What’s the 1 best thing for Kindle, eReaders?

With the Kindle 3 already here, the Sony 650′s details leaked, and Nook 2 waiting to pounce in September we have a pretty good idea of where we stand.

Where we stand with Kindle, eReaders

Here’s a quick list -

  1. Price – We’re doing very well on price with $189 to $200 prices for the 6″ eReaders and $130 to $150 prices for the 3G less 6″ eReaders. The larger screen models are still rather expensive at $379 for the Kindle DX.
  2. Technology – eInk Pearl makes the screen contrast excellent and Sony 650 supposedly pulls off touch without hurting readability. Apart from that we’re doing pretty poorly – No flexibility and no rollable screens, no unbreakable screens, and the best bet for color (Qualcomm Mirasol) just announced a facility that’ll mass-produce screens only in 2012.
  3. User Friendliness – This is going amazingly well. eReaders are still easy to use and getting easier. They are also expanding to low vision readers (super size fonts in Kindle and Nook), blind readers (voice guide and text to speech in Kindle), and other demographics.
  4. eBooks – This is a mixed bag. We’re at 8.5% market share for ebooks and we’re also saddled with the Agency Model. It’s very encouraging but there are still threats including vague hints of advertising in books.
  5. Killer Features – Well, across the various eReaders we have Library Books, Accessibility, eInk Pearl, Read to Me, Lend Me, Amazing battery life, much improved page turn speeds, changeable font sizes, respectable PDF support, good browsers (Nook and Kindle), support for more and more languages, touch and free hand drawing, great size, low weight, and a few other killer features. Doing pretty well here.
  6. Formats and Interoperability – This is a royal mess. Even the ePub companies can’t work well with each other and when they do they make it incredibly complicated to use ePub. You’ve got to love how ‘open’ ePub requires Adobe Digital Editions, PC to eReader transfers, and all sorts of 20th century mechanisms.
  7. Survival – Everything’s good here. eReaders are alive and kicking. They haven’t been eaten up by or morphed into great-for-nothing, good-for-everything devices.
  8. Market – The market continues to expand with predictions that 10 million eReaders will be sold in 2010 though it’s disconcerting that over 70% of those sales are expected in the last 5 months of the year.
  9. School and College – Not much progress here. The lack of touch makes eReaders irrelevant (except for English majors and perhaps a few others). Sony has touch but no large screen eReader. It’s hard to get excited by Blio and NookStudy - they’re not eReaders and they involve reading on LCD screens.

All in all some things are going very well (price, killer features, survival, market size, user friendliness) and some are bumbling along with ups and downs (interoperability, school+college, technology, ebooks).

Which brings us to the point of this post – Figuring out the 1 thing that would have the most impact and the most positive impact on eReaders.

Candidates for the 1 best thing for eReaders and Kindle

Let’s list as many as we can -

  1. Killer feature or breakthrough based on software. Perhaps a company comes up with some software that just revolutionizes reading and ebooks and eReaders.
  2. Killer feature or breakthrough based on hardware. Perhaps eInk makes a major breakthrough, perhaps chip makers make a breakthrough.  
  3. A huge jump in ease of use. This is a bit harder to imagine as eReaders are already pretty simple. However, it’s possible.
  4. Steve Jobs level marketing magic. The major impediment in eReaders’ path to domination is Perception – some people don’t realize it’s just like reading a book, other people don’t realize how much better the reading experience is than on LCD screens, and a few people just can’t get over the touch and feel of books. Add on the 70% of people who have no idea what an eReader is and you suddenly realize the need to market and promote eReaders.
  5. The end of DRM. Since DRM is supposedly the root of all evil perhaps removing it would lead to something magical and revolutionary.
  6. 1 common format. Another thing that is the root of all evil (interesting isn’t it – two roots of evil) is the lack of a common format. Perhaps removing this would lead to amazing things.
  7. 1 eReader winning out. It’s possible though not probable that a dominant eReader would be a good thing.
  8. A permanent tie between 2 or 3 eReaders. This is much likelier to be good for eReaders – constant competition would mean constant improvements. 
  9. Huge cut in prices on large screen eReaders. Hard to make a case for this when the 6″ eReaders are doing so much better. Perhaps the school and college angle.
  10. 6″ eReaders hitting $99. We mean the big three – Kindle, Nook, Sony Reader. We’re already at $139 but the magic $100 figure may very well be the secret.
  11. Death of the Agency Model. Well, it isn’t really hurting eReader sales or eBook sales and $14.99 has morphed into $12.99 so this is unlikely to be the one.
  12. eReader App Store. This is a total wild card. As opposed to Facebook and iPhone which are in some ways blank canvases and where people have a lot of time to waste eReaders already have their killer function – reading.
  13. Arrival of color. Color has so little to do with reading books that this is unlikely to be the most impactful change we could have.
  14. Unbreakable screens. This would help a lot.
  15. Kindle for Kids or Sony Reader for Kids. This has two consequences – a lot more sales, inculcating a love of reading before school work kills the possibility.
  16. Actual Internationalization. eReaders that support all languages and book rights that work across the globe.
  17. Writing capability. This would be huge.

A lot of the items on this list would be impactful. It’d be a fun exercise to run a bunch of readers through the list and have them prioritize these features or cast a yes/no vote on each.

Top 7 Candidates for huge Kindle, eReaders impact

Well, here are the ones that, in my opinion, could have the most impact -

  1. A permanent tie between two or three eReaders. This would be a dream outcome as the companies would always be competing and improving. 3 or 4 would be much better than 2.
  2. $99 prices on eReaders from the Big 3. It’s hard to discount this as casual readers are a pretty important market and the fact that eReaders turn some casual readers into frequent or even hard-core readers is even more important.
  3. Writing Capability. Perhaps the one thing that instantly transforms eReaders from niche devices into devices with incredibly broad appeal (school, college, work, replacing paper).  
  4. Actual Internationalization. The US has almost single-handedly taken eReaders from an idea to millions of sales a year. If we can get the whole world to participate we would transform books and eReaders.  
  5. Huge jump in Awareness. If the rate of increase in awareness could be accelerated things would become much easier. We saw this with Oprah’s Kindle endorsement and you have to wonder if that’s scalable – Surely, every country and every state has its own equivalent of Oprah.
  6. Major hardware breakthrough. Could we get an eInk related breakthrough that changes things massively? Perhaps unbreakable screens.
  7. 1 common format. There’s so much drama around interoperability. You almost feel it’d be worth fixing just to get people to stop complaining about it. If those people then become positive and embrace eReaders whole-heartedly this would be a huge factor. If they just find something else to complain about (books not being free, Amazon and B&N dominating, no free coffee) then the format issue would prove to be a red herring.

These are all very good candidates – My money’s on one out of ‘A permanent tie between two or three eReaders’, ‘Writing Capability’, and ‘Actual Internationalization’. The others are very promising too (especially Awareness) – However, any 1 of the latter three could transform eReaders just by itself.

The move to $99 eReaders grows stronger

The $189 Kindle 3 and the $139 Kindle WiFi have galvanized eReader companies into action.

More and more of them are pricing their eReaders at the magic $99 mark. Two weeks ago we’d looked at a few eReaders discounted to $99 including the rather impressive Cybook Opus and the Sony 300 (at one solitary store – P. C. Richard & Son). The key distinction there was that these were all discounted eReaders.

Now we’re seeing a bunch of eReaders and pretend-eReaders arriving at $99 or planning to lower their price permanently to $99.

New Wave of $99 eReaders

Well, here’s what we have -

  1. The New Yorker talks about how Kobo is planning on reducing the price of its eReader to $99 by Christmas - 

    And its own e-reader’s simplicity and affordability (it will reportedly be down to ninety-nine dollars in time for Christmas)

  2. WSJ’s Digits Blog talks about the $99 Copia which has a 5″ color screen and is set to arrive this fall.  
  3. Augen’s ‘The Book’ eReader is being offered for $90.
  4. CVS is going to start selling a $100 Sylvania Netbook that some people are calling an eReader. It’s also selling something called the Sylvania LookBook eReader for $179.  
  5. Sony 300 has shown up at the $99 price a few more times (at various stores) since our last sighting.

It’s a motley bunch but what’s impressive is that these are not discounts or temporary price reductions (except the Sony 300) – These are eReaders tying the wedding knot with sub-$100 prices.

What impact will these $99 eReaders have?

The $99 eReaders impact eReaders in lots of ways -

  1. They put some pricing pressure on Kindle WiFi and Nook WiFi.
  2. They help create more buzz around eReaders and reading. People then investigate and find out about Kindle and Nook and Sony Reader.
  3. If they sell they help increase eInk screen sales and thus help create economies of scale.
  4. If they sell they lead to more eBook sales and accelerate the rise of eBooks.
  5. They help kill the Press’ delusional arguments that eReaders are dying out.

The most important impact of the $99 eReaders might be anchoring $99 in people’s minds. It’s anchoring in two ways – It opens people up to buying eReaders since $99 is a great price, it creates the expectation of $99 eReaders in people’s minds and forces the Big 3 eReader makers to match the price.

$99 eReaders will help push Kindle WiFi and Nook WiFi to $99

The $99 eReaders are going to be one amongst a number of factors that push Kindle WiFi and Nook WiFi to $99 by end 2010. Here are the other factors -

  1. Competition amongst the Big 3′s lower priced eReaders. Kindle WiFi vs Nook WiFi vs Sony 350 probably means we get top quality $99 eReaders by year end.
  2. Economies of Scale. The more Kindles and Nooks and Sony Readers sell the cheaper everything gets – the screen, the chips, everything. We also have talk of system on a chip designs and various other improvements.
  3. Christmas 2010 is vital. It’s vital for Nook and Sony Reader because they can’t afford to be missing in action two years in a row. It’s vital for Kindle because it can cement its position as the #1 eReader and the #1 ebook store.
  4. The entry of Google Editions makes it vital for Kindle 3 and Nook 2 to sell more units and lock-in users. 
  5. (Perhaps) Advances in technology such as touch (and perhaps even rough versions of color eInk) which force Kindle WiFi and Nook WiFi to compete on price.
  6. The iPad 2.
  7. Android Tablets that come in at $200 and lower. They will attack eReaders on value for money and force lower prices.  

There are just a lot of factors. We have the Kindle WiFi at $139 in August. There’s no easy way to conceive a situation where it’s not down to $100 by December 2010.

A little on Kobo

The New Yorker article is fascinating as it goes into a lot more than just the rumored $99 price.

First, we get a little on Kobo -

Lounging on a swanky rooftop patio the other day, dozens of beaming young people sipped complimentary cocktails and marveled about the nonstop hiring their company was doing …

They were all from the content side of the company, and I noted that everyone at their table was dressed like they might work in film or music.

Yup, that’s what you need to win the eReader Wars – swanky rooftop parties and LA style.

Next, we get a little bit of delusion -

Kobo is perhaps the scrappiest and most focussed player in the e-book war.


Then, a lot of delusion -

… has spawned a cult following. In Amazon’s rear-view mirror, Kobo is quickly gaining ground.

If you define ‘quickly gaining ground’ as – Looks outdated compared to Nook WiFi and positively ancient compared to Kindle WiFi.

Finally,  a ridiculous amount of delusion -

“What we’re doing is the first major change in publishing in hundreds of years,” Michael Serbinis told me.

“This is a monumental shift in how ideas and stories are spread,” he said. “This is an advance for humanity.”

The Kobo CEO is like Steve Jobs except without the hit products.

Sony started the whole eReader idea and Amazon executed on it. Kobo is a company that joined a few years late and that has perhaps 1% market share – It’s absurd for Kobo to be claiming credit for what’s going on with eReaders and eBooks.

Here’s a comment from the New Yorker (courtesy KW Newton) -

Is it just me or is there a whiff of incredible ego here?

What *Kobo* is doing is “the first major change in publishing in hundreds of years”?

That would be news to Sony, who were the first to market a readable, usable eReader, or to Amazon, who were the first to market one that didn’t require a computer, or to Barnes & Noble, who are playing catch-up but at least realize that ease of use is as important as the screen technology.

Well, back to the topic of $99 eReaders.

How soon will we see Kindle WiFi or Nook WiFi or Sony 350 at $99 and what will it mean?

My money is on us seeing one of the Big 3 selling a $99 eReader by October 2010. Mostly because – Companies will want to cash in on Thanksgiving and early gift buying, Nook 2 and Sony 350 prices are yet to be announced and they might cause price wars, waiting till December would be too late, this season is far too important.

By October 2010, one or more out of Kindle WiFi, Nook WiFi, and Sony 350 will be at $99.

What will the Big 3 hitting $99 mean?

Well, the $99 price point is huge psychologically – A lot more people start making impulse purchases, a lot more eReaders start being gifted, more people feel a device ‘that does nothing other than read’ is worthwhile since it’s just $99, more casual readers try it out.

There’s also enough separation between $99 eReaders and $200 Android Tablets and $300 iPad 2s and even iPhones and smartphones (since there’s no contract).

The increased sales create a vicious positive cycle since eInk/PVI can now make its eInk screens even cheaper and invest more into R&D. eReader companies get more revenue and sell more ebooks and that affects all of Publishing giving eReader companies more power and money and they put some/most/all of the money back into eReaders.

Kindle WiFi coming in at $139 has set the wheels in motion for an explosion in eReaders this Christmas season and a guaranteed great 2011. Every ‘eReaders are going to die’ article and every ‘Android devices are going to kill eReaders’ article seems more and more of a joke. There was some plausibility when we had hundreds of thousands of eReaders being sold per year. Now we have millions and eReaders have differentiated themselves from every device that was supposed to kill them.

It’s gotten so bad that the only ‘Kindle Killer’ the press is left with is some unreleased ‘Android Death Star Tablet’.  2010 went from The Year of the eReader to potentially The Year of the Death of the eReader with the iPad’s success and is now, thanks to the $139 Kindle WiFi, back to being The Year of the eReader.

eReaders, Billion Dollar Businesses & Evolution

My favorite thing about the Kindle 3 is that it’s evolution at work.

It’s a product (species) realizing it’s in danger and evolving (adding features, cutting price, improving at what it does best) to be more fit – to survive.

