Apparently eReaders are not as endangered as the iPod Touch

We have another survey of questionable origins being used as evidence to support the supposed demise of eReaders. This one however cuts both ways. It’s a Morgan Stanley/Alphawise survey from March 2010.

Lies, Damn Lies, and Surveys

This is a survey that questioned customers and collated results from consumers who planned on buying an iPad. Note that these are customers ‘planning on buying an iPad’ so it’s even more unreliable than normal surveys.

The results were –

  1. 44% of US consumers who were planning on buying an iPad were buying it instead of a notebook computer or a netbook. Of those over half (24% chunk out of 44% chunk) were going to buy an iPad instead of an Apple Macbook.  
  2. 41% of US consumers planning on buying an iPad chose it instead of an iPod Touch. 
  3. 28% of US consumers planning on buying an iPad chose an iPad instead of an eReader. 
  4. 27% of US consumers were planning on buying an iPad instead of a desktop. Of those over half (14% chunk) were going to buy an iPad instead of a Mac.

Those figures add up to more than 100% (140% to be precise) because consumers probably considered 2 or 3 choices. This is interesting because it means people were even less serious about reading – If you want a device to read on and you’re deciding between a laptop, a Kindle, and an iPad you’re less likely to be the typical eReader owner.

Is this survey correct?

To be frank it’s a bit of a joke. Customers who are planning to buy something can’t really be used as an accurate measure. We also don’t know how many people were surveyed – How convenient to not mention that or any other details such as the wording of the questions.  

You also have the fact that the numbers add up to much more than 100% because customers were deciding between multiple choices.

If this survey is an accurate gauge of user behavior

We get some fascinating things –

  1. There’s a lot of cannibalization. People planning to buy an iPad chose it over Macbooks (24%), iPod Touches (41%), and Macs (14%). There’s overlap – However, at least 41% of the time these are sales that would probably go to other Apple devices.  
  2. Only 28% of people planning to buy an iPad were considering eReaders. Plus there’s no guarantee they wouldn’t have gotten an iPod touch or a netbook instead of an eReader if the iPad wasn’t available (and they haven’t bought anything yet). 
  3. Only 17% of people planning to buy an iPad were considering handheld video games.
  4. Only 20% were considering notebooks and netbooks.

Isn’t it interesting that the three categories of devices supposed to be most endangered by the iPad (handheld video games, eReaders, netbooks) have such low figures (17%, 28%, and some portion of 20%) while Apple’s own products have much higher figures. 

Not only is the iPad a giant iPod Touch it’s also a giant iPod Touch killer.

The rumored death of Netbooks

Netbooks had a year over year growth rate varying between 180% and 641% in the last 6 months of 2009. The growth rate is now rather low – it fell to just 5% in April 2010, and was never above 68% (January). 

This is being attributed to the iPad. However, it’s worth considering a few things –

  1. It’s probably the unknown i.e. not knowing what’s coming out, that caused a lot of the drop.
  2. If you’re selling 20 million plus netbooks a year it’s unrealistic to expect another year of growth rates between 180% and 641%.
  3. You have to compare total netbook sales with total iPad sales. Since iPad is starting from zero comparing growth rates is rather unfair.  

It’s typical Apple marketing to take a figure like declining growth rate and focus on that. It’d be much less fun to point out that Netbooks outsold the iPad even after all the hype and publicity.

While the iPad did take away a chunk of the netbook market we have to wait and see how big that chunk was and  whether it was the promise of the iPad that stalled sales as opposed to the actual device stealing sales.  

What devices do people who love reading consider?

We’re getting quite a list in the survey – iPod Touches, netbooks, notebooks, eReaders, iPads, desktop PCs.

Do people who read books really consider all of those devices as reading devices?

That’s a good question and it hints at why Apple is pushing the iPad as an eReader. Since it’s a very new market, is not very well-defined, and eInk hