Do new Tablets threaten eReaders?

Monday saw a barrage of Tablets masquerading as eReaders and Tablets being portrayed as eReader killers –

  1. There were rumors of iPad Minis with 5.6″ and 7″ screens that will focus on reading and set up a Kindle 3 vs iPad Mini Christmas showdown.
  2. Velocity Micro said it will be releasing the Cruz Tablet and Cruz eReader which both have a 7″ color touchscreen, run on Andorid, and come with an App for reading ebooks.
  3. The Pandigital Novel eReader got hacked to work as a Tablet.  

It brings up some good questions – Which of these shiny new Tablets are threats to eReaders? Are dedicated eReaders like the Kindle now an endangered species?

Which Tablets are a threat to eReaders?

Apple’s iPad Mini may or may not be a threat 

From one perspective it doesn’t seem a threat – it’ll still be on the expensive side, it isn’t exactly tailored to reading, it seems more of a gaming device, it has an OLED screen which means readability won’t be as good as eInk and battery life will probably be pretty bad.

From another perspective it is a bit of a threat – Apple’s marketing machine is scary good, people who don’t read much will be tempted by the perception that a device that does more than just read is better for reading, it’ll appeal more to casual readers.

In the end the best thing it might do is keep Kindle and Nook honest and force them to evolve faster. The iPhone with 50 million units sold didn’t kill the Kindle and it’s unlikely iPad or iPad Mini will.

Velocity Micro’s Cruz Reader at $199 is a bit of a wild card

The Cruz Reader is part of ‘the world’s first family of affordable touchscreen color ereaders and tablets’ – Apparently color and a touchscreen are now supposed to be critical eReader features.

It’s an interesting package at $199 – It has a 7″ screen with 800 by 600 resolution in a 4:3 layout, a premium resistive touchscreen, 802.11 b/g wireless (WiFi), an SD card slot, apps for eBooks (and for magazines, video, music, and games), 6+ hours of battery life, and a browser.

It runs on Android and has an open content portal. It weighs just under 1 pound and its dimensions are 7.55″ by 5.6″ by 0.57″. It supports audio (MP3, wav, aac), video (mpeg4, H263, H264), and text (ePub, PDF, txt, html).

It also lists as features – email, multitasking, accelerometer, user replaceable battery, docking station, non-skid rubberized back, and 100+ pre-installed ebooks. 

Don’t really know what to think of the Cruz eReader. $199 is certainly an impressive price and yet its features suggest that it’s yet another Tablet pretending to be an eReader.

Pandigital Novel is doing the reverse jump

We usually see Tablets eager to pass themselves off as eReaders and steal a share of the exploding eReader market. With the Pandigital Novel we have a rather strange situation – People have hacked the Pandigital Novel ereader and are claiming it makes a great Tablet.

The Pandigital Novel has a 7″ screen, runs on Android, has an Arm 11 processor, supports WiFi and AT&T’s EDGE network, and has a $199 price tag – In fact, it sounds exactly like the Cruz eReader.

There’s a lot of sudden interest because it turns out its possible to hack the Pandigital Novel to run Kindle for Android. Kindle for Android also happens to run much faster than Pandigital’s in-built eReader software.

How does the hacked Novel do while running Aldiko or Kindle for Android?

Apparently these apps do a great job taking advantage of the Novel’s good hardware specifications: turning pages is faster, as is general responsiveness.

Beyond fast page turning, this hack gives Android fans an inexpensive introductory tablet on which to play with the Android OS.

Looking at the Pandigital makes you realize that it’s yet another Tablet masquerading as an eReader. You also realize something else.

Tablets aren’t a threat – they’re just trying to survive

You could make a case that the iPad might have validated the Tablet space – However, it may just have validated Apple’s ability to sell products to its loyal Apple people.

The focus of every single tablet, including the iPad, to pass itself off as an eReader suggests that rather than Tablets being a threat to eReaders they are just trying to steal enough of the eReader market to prop themselves up and get a chance to carve out a market for themselves.

If the Tablet market emerges and survives it will be made of pieces of other markets cobbled together. At the moment eReaders are an exploding market and it’s easy to get a piece – especially as you can blitzkrieg readers into thinking Tablets are just as good for reading as eReaders. 

eReaders have a much higher chance of surviving than Tablets

Step away from the delusions and coolness of Tablets for a minute and think about it – eReaders are taking over the Book Market and will, eventually, take over the paper market. All Tablets are taking over is – well, nothing. Take Apple’s marketing genius and loyal customers out of the equation and there isn’t much left. Somewhere between 63% and 75% of iPad owners already own an Apple product – it’s all Apple loyalty and it’s not particularly strong since the iPhone 4 sold 1.7 million in a weekend (iPad took 2 months to log 2 million sales).

There’s so much talk of Apple selling much more than every other Tablet maker combined – Perhaps that means Apple made the best product imaginable, perhaps it just means there’s no market.

The market for ebooks is the need for books to evolve. The market for eReaders is replacing paper. The eReader market is going to be a ‘hundreds of millions of devices sold per year’ market.

There is no such guaranteed market for Tablets.

While there is a chance that Apple is ‘doing it right’ and suddenly a market of hundreds of millions of tablets per year will appear it’s rather unlikely. Tablets aren’t replacing something as basic as books or paper and they aren’t the only evolution in technology in centuries (which is what eReaders are). Tablets are trying to replace PCs and laptops when there is no demonstrated need or demand – plus they are just a tiny jump in technology.  

That’s the fundamental difference – eReaders are bringing books into the 21st century. Tablets are simply Apple’s finely honed marketing trying to conjure up a market that may or may not exist.

22% for iBooks – Was Steve Jobs trying to mislead us?

Here’s what was in Steve Jobs’ presentation regarding iBooks’ share of the ebook market place  –

  1. On the Slide – 22% Share of total eBook sales.  Check the image at the bottom of Engadget’s coverage of the Apple conference.
  2. What he said (one version) – Publishers tell us that sales of their eBook sales are at 22% right now. 22% in iBooks.
  3. What he said (a second version) – 5 of 6 biggest Publishers tell us that share of eBooks is now 22%.

What has happened is that we have had the Press react in multiple ways –

  • The majority have interpreted it to mean that iBooks has 22% of the eBooks market. 
  • A small minority are focused on it being 22% for Agency Model Publishers and consider that significant. 
  • Another small minority think the numbers mean nothing.

Whether or not Steve Jobs intended to get that reaction – It’s the best possible reaction. The current press interpretation will help Apple to get more Publishers on-board and to a lesser extent will help iPad sales.

The Things that Steve Jobs forgot to mention

You could make a good argument that except for the first the others aren’t absolutely essential. We could make a counter argument that while not essential they are important enough to mention –

  1. 5 of the 6 biggest Publishers translates to less than 50% of the market. The Slide should have read – 22% share of 50% of the eBook market.
  2. These Agency Model Publishers had just raised prices 30% to 50% and their share of ebook sales almost certainly dipped compared to Random House and Indie Publishers and Authors.
  3. Lots of Kindle owners and Nook owners were boycotting Agency Model Publishers – meaning even more of a skew towards iBooks users who were less likely to boycott or even know about increased prices.
  4. Penguin stopped selling new books in the Kindle Store. 
  5. iPad owners had just bought their devices and were far more likely to buy books – the new device effect.

The first is definitely a huge, huge thing to forget to mention. By saying 5 of 6 biggest Publishers Steve Jobs creates the impression that the 22% applies to the entire market and he strengthens it with the slide.

The other 4 points should also be mentioned if you want to validate a claim that your channel now owns 22% of the market. On the other hand – if you want to create the impression that your product owns 22% of the market when it owns much less then what Steve Jobs did is perfect.

The Things that Steve Jobs did remember to add-on

Almost as important as what he left out is what he added i.e.

  • iBooks owners downloaded 5 million books.
  • That it translates to 2.5 books per iPad owner.

These figures are obviously supposed to give the impression that the 22% market share is valid.

You could argue that they were never meant to be used as evidence of 22% market share – However, they were mentioned right before the 22% figure was announced and everyone is interpreting them as evidence.

The Trend of Implying things without overtly lying

You begin to see this trend everywhere with Apple’s marketing –

  1. The implication is something very stunning. In this case it’s 22% market share for iBooks. 
  2. There is evidence that seems to add to the implication. In this case the downloads of 5 million books.
  3. Dig deeper and the holes show up – No mention that it is 22% of 50% or less of the ebook market. No mention of whether the downloads are paid or free.

It creates the intended effect without ever having to prove it. If someone disputes the claim (as Kindle owners at the Kindle forum are) Steve Jobs can just go back to his exact words and claim that he never said 22% market share of all ebooks – Even though that’s exactly what the slide says.  

Unintended Slip or Borderline Ethics or Excellent Marketing?

Here’s how people will probably interpret it –

  1. Apple fans – It’s a slip. He was precise in his words. Who cares about anyone other than Agency Model Publishers anyways.  
  2. Kindle owners – That’s shady. It’s pretty obvious that he’s trying to create the impression that iBooks has 22% of market share although it actually has 11% or less. 
  3. Marketing People – Wow! That’s amazing marketing. No wonder he sells so many iWhatevers.

The interesting thing is that this isn’t the only part of the keynote that people are questioning.

Retina Display might not be as magical as we thought

Reuters covers Wired’s article which points out that Apple is again going overboard on marketing

  1. Steve Jobs claimed that 300 pixels per inch was the limit of the human retina for a display about a foot away.
  2. Wired references an expert who differs from Steve Jobs –

    Soneira, who possesses a Ph.D. in theoretical physics from Princeton and has been studying displays for 20 years, said it was inaccurate to measure the resolution of the eye in terms of pixels, because the eye actually has an angular resolution of 50 cycles per degree.

    Therefore, if we were to compare the resolution limit of the eye with pixels on a screen, we must convert the angular resolution to linear resolution. After conversions are made, a more accurate “retina display” would have a pixel resolution of 477 pixels per inch at 12 inches, Soneira calculated.

  3. Obviously Apple is not going to say we are at around 50% of what the perfect display is. However, that doesn’t mean he should claim his display is as good as it could possibly get.

To be fair the expert did say that we might not realistically need anything better than the new iPhone screen’s 326 pixel per inch display.

Apple also forgot to mention that the improved resolution is only worthwhile if apps and content are made to match it i.e. existing apps will mostly not be taking advantage of this improved resolution.

Let’s end with something the expert, Soneira, said –

“If you and I have the world’s greatest display, and we launched it and put down the real scientific numbers, we’d go bankrupt because our numbers would look like the worst display being made.”

You have to suspect that’s what Apple is trying to do with eReaders and eBooks – use its war of perception and its tentacles in the Press to outsell a better product (Better for reading). That’s what the Kindle and Nook and Sony Reader are up against – they might be the best reading devices but they have to fight the illusion of ‘best reading device’ that Apple is conjuring up for the iPad.

Survey says 33% of iPad owners frequently read ebooks

Well, sort of. It is a survey after all.

Change Wave did a survey that asked 153 iPad owners what they most often utilized their iPads for. Each respondent was allowed to choose up to 5 uses. The results were –

  1. Surfing the Internet – 83%.
  2. Checking Email – 71%.
  3. Apps from Apple App Stores (whatever that means) – 56%.
  4. Watching Videos – 48%.
  5. Reading eBooks – 33%.
  6. Playing Games – 29%.
  7. Reading Magazines/Newspapers – 28%.
  8. Listening to Music – 18%.

It’s impressive that ebooks beat out games (almost to the point that it makes you wonder about the accuracy of the survey).

It’s also worth noting that for all the hype of the iPad being an eReader and Apple trying its best to force the iPad into the eReader niche only 33% of users listed reading books as one of the main things they do. They had up to 5 slots and only 33% of them chose reading ebooks.

The numbers add up to 356%. Not sure exactly how those 5 choices were tallied up – Guessing they just counted a vote for ebooks if it was listed in any of the 5 slots.

33% of 1 million? 33% of a couple million?

The Press not only wrongly categorize the iPad as an eReader they also compare iPad sales figures against eReader sales figures.

If this survey is correct (and it’s positive about the iPad so the Press will assume it is) then it means only 33% of iPad owners are actually reading books on it.

Let’s say 2 million iPads have been sold so far. And that 5 million sell this year.