There’s a post by Dave Winer related to this concept. He talks about how Asus is killing itself in Netbooks because it isn’t evolving -

Asus says the iPad is cutting into netbook sales. I’m not surprised. Asus’s response to the iPad has been to stop improving their netbooks.

The product they’re shipping now is in no way different from the one they were shipping six months before the iPad shipped. It isn’t even cheaper.

There are two fundamental mistakes here – Asus has forgotten what made its Netbooks amazing and hasn’t kept the price gap between netbooks and notebooks that was there in 2007 (the gap that helped netbooks become enormously successful). Asus has also forgotten that it specialized in making great netbooks – It’s now under the illusion that there’s something wrong with making netbooks and that it should be making Tablets instead.

You have to keep running and keep evolving

Business is funny – You start off in a market and no one cares. You do well and show there’s money and suddenly you get all sorts of companies trying to steal your market via all sorts of strategies. 

Consider the eReader market and the Kindle -

  1. Chinese clone eReader makers tried to steal the market via low prices. 
  2. Plastic Logic tried to steal it via new technology (when previewed in 2008 the technology was a big deal).
  3. Pixel Qi is trying to steal the market by turning every netbook and tablet into a Transformers style eReader + Netbook.
  4. Apple is trying to steal it by pretending its Tablet is a better eReader than dedicated eReaders.
  5. B&N is trying to steal it with Nook. A lot of credit to them for delivering a solid product.
  6. Sony is trying to get back the market it lost – though only half-heartedly.
  7. Google and lots of companies will try to steal the ebook revenue stream.

There are multiple threats -

  • There are companies that try to create a better competing product. Ex: Nook. These are not very dangerous because the competition is right in front of you. 
  • There are companies that try to steal the most profitable parts. Ex: Google. These are pretty dangerous as they may commoditize you.
  • There are companies that try to re-imagine the entire market in a way that gives them an advantage. Ex: Apple. These are the most dangerous – If you aren’t careful you forget what you’re good at and start competing on their terms.

The last is what’s happened to Asus.

It’s great that Amazon has avoided the grand Apple manipulation/trickery and stuck to reading – the release of the Kindle 3 reaffirms Amazon’s focus on reading.

The ‘multi-purpose device future’ fallacy

There are some things that aren’t supposed to survive but do – Microsoft’s dominance in OS and Office, people wanting customer service via real people rather than algorithms, devices that focus on one thing.

This is what everyone who believes in the multi-purpose device future fallacy thinks -

Amazon is losing a huge opportunity. It’s making a mistake by keeping the Kindle focused on reading. It’s going to get killed by multi-purpose devices.

However, they’re missing the much, much bigger picture – The Kindle has a shot at replacing paper. Look around and you see all the different ways paper is used – labels, notebooks, papers, documents, books, newspapers. It’s an almost endless list.

All of that is going to be replaced by something one day because we’re either going to run out of trees or we’re not going to have enough gasoline to transport and process them. There is going to be a huge opportunity for eInk based products.

Guess which company is going to be the most qualified and the most prepared? Hint: It’s the company that is causing even Chinese clone eReader makers to give up.

So the iPad’s siren call is hardly seductive - Why don’t you pass up the soon-to-be multi-billion dollar business you are the leader in (not to mention the business you specialize in) to focus on an unproven niche that you have neither the lead in nor the expertise for?

Netbooks are forgetting what their core value proposition was

It was – a really cheap computer on which you can do 75% of the things you do on your big computer.

The pace of evolution of Netbooks was breath-taking – until the companies started self-sabotaging themselves. They didn’t want to be selling $300 computers when they could sell $700 computers. Two things happened in parallel – Those $700 laptops fell to $400 and $500. Netbooks stayed stationary at $300 to $400.

Suddenly the main value proposition was gone.

Netbooks went from around half a million in 2007 to 11.4 million in 2008 to 30 or so million in 2009. This year they stalled. Their pace didn’t slow down because of the iPad – It slowed down because they were no longer half the price of laptops. They stopped evolving.

Contrast these two devices -

  1. July 2009 – Asus Eee 1005 HA. 8.5 hours battery life, $350,  Intel N270 Processor, 10.1″ display.
  2. August 2010 – Asus Eee 1015. 13 hours battery life, $379.99, Intel N475 Processor, 10.1″ display.

In 1 year we’ve had the battery life go up 50%, the processor get a little faster, and the price go up $50. No wonder netbooks stopped growing at 300% to 600% a year.   

We had companies selling 30 million netbooks a year but instead of going to 100 million netbooks a year they decided they should try to see how close they can get to laptops in price.

Luckily Amazon and B&N are much, much smarter than Asus and Acer.

