large screen eReader.
  5. PocketBook has been trying hard – It has a variety of models, including a TFT color screen based 7″ eReader. It has a lot of good experience it can leverage when making its color eReader.
  6. It sells its eReaders in USA, Canada, Mexico, Australia, and Asia.
  7. It’s one of the few smaller eReader companies that makes good-looking eReaders (a few of its eReader models, not all).
  8. PocketBook is being aggressive about pricing – Its 5″ PocketBook 360 eReader is currently available for just $129.
  9. It supports ePub.
  10. It also supports a lot of formats which other eReaders don’t – such as FB2, CHM, and DJVU.

Perhaps the most impressive Pocket Book achievement is surviving 2010. If it can manage to release a Mirasol powered Color eReader by Q3, 2011, it’ll force Amazon and B&N to release color eReaders quicker than they otherwise would.

Kobo and PocketBook might play a bigger role than we realize

Kobo kicked off the race to $100 eReaders with the $150 Kobo Reader. It’s also doing a lot of price-cutting in eBooks. It’s going to continue to play a big role in eReaders in 2011. If it keeps improving at its current rate, it might replace Sony as a member of the Big 3 eReaders.

PocketBook might kick off the entire color eReader movement – If it manages to release a color eReader by Q3, 2011. If it brings Qualcomm’s Mirasol ePaper to market, it’ll force other eReader companies to scramble and release Color eReaders using Mirasol, eInk Triton, or another color ePaper technology. It would be remarkable if PocketBook turns out to be the company that drags eReaders into ‘The Promised Land of Color ePaper Screens’.

At a time when Kindle and Nook Color seem far ahead of the pack, it’s good to have a couple of dark horses competing in the eReader wars.

What are Kindle owners’ concerns as we head into Christmas?

The Kindle 3 and the Kindle WiFi are both in stock, and selling well. Everything seems to be good.

It’s worth taking a look at the official kindle forum, and seeing what concerns Kindle owners have.

Kindle Owners’ Top Concerns before Christmas

With some thoughts thrown in.

  1. Kindles are in stock again. It’s interesting how the official Kindle forum seems to get news faster than any other site. 
  2. Complaints that UK gets better free books than the US. It’s impressive that readers in every single country are upset about country-based restrictions on book offers and books.
  3. The thread on discounted books is going strong. It’s really worth checking. 
  4. Help on converting PDF files to Kindle format. Multiple threads on this topic.
  5. Choosing between WiFi and 3G. A lot of threads discussing this.
  6. Is a Kindle a good gift for a 67-year-old, who is slightly up to date with technology? Depends on how much she reads.
  7. Paul Coleman is running a thread where he’s asking for volunteers – volunteers to be put in as characters that are killed in his next book. Indie authors are finding smarter and smarter ways to promote themselves.
  8. Apparently, the white Kindle 3G is sold out.
  9. Questions about the lack of support for library books.
  10. How to remove books from the Archive. Well, you have to go to the ‘Manage Your Kindle’ page.
  11. Question on how to input numbers when using the Kindle 3. Well, Alt+Q is 1, and so forth. Or, you could use the SYM key.
  12. How to do ebook returns. Email Amazon customer service, or call them up.
  13. Question on how to turn off the Kindle. A lot of people are still uncomfortable with the fact that the default ‘OFF’ behavior for Kindle is sleep mode.
  14. ‘Anonymous’ talking about how iPad will kill Kindle by going to $399. I thought it was going to be Retina Display, or a thousand pint sized assassin dolls.
  15. Question on custom screensavers, and lack thereof.
  16. Creaky Kindle 3 – Something’s moving around inside. That sounds like it would be rather annoying. Multiple threads on this.
  17. Kindle cover problems. It’s interesting how this issue sprang up out of nowhere. It’s been months and months since release – Suddenly, we have Kindle covers causing problems. Is it a recent batch of covers that’s causing the problem? Are people only realizing now, that there’s an issue?
  18. A thread on grammatical errors in Kindle books. Yes, such as the price on Agency Model books.
  19. A few non-US Kindle owners waiting eagerly for their Kindles to arrive.
  20. A thread on the ethics of distributing books caught in the public domain black hole – whatever that means.

It’s quite surprising. There isn’t really any issue (except perhaps the cover issue) that is getting a lot of attention.

For the most part, Kindle owners are pretty happy with their Kindles, and have only minor concerns.

There are a few issues that get a decent amount of attention – library books, international availability, choosing between WiFi and 3G, kindle cover problems. At the same time, we don’t have the sort of huge pain points that we had earlier (lack of PDF support, lack of Folders, the Kindle 3 freezing issue).