That would mean 660,000 people reading books on their iPad so far and 1.66 million iPads that are used for reading books by the end of the year. That brings up 3 questions –

  1. If only 33% of iPad owners read books – That’s 1.66 million by end of 2010. How significant is that? Obviously not as significant as pretending every iPad owner reads ebooks.  
  2. Do people who read on the iPad buy and read books as often as Kindle owners (and owners of other dedicated eReaders)? If not, what is the difference?  
  3. Are these people who weren’t reading and now are reading because they can get ebooks on the iPad? Are these people who would have bought a dedicated eReader – If so, are they reading less or more?

The figure of 33%, if correct, gives us a starting point for guessing lost eReader sales.

Guesstimating lost eReader sales

Assuming 2 million iPads have been sold so far we get 660K people who read ebooks on the iPad.

  • Let’s say half of them did not consider an eReader. That leaves 330K.
  • Let’s say 50% of the remaining  would have ended up buying an iPhone or iPod touch or some other multi-purpose device. Simply because being able to do multiple things appealed to them. 
  • We’re left with 165K lost sales.

It’s fashionable (as in this survey) to refer to ‘so many iPad sales in just a couple of weeks’. However, we had –

  • January 27th to April 3rd. When people were delaying their purchases. 
  • April 3rd to May 21st. When iPads were actually available.

That’s over 3 months and 3 weeks. Let’s say 3.75 months. So eReaders lost 165K units of sales in 3.75 months. That’s 44,000 lost ereader sales a month.

What eReader sales might we lose over the course of 2010?

So far we’ve had 165,000 lost sales at the rate of roughly 44,000 sales lost a month.

Over the next 7 months in the best case scenario sales losses occur at the same rate – which equates to an additional 308,000 lost. That means a total loss of 473,000 sales. A significant loss but not a huge one.

In the worst case scenario the rate of lost sales keeps going up and we’re losing an average of 100,000 sales a month. That would mean 865,000 eReader sales lost to the iPad in 2010. Pretty significant – However, it still wouldn’t kill eReaders. In fact, they’d probably sell more than they did last year (assuming 5 million in 2009).

That 865,000 sales lost number is pretty much the upper limit. It’s assuming 100,000 sales lost a month from here on out.

In the worst case the iPad will eat up 20% of eReader sales

It’s obviously a very different figure for ‘lost eReader sales’ if you compare number of iPads sold against number of eReaders sold. However, as this survey shows, only 33% of people read ebooks on their iPad. So it’s pretty unrealistic to count the other 67% of iPads as ‘lost eReader sales’.

In the realistic worst case scenario we lose 865,000 eReader sales to the iPad which would be less than 20% of eReader sales for 2010.

If you want to play games with numbers you could claim that all 33% of iPads that are used for reading books are lost eReader sales (even though they’d probably have been iPhone and iPod sales if the iPad wasn’t around). If we do go with that and we have 5 million iPad sales, then we get 1.66 million iPads sold that were lost eReader sales.

If 5 million eReaders were supposed to be sold this year then a loss of 1.66 million is 33%. A huge number but it’s still not a big enough number to kill the eReader. Also, with this we’re assuming that just 3.34 million eReaders sell this year. That’s unlikely – Amazon alone might sell that many Kindles.

Basically, the iPad is doing exactly what you’d logically think it would – stealing chunks of various markets (iPod, Mac, Netbook, Laptop, Kindle, etc.) and combining those to get big numbers – at least so far.

What’s the benchmark for the iPad to be considered a huge success?

If you’re thinking ‘revolutionary and magical’ and a new paradigm of computing then it’s probably tens of millions of units. That would mean hitting 5 million or more in its first year.

If Apple persists in going with the eReader route then it can keep claiming it has huge comparative numbers even though only 33% of them actually read ebooks. This is probably what Apple is going to do. Pick markets like Tablet PCs and eReaders that are small and try to show that the iPad dominates them. It’s hoping that the buzz gets lots of people into buying the iPad.

That in turn would let Apple hit economies of scale and sell the iPad at a more compelling price point.

The 33% number is really surprising. Guess the Apple reality distortion field had affected me too because it seemed like 75% of the people who bought an iPad talked about reading lots of books on it.