Kindle 2 to Kindle 3 is a pretty big jump

Yes, it could and should have been even bigger. However, consider the differences -

  1. Kindle 2 in July 2009 was around $299, it didn’t have PDF support, it wasn’t available internationally, it didn’t have rotation support, and the screen was good but not great. It also didn’t have accessibility.
  2. Kindle 3 in August 2010 is $189 (with a $139 Kindle WiFi option), there’s really good PDF support, 1 month battery life (double), double the memory, much faster page turns, international availability, rotation support, the new eInk Pearl screen, and a dozen other improvements (especially in fonts). It’s also accessible and has a new WebKit browser and WiFi.

A lot of credit to Amazon (and to B&N) for pushing eReaders. If Kindle and Nook had stayed as stationary as netbooks they would be dying too. They haven’t – they’ve evolved so quickly and the companies behind them have invested so much that Wall Street is upset with Amazon and B&N is struggling.

Evolution applies to companies too

Companies not only have to compete and fight off competitors in the markets they own, they also have to evolve and find new niches and markets that will sustain them in the future.

Consider a few companies -

  1. Apple is building each product line on top of the previous ones – iPods, iPhones, Macs, iPads. They all combine to create this Apple eco-system and Apple nation that lets Apple launch even more new product lines. It’s creating an interesting symbiotic relationship where owning one product makes you feel perhaps you should own the others.
  2. Amazon has a few major bets for the future – Kindle, Amazon Web Services, Shoes and Clothes. Interestingly enough its entire main business (retail) is a huge bet. Amazon is delaying gratification far more than any other company and you have to wonder just how much money it’ll make when it finally decides to cash in.
  3. Microsoft, for all the flak it gets, is pretty secure – Windows and Office are making more money than they ever have (just check the balance sheet if you find it hard to believe), there are new successes (Xbox Live, Xbox), and there are the low profile billion dollar businesses (SharePoint, Server Tools).
  4. Google - Don’t really know what to think or say. Search is a behemoth. Every other business Google goes into it seems to only want to compete on zero price. The whole ‘live by the sword, die by the sword’ aspect couldn’t be more true. Google is using its ability to leverage Free as a weapon/differentiator in every business but it’s also blowing up every potential revenue stream – It’s beating its opponents by blowing up the profitability.

Free is such a scourge and such a disease that we don’t even have other huge multi-billion dollar companies. Where are they?

If Google from 1998 is the newest company with multi-billion dollar profits you have to wonder whether the entire 1999 through 2010 stretch has been an utter waste financially. Skype had a profit of $13 million in the first 6 months of 2010. Facebook is still hiding behind terms like cash-flow positive.

If companies with hundreds of millions of users are having a hard time making profits it’s time for companies to pick a different branch of evolution – preferably one that rules out Free and ‘Freemium’ and every other ‘sounds too good to be true’ strategy dreamt up by Internet start-ups.

eReaders and eBooks will spawn lots of billion dollar businesses

The top 2-3 eReader makers will have billion dollar businesses. The top 2-3 ebook stores will have billion dollar businesses. The top company providing services to authors will be a billion dollar company. There will be new Publishers and new Platforms that might become billion dollar companies.

There are lots of opportunities. Of course, an essential prerequisite is to keep out the scourge of Free and the Internet Start-ups. Authors and Publishers should be as wary of Internet companies as they would be of the red death. Internet companies are the Anti-Midas companies of our times – the true enemies of profitability.

Skype sees 124 million users per month. Only 8.1 million are paying users. It made $406 million in revenue and the profits were just $16 million. That’s $2 profit per paying customer per 6 months. 12.9 cents per customer per 6 months. You could make more profit per customer from a lemonade stand or from a newspaper route.

That’s how amazing our new Internet companies are – They are less profitable per customer than your kid’s paper route.

With eReaders and eBooks we’ve found what might be the next big businesses. Not just in the US – all over the world. A business where users are gladly paying $5 to $10 per book and buying multiple books per month. If an average Kindle owner buys 3 books a month and Amazon makes $1 per book then in 6 months it’s making $18. That’s 139 times more than what Skype makes per user.

The scary part is that there’s a pretty decent chance eReaders really blow up. That there are tens of millions of eReaders sold and then hundreds of millions of eReaders sold. It’s not out of the question that we have 50 or 100 million Kindle owners in 2015 with each making Amazon $36 a year just from ebooks. That’s $1.8 billion a year in profits – from selling ebooks.

It’s puzzling isn’t it – That Amazon is #1 in 2 businesses that might each generate billions in annual profits for it and it isn’t ditching those to try to imitate Apple and its iPad. Too bad it isn’t like Asus which is pretty much ditching the netbook business that went from 400,000 units sold in 2007 to 30 million units sold in 2009.

10 long term Kindle, eReader questions

Now that the Kindle 3 is out we have a good idea of what the third generation of eReaders is probably going to be like. It’s worth wondering what we might see 4-5 years down the line with Kindle 6, Nook 5, and the other eReaders of 2014-2015.

Which eReaders and which companies will still be around?

Kindle will probably be around. Nook might be around depending on who buys B&N.