If you’re outside the US, you might have a legitimate complaint since Kindles are not shipping outside of US and UK, and since book availability and pricing vary wildly. However, US Kindle owners don’t have very much to complain about, and it’s reflected in the forums.

Has Kindle reached a ’90% of what needs to be done’ stage?

It’s not inconceivable that Amazon has managed to deliver 90% of what Kindle owners in the US want. That, now, all they have to do is keep selling Kindles and Kindle books and keep making money.

It makes things pretty difficult for any company that intends to steal current Kindle owners. If they’re pretty happy, and have their libraries locked into Kindle format – Why would they ever leave?

You also have the problem of Amazon’s excellent customer service.

The only option left, for Kindle rivals, is to create competing devices (like B&N has with Nook and Nook Color), and get to readers before Amazon does.

Is the real war, the war for readers who haven’t yet bought an eReader?

There are two wars that are hyped up -

  1. The eBook Wars – Where various eBook stores use various strategies to compete, and try to win over readers who own different devices.
  2. The eReader Wars – Where competing eReaders try to grab readers, and get them into their ecosystem.

For the first, you have to count out the eReaders. Both Kindle and Nook customers seem pretty content to shop at their own eBook stores. The Kindle makes it even more difficult to steal Kindle owners by not supporting ePub.

That restricts the eBook Wars to devices that are relatively open – such as iPhones and Android phones.

The eReader War becomes even more critical. If a company loses out on a reader – It’s not just the eReader sale. In all probability, it’s every single book that reader will ever buy, from that point onwards.

Should Amazon and B&N drop eReader prices even more?

Perhaps the eReader becomes even more of a customer acquisition tool.

  1. Take a reader who buys 50 books a year. If a company is making $2 per book that equates to $100 per year. Over 3 years, that’s $300. An eReader sale probably means $300 in profit from ebook sales – over the 3 years the customer owns the eReader.
  2. On top of that, you steal a potential customer from your competitor.
  3. You also greatly increase the probability that the customer buys her next eReader from you – thereby guaranteeing another 3 years of $100 per year in profit.

When people talk about selling ebooks to eReader owners they are being unrealistic. Stealing a reader from the company that owns the reader’s eReader isn’t easy.

You have to factor in commitment and consistency -

  1. Kindle owners and Nook owners are inordinately fond of their eReaders. They are also rather averse to the opposite eReader, and to competing eBook stores.
  2. If a reader has been a Kindle owner for 2 years, and has his library on the Kindle, it’s the path of least resistance to stick with the Kindle.
  3. Amazon and B&N are both doing a pretty good job of keeping customers happy.
  4. eReader owners are fighting against the Press, against people who think reading doesn’t merit its own device, and against other factors. That creates a lot of attachment to the eReader.
  5. Every book read on a Kindle, or Nook, increases the owner’s love for the device.

The net result – If you buy a particular eReader, it’s almost impossible for a rival eReader company to prise you away.

Winning over a reader, as an eReader owner, is worth $200 or more to an eReader company

If Amazon and B&N were to sit down and think through this, and you can bet they have, they’d probably figure that each reader they win over is worth $200 or $300.

That’s why the Nook Color is $249, and the Kindle WiFi is $139. That’s why there are 60 second book downloads. It’s also why Amazon and B&N are opening up app stores – shiny, pretty things to attract readers.

The competition is going to get very, very brutal. We’re only seeing the beginnings. Kindle vs Nook is going to turn into a blood-fest - readers will soon be offered $300 devices for $100.

Kindle might face serious competition next month – Google

It seems that the Kindle suddenly has to take on a new competitor - one that doesn’t even have an eReader to sell.

Thanks to Robert for the update -

Google Inc. is in the final stages of launching its long-awaited e-book retailing venture, Google Editions, a move that could shake up the way digital books are sold.The long-delayed venture—Google executives had said they hoped to launch this summer—recently has cleared several technical and legal hurdles, people close to the company say. It is set to debut in the U.S. by the end of the year and internationally in the first quarter of next year,

Original Article – Google Set to Launch eBook Venture.

If the article is right, and there’s no guarantee it is, Google has negotiated all the legal hurdles and is going to release Google Editions in the US in end 2010 and internationally in early 2011.