You have to wonder about Google - it just closed down Wave and that was supposed to replace email. If Google Editions doesn’t take off Google might shut it down fairly soon. On the other hand, if the Settlement gets decided in its favor it can keep selling subscriptions and make it a viable business.

Sony Reader may or may not be around – a lot will depend on what the new Sony Readers are like and how well they do.

Will Apple still be trying to sell pretend-readers? Perhaps. It’ll probably play an important role with respect to casual readers and continue to provide add-on reading devices for Kindle owners.  

Will eReaders still be around?

With the Kindle 3 selling out this seems a strange question to ask. However, it’s not a given that eReaders will be around forever. A few missteps and we might see the end of the eReader.

There are a few threats – multi-purpose devices becoming much better for reading, multi-purpose devices becoming much cheaper, Publishers choking off the supply of ebooks, the major eReader companies collapsing.

It’s tough to imagine that eReaders will die out – However, trying to imagine it brings up some risks that aren’t very apparent. For example, if the Kindle wins out within the next 9-12 months there may not be enough competition left to force it to evolve and multi-purpose devices might outpace it and kill it off.

Will we move to a common format or an exchange system?

There are two possibilities that would be great though both are rather unlikely -

  1. A single format to rule them all. 
  2. An exchange system that lets you take your books with you if you move to a device with another format.

The single format idea hasn’t really worked out. The exchange system concept hasn’t been tried.

There aren’t that many dimensions left to attack established eReader and eBook companies on. If the current status quo (Kindle in the lead and Nook and Sony Reader eating up most of the rest of the market) continues then we will see rival eReader companies try to use an exchange system (‘ebook ownership for life’) to beat locked-in formats (‘ebook license for one device/platform’).

Will eReaders become multiple purpose devices that specialize in reading?

There are two important characteristics of eReaders when it comes to reading -

  1. A specialization in reading i.e. eInk and other features that make it great for reading.
  2. A focus on unitasking with things apart from reading consciously neglected. 

It’s quite likely that the second disappears. We’re already getting Facebook and Twitter and a WebKit browser and Kindle Apps.

The unitasking might be lost and we might end up with multi-purpose devices that are best suited to reading. Not quite as pure a focus as that of a device built solely for reading.

How big will the eReader market be?

Will we still be seeing 3-5 million eReaders sold a year?

You’d think it’d be more than that. Would it be 10 million a year? Could it even be 20-30 million a year?

How will it be split up – Will one company make 80% of the sales? Will it be a Big 3 like it is now (Kindle, Nook, Sony Reader)?

What part will Kindle Apps and eReader Apps play?

Apps might turn eReaders into a bigger hit – eReaders could become the one device for parents who want smarter kids.

You just need a few killer apps that make Kindle irreplaceable for education or irreplaceable for work and you’re set. It could be something as simple as an app for easily sharing and reading documents at work.

The exciting thing is that you get thousands of people approach it from their unique perspectives. People willing to take risks a large company never would and hungry in a way large companies can never be.

How many books will be available as eBooks?

There are two aspects to it – quality and quantity.

Google wrote today about there being 129 million books in the world. That’s typical Google – more interested in how many books it can round up than in the ‘people reading books’ part.

The far more interesting questions are - What are the 2.58 million most important books? What are the books that the most people want to read and the books that best represent books and reading?

If we have all of those books available and available at reasonable prices and to everyone across the world and on most platforms where reading is possible – Well, that would mean a lot more than having 20 million obscure books available in a context that is not suited to reading.

Will we have sharing and social features?

People write books for other people. People read books to feel what others have felt and learn what others have learnt. We all like to share the books that move us.

We have managed to go from physical books to ebooks which are much more suited for sharing and still, somehow, eliminated the social aspect. The serendipity and connection are gone even though the movement to electronic books should have increased them.

This might be the most exciting development in the next 5 years - A way to make books social again. Not social in the sense of extroverted or being a social butterfly - social in the sense of the human touch and connection.  

What will happen to Publishing and Publishers?

There are two easy answers that come to mind – Publishers settling for a 15% to 20% share, New Publishers or Literary Agents taking over Publishing for 15%.

There are, however, huge problems envisioning the long-term viability of the former scenario – Publishers are not set-up to survive on 15% to 20%. Additionally, they don’t get ebooks and eReaders - anything electronic falls outside their area of expertise.

The latter scenario (Agents and Publishing start-ups taking over) is also hard to imagine as opening the floodgates means there will be way too many authors. Publishers are huge companies. Very few literary agents are going to be able to scale up as much as required. Even the new Publishing companies might not be able to scale up fast enough.

The need for large Publishers will be stronger than ever while the cut available for them will probably be miniscule and inadequate.

What percentage of the book market will be ebooks? 

The consensus seems to be 25% market share for ebooks by 2015.

There’s just one problem – We went from 2.85% market share in the first 5 months of 2009 to 8.46% market share in the first 5 months of 2010 (Might have gotten the numbers slightly wrong – it was around 3% to around 8% in 1 year). If that growth rate continues ebooks will be over 25% within 1.5 years – by 2012.

50% market share for ebooks by 2015 is not out of the question. 25% almost seems unrealistically low.

Those are just 10 out of the dozens of questions we could wonder about. There’s a lot more – replacing paper, the rise of eWriters, the state of eInk and eReader technology, the effect on reading, spread of eReaders in education, the prices we settle at, the revenue stream eBooks and eReaders provide.

Kindle 3 – What will Kindle 3′s impact be?

The stars are aligning for the Kindle 3 to take over the eReader market. Here are some of the things that Kindle 3 might mean and some speculation.

10 Best Things about the Kindle 3

This list is probably different for everyone -

  1. The new eInk Pearl screen – We know the screen has 50% better contrast and that the graphite casing helps bring out the contrast more. Amazon has also written that software tweaks and tuning (perhaps software based, perhaps hardware based) make the contrast even better.
  2. The Price of $189 and the Kindle WiFi’s $139 – This has done a lot of things. It’s scared smaller eReaders out of the market. It’s changed Kindle vs iPad into Kindle AND iPad. It’s gotten casual readers interested. It’s almost ensured the death of every rival not named Nook or Sony Reader. The $139 Kindle WiFi has kicked iPad out of the eReader conversation.
  3. It marks the next step in the evolution of eReaders – Kindle 3 has managed to do something we didn’t think would happen until color arrived. It has heralded the third generation of eReaders. You make enough improvements, including some significant ones, and you get even eReader owners excited and eager for the new arrival.
  4. eReaders are no longer dead – Well, we know they weren’t dead. However, now everyone knows they aren’t dead. Here, again, we have the $139 Kindle WiFi to thank. Everyone’s talking about eReaders and eBooks again.
  5. It gets NFB to stop roadblocking eReaders in Education – It doesn’t matter if it’s Nook with Nook Study or Kindle or another eReader that breaks through in schools and colleges. As long as it happens. Accessibility might help a million blind readers – However, by getting the National Federation of the Blind to stop their legal attacks it’ll get tens of millions of schoolchildren to discover a love of reading. A nice side benefit would be to break the textbook racket – However, that’s unlikely for a few more years.
  6. It turns casual readers into hard-core readers - Lots and lots of people want to read and they miss out because it’s 5 seconds to turn on the TV and 15 minutes to walk to the bookstore. With the Kindle a LOT of people are going to be able to read as much as they want to. We even have lots of iWhatever owners admitting that they aren’t reading as much as they thought (sometimes not at all) and deciding to get Kindles now that they are better and cheaper.
  7. It kills Publishers’ attempts to divide and conquer - Publishers were desperately hoping to trip up Amazon with the Agency Model and stall eBooks and eReaders. First, the Agency Model failed to stall Kindle growth. Next, Amazon announced its bombshell (ebooks beating hardcovers at Amazon.com) and Andrew Wylie announced his bombshell. Now, the Kindle 3 is selling very well to readers and casual readers and threatening to make Mr. Bezos’ ‘ebooks will sell more than paperbacks by 2011′ prophecy true.
  8. Kindle truly goes international - With support for CJK fonts and Cyrillic fonts Amazon gets brand new markets to expand into. A LOT of companies (perhaps including Amazon) make 40% or more of their profits from outside the US so this is pretty important (China, Russia, and Japan are huge markets).
  9. It further reinforces ‘Kindle = eReader’ - Kindle was already the first thing everyone thought of when they heard eReader. That just got strengthened and it’s really important because now every time Apple mentions reading or readers walk past a Nook display or Sony gets Peyton Manning to waste his offseason time people automatically think - Oh, it’s like Kindle.
  10. It creates a lot of awareness of eReaders – There are obviously lots of people who heard about the Kindle 3 or Kindle WiFi. They might not have bought a Kindle – However, they now know what it is. Perhaps it’s the Nook 2 that will get them to jump, perhaps Kindle 4. However, they now know what an eReader is and know about the eReader value proposition.

There are a lot of Kindle 3 features that are impressive (1 month battery life comes to mind) – Yet the lasting impact of Kindle 3 might simply be to separate eReaders into their own category and kick out the pretend-Readers. That and making Amazon strong enough and dominant enough to withstand attacks from Publishers and other elements – ones that are worse than Publishers because they don’t really care about readers or reading.