Kindle in Danger – The Huge Threat of Google Editions

Well, there are a few things about its newest competitor that should really worry Amazon -

  1. More Exposure – Every single search and video and map and email that has a reference to books will get a link to a Kindle Store competitor. More people will know about Google Editions than about Kindle Store.
  2. More Exposure Part 2 - For some strange reason all the independent bookstores think they can get into the digital book market via Editions. It’s an interesting tie-up and it’ll give Google a ton of exposure with bibliophiles.
  3. Download-free reading – It’s a competitor that will offer books in the browser. It’s not clear how this will work – There’s a chance it might have some big advantages over downloading books.
  4. Every Device Works - It’s browser-based so it’ll work from every device. Plus users don’t have to download a special app.
  5. Use What You Have – Google may very well push the ‘you don’t have to buy a Kindle, just read on whatever device you already have’ angle.
  6. Across most eReaders – Google might tie up with each and every eReader company not named Amazon or B&N. Sony seems to be the prime candidate to hand over its book store channel to Google.
  7. Free of Amazon’s controls – Since its browser-based there’s no way Amazon can stop Kindle owners from buying and reading Google’s books. It might block sites over 3G but over WiFi it can’t do anything.
  8. Wider Range of Books – All signs point to Google having more books. No idea what’s going on with the big settlement but a decision might be close. It’ll be the first time a store will have more new ebooks available than Amazon.
  9. Possibly Lower Prices – It’s quite likely that Google will be super aggressive on pricing and will try to under-cut Amazon. Perhaps it’ll be via value (sharing, resale, something else), perhaps it’ll be just cheaper prices.
  10. More Money – Google will also be the first company selling ebooks that has larger cash reserves than Amazon. Please note that we’re not considering Apple because it isn’t really selling books seriously.
  11. Possibly Orphan Works – If the big book settlement goes through Google will have access to a huge store of Orphan Works.

It’s a huge danger for Amazon. It’ll be interesting to see what Mr. Bezos and the Kindle team do to counter it.

There are three vectors of attack that Amazon will have to defend against.

Three main threats to Amazon

The first main threat to Amazon is that lots of people will hear about Google Editions and at the same time not know about Kindle or that there are Kindle reading apps. A lot more people do searches and use Google than the Amazon main site. So a huge number of people are going to think ‘eBook = Google Editions’. This threat can’t be understated – If you aren’t even on the customer’s radar you have zero chance.

The second main threat to Amazon is that a large portion of casual readers are going to prefer books in their browser over the hassle of a custom reading app or a custom device. Amazon has prepared itself for this (they have a Kindle Book Preview in HTML feature they’ll expand into reading in the browser). However, the association of Kindle with a device you buy or a reading app you download is very strong. The path of least resistance is browser reading and Google gets a big edge because it becomes the ‘read in your browser’ option.

The third main threat to Amazon is that the combination of the WebKit browser and WiFi on the latest Kindles means that new Kindle owners can access Google’s books freely. With every other ebook store the books had DRM and Amazon didn’t support the DRM or the format. What’s Amazon going to do to stop a browser-based solution? What can it do?

We’ll look at what Amazon could do to counter Google Editions in a later thread. Let’s conclude this post by taking a look at Amazon’s strengths.

Amazon’s strengths – Things Google Editions will struggle against

Amazon and Kindle do have quite a few strengths -

  1. 5 million or so Kindle owners and another few million users of Kindle Apps. These users aren’t going to leave the Kindle and the Kindle Store unless a notably better solution appears.  
  2. People who love books and read a lot or would like to read more would always want a dedicated reading device. We’re excluding the LCD-compatibles. People also wouldn’t want a device made by one company working with a store run by another company as there are always integration problems.
  3. Years and years of customer data. Amazon knows what book readers want and has a treasure trove of data. Google has a lot of information on what readers search for and Amazon has a lot of information on what readers buy and read.
  4. Customer Service. Amazon has excellent customer service – Have no idea what Google’s customer service is like.
  5. Focus on Books. Amazon is very focused on books and it’s unlikely Google will bring the same level of focus.
  6. No Fragmentation. Amazon can make sure the reading experience is very similar across all its apps and that users don’t have to keep re-learning how things work. How is any company going to be able to get IE, Safari, and Firefox to behave the same?
  7. Not having to share a cut with Device Manufacturers and Book Store Owners. It’s safe to assume that all the devices that will add support for Google Editions will get a cut - as will all the book stores that sell Google Editions.  
  8. Kindle = Reading. The common perception is that the Kindle is the best choice for reading and Kindle Store is the best choice for eBooks. Google will have to fight against this.
  9. WhisperNet. Amazon has put together a nice collection of services – sync your place in a book across devices, sync highlights and notes, check on popular highlights, and so forth. It is a pretty big advantage.
  10. International reach. You have to imagine it’ll take Google at least a year or two to get the International Publishing contracts in place. There’s a slight possibility everything is already done and there really will be a full launch in early 2011 - that would be super impressive.
  11. Potentially the Kindle App Store. If Amazon plays it right it could get enough reading related apps that the Kindle becomes even more of an advantage over the browser. 

Might have missed out a few advantages.

For any company other than Microsoft, Google, and Apple – Amazon is almost unbeatable. However, these three companies have the money, technical skills, and power to take on Amazon. Apple hasn’t really focused on books so it’s no longer a huge threat. Microsoft probably doesn’t want to enter a market that’s so competitive. That leaves Google and, unfortunately for Amazon, it has decided to jump right in.

It’s a difficult test for Amazon and there are sure to be some nasty surprises. Kindle sales to the core group of Kindle owners and regular book buyers should be mostly unaffected – On the other hand, Amazon’s Kindle sales to casual readers and the revenue stream from Kindle book sales (to casual and hardcore readers) are in massive danger.

Google has, in some ways, approached it perfectly. It’s not making the hard investment of making an eReader - it’s leaving the core eReader market alone. It’s just going for the book sales – book sales to everyone. If it manages to stay focused on books for 2 to 3 years it could easily eat up 30% of the eBook market.

We’re basically seeing the eBooks and eReader markets break up into segments – Nook Color threatens to steal casual readers and Google Editions threatens to steal book sales to casual and hardcore readers. The Kindle really needs some help and it might be time for a Kindle Tablet.

Kindle 3, eReader Wars – Sept 2010

The Kindle 3 faces two interesting new challenges – Sony released its new eReader models today and Borders cut the prices of the Kobo and Aluratek eReaders.

How much of a threat to the Kindle 3 are the new Sony Readers? What impact will the $99 Aluratek eReader have on the eReader wars?

Let’s dive into the specifics and see what impact these changes might have on the  eReader Wars.

Kindle 3, eReader Wars – Borders selling $99 eReader

Borders has reduced the prices of two eReaders – Aluratek Libre is now $99 and Kobo eReader is now $129. All the talk of us seeing $99 eReaders by end 2010 seemed presumptuous until a few months ago. Today, we already have $99 eReaders.

The Aluratek Libre at $99 puts some pricing pressure on Kindle WiFi but not much since Aluratek’s eReader isn’t very good. The Kobo at $129 isn’t really a factor since Kindle WiFi is much, much better than the Kobo eReader.

A few months ago the Kobo eReader at $149 was the first eReader from a big/well-funded company to break the $150 price barrier and there was talk of it stealing away market share from the Kindle. It’s a reflection of how quickly things are changing that today, even at $129, it’s an after-thought. The Nook WiFi at $149 and Kindle WiFi at $139 are much better options.

Not having a competitive eReader is the least of Borders’ problems.

A World without Borders?

Borders is really struggling. For Q2, 2010 it had a loss of $46.7 million and NY Times chronicles Borders’ dismal state -

  1. In the last  3 years Borders has reduced its store count by almost half. This includes exiting the UK.
  2. It raised capital in Q2, 2010 by selling $25 million worth of shares to a cigarette executive who became the largest shareholder. 
  3. It sold its Paperchase chain for $31 million.
  4. It still has debt of $262.1 million.
  5. Sales at Borders stores open at least a year fell 6.8% in Q2, 2010.

Its share price also took a hit – falling 4.5%. Basically, Borders doesn’t look like it’s going to survive – It is hardly in a position to mount a serious threat on the eReader market. With the $149 Kobo Reader and the Aluratek Libre it was trying to corner up the lower end of the market but Kindle WiFi has destroyed that opportunity.

The lower prices of the Kobo and Aluratek eReaders don’t change the fact that they aren’t very good – they couldn’t even compete with Kindle 2. Put them up against the Kindle WiFi and the new Sony Readers and they are terribly inadequate.

Kindle 3, eReader Wars – Sony releases pricier eReaders

Sony seems to have given up on trying to beat the Kindle 3 and seems focused on creating the perfect product for a market that only exists in its imagination. It talks a lot about how it couldn’t afford to put WiFi into its $179 Sony 350 and its $229 Sony 650 without taking a moment to wonder how Amazon and B&N managed to produce WiFi capable eReaders at sub $150 prices.

It’s also got really strange priorities – It seems to be more interested in building a device, selling it, and running away than in earning money from ebook sales. In a sense it’s trying to build TVs and hoping cable companies supply the service and content. The only problem is the cable companies in this market have their own TVs.

The net result is a beautiful eReader (good-looking, good features, touch screen) that doesn’t really have good infrastructure or a good store to back it up. It’s an eReader made by a company that doesn’t really grasp that people are going to read books on the eReader. Sony is trying to provide one part of what the customer is asking for and is hoping the other parts just magically appear.

Is Sony using really smart strategy or deluding itself?

There are three entirely reasonable possibilities -

  1. Sony has figured out that it can get a solid #2 or even a #1 spot by selling higher end eReaders with touch screens and selling them all over the world via their retail channels.  
  2. Sony has decided it’s just too much work to compete with the Kindle 3 and has given up on the US market.
  3. Sony is delusional and it’s convinced itself that the product it has to offer meets the needs of the eReader market perfectly. If you look at Sony 650 and contrast it with Sony 600 the only thing Sony has changed is that the touch screen now doesn’t hurt readability. In almost every other way it’s the same product.

We do have to give credit to Sony for differentiating and managing to release eReaders with touch screens. The lack of WiFi and the high prices are madness - However, the touch screen gives Sony an angle that it might be able to leverage to generate sales despite the high price.  

Kindle 3 to be sold at Staples

Amazon isn’t exactly sitting still and it’s begun to expand the Kindle’s retail presence. Kindle 3 will be sold at Staples stores starting this Fall. Reuters reports on Kindle 3 at Staples -

Staples will start selling the Kindle at its more than 1,500 U.S. stores starting in the autumn, the company said.

It plans to sell the $139 version of the Kindle, the 3G model and the more expensive Kindle DX.

Staples makes a lot of sense as the $139 Kindle WiFi and the $189 Kindle 3 are both good products that meet the needs of businesses looking to cut down on paper and printing costs. Additionally, the prices are low enough to entice some Staples customers into impulse purchases.

5 million Kindles sold?

The Reuters report goes on to talk about Kindle sales estimates -

Forrester Research estimates that Amazon has sold about 5 million Kindles since the product’s launch in 2007, and that Barnes & Noble has sold 1 million Nooks since their introduction last year.

Every day there’s a new Kindle sales estimate – 5 million is one of the higher ones. Keeping Kindle sales figures secret is the gift that keeps giving.

Nook 2 still missing in action

If Nook 2 really is slated to be launched in parallel with B&N’s big in-store push for the Nook (which starts around September 4th/5th) then we might soon find out what B&N has in store for us.

At the moment, Nook 2 is missing and every day readers are picking Kindle 3 and Kindle WiFi over Nook and further increasing Amazon’s lead. It’s hard to understand what’s stopping B&N from announcing Nook 2 and letting readers place preorders.

Google Editions still missing in action

The other mystery is around Google Editions which was supposed to launch in summer 2010. It would make so much sense for Google to team up with one or both of Sony and B&N and with every smaller eReader to take on the Kindle Store.

It already has Android in nearly every non-Kindle eReader and it’s already providing a million public domain books (via Google Books) to nearly every non-Kindle eReader. It might as well add the store. Most eReader makers are desperate and this would be the perfect time to push and promote Google Editions. 

Apple doesn’t announce iPad 2 at today’s Apple Event

There were rumors that an iPad 2 would be announced at today’s Apple iPod event. That didn’t happen and there wasn’t any mention of iPad sales figures either. Perhaps they are being saved for a later conference that would also see the announcement of the iPad 2.

It’s pretty likely that we’ll see the iPad 2 arrive by October/November of 2010. The main question is price - At $350 or higher there is little threat to the Kindle 3 but at $300 or below iPad 2 would start eating up pieces of the eReader market.

There’s still a lot left to be unveiled

Nook 2, iPad 2, and Google Editions are far more important than the over-priced Sony Readers and the irrelevant Aluratek and Kobo eReaders.

Kindle 3 has the eReader market all to itself but that might change any day as Nook 2 is probably going to be released/announced soon. Apple will probably wait till holiday season to make a splash and Google might just be waiting for a certain settlement. Sony has kicked things off and Borders is doing it’s part – However, the real fun has not yet begun.

Kindle 3 might finish what the iPad started

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 -

  1. The iPad forced eReaders to cut prices and also stole some of the casual readers. 
  2. Kindle and Nook improvements (software upgrades) and price cuts put a lot of pressure on other eReader companies.  
  3. 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?

  1. At $189 Kindle 3s are probably losing money. You can’t beat Kindle 3 on price.
  2. The new eInk Pearl screen is the latest generation. Beating Kindle 3 on technology is ruled out.
  3. The software is improving at a ridiculous rate.
  4. It’s thinner and lighter and more compact.
  5. The Kindle Store has the most new books and cheaper prices.
  6. WhisperNet means things like free Internet.
  7. 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.


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