7 Things We Don’t Know about the Kindle 3

It wouldn’t be Amazon if things were crystal clear -

  1. We don’t know whether Kindle 3 will end the eReader Wars. It threatens to – However, we have no idea what Nook 2 and Sony’s new eReaders will be like. Predictions are particularly difficult because we have no idea what Kindle’s eReader market share looks like.
  2. We have no idea what millions means in either of these statements – Amazon has sold millions of Kindles. Amazon expects to sell millions of Kindle 3s.
  3. We don’t know what the Kindle App Store is going to be like, when it’ll come out, and what impact it’ll have. It could do nothing or it could do what app stores did for iPhone and Facebook.
  4. No one knows whether all the improvements and the new eInk screen will come together well or not. You could put together 5 great features and get a device that is terrible. Will all the improvements in Kindle 3 combine to form a great experience?  45 minutes in, it felt they did. However, you need weeks to know for sure.
  5. What will the Kindle WiFi mean - Will people expect 3G type always-on access? Will they expect something that does more than reading?
  6. Nook 2 is a complete mystery. We know it’s going to be similar to Nook 1 in shape and design and that’s about it. Arrival date, features, and screen type are all a mystery.
  7. Sony’s new generation of eReaders are also a mystery. Sony has been selling its current crop of eReaders at deep discounts for months and we might see the new models arrive any day.

Not only is the Kindle 3 full of unknowns we have absolutely no idea what it’ll be going up against.

Is Kindle 3 good or bad for readers?

There are three broad schools of thought here -

  1. Kindle 3 brings down eReader prices and increases the growth of eBooks and it keeps eReaders and eBooks alive and kicking. It guarantees the democratization of Publishing.  
  2. Kindle 3 ensures Amazon dominates. We are replacing Publishers and Stores who took 85% with a platform that takes 30%.
  3. Kindle 3 is terrible since its not open and it will kill any chance eBooks have.  

The third isn’t rooted in reality so don’t know how to answer that. Kindle, Sony, and Nook have brought us here – Of the three the Kindle has played the biggest part. Claims that ebooks and ereaders wouldn’t work without ePub and openness have been around since 2008/2009. The third school of thought is self-serving and propagated by companies using Open as a strategy and a cover for their inadequacies. 

There is a lot of truth to the first two. Kindle 3 helps continue the eReader/eBook revolution. Kindle 3 also gives Amazon immense power. It’s still a huge improvement – Authors get 55% (if they choose an Agency or a new Publisher) to 70% (if they self-publish), readers get to decide what they want to read, everyone who wants to share their story gets to share.

The third part (sharing stories) might be the most important.

Kindle 3 ensures everyone gets to share their story

A lot of people in the Publishing world and in the eReader world are beginning to start thinking that the real customers are Authors. What would you consider the stronger drive – the drive to read books or the drive to share your story through a book?

For a very long time we had Publishers decide who gets to share their story and what stories we get to hear. It was based far more on what would sell and what was marketable than on which were the most beautiful stories.

Now, all of us get to decide. We have no idea whether Publishers were keeping the bad ones out or not letting the good ones in. Now, we get to read the stories and find out for ourselves.

How do we measure Kindle 3′s impact?

Well, here are my suggested criteria (assuming we don’t see Kindle 4 until mid to end 2011) -

  1. The percentage of the book market ebooks comprise by mid 2011. If the Kindle 3 has impact then surely the most reliable indicator is the growth of ebooks.
  2. The number of Kindle 3′s sold by mid 2011. We might only be able to ascertain this indirectly - However, it’ll be pretty clear whether we are looking at millions or 5 million or 10 million. Amazon might even let us know if we hit 10 million.  
  3. How dominant Amazon becomes in ebooks and eReaders. If the Kindle 3 has impact it should not only affect total eBook and eReader sales it should also help Amazon grab a dominant and defensible position in both eReaders and ebooks.  
  4. How much evolution in eReader technology Kindle 3 triggers – Do we get competitors with Mirasol by end 2010? Do Pixel Qi Tablets recreate Kindle vs iPad? How fast and how quickly do eReaders evolve?
  5. The rate of decline of Publishers and bookstores. If the Kindle 3 does very well it is bound to start killing off Publishers and Stores built on selling physical books. If we see Borders go bankrupt and a few Publishers struggle mightily by mid 2011 then we know Kindle 3 has had major impact.
  6. The number of new readers. How many non-readers become casual readers? How many casual readers become hardcore readers?
  7. The number of children below 12 that become interested in reading due to Kindle 3 and other eReaders. Perhaps it’s a bit much to expect the third generation of eReaders to undo the damage that three generations of TV watching has done – However, if Kindle 3 can have impact here it would lay claim to the title of the most important eReader made. 

It’s the nature of things that the rise of eReaders and eBooks will be marked by death and destruction. It’s unfortunate that bookstores will be affected.

Although the Kindle 3 may, all by itself, bring down Publishers the amusing thing is that it doesn’t have to. It’s set a high bar and sooner or later competitors will meet and exceed the bar. Publishers are now only evading the inevitable – Kindle 3 is the inflection point for the death of Publishers.

The real question is – Will this be the main impact the Kindle 3 has or will Kindle 3 impact reading and books in other, more significant ways?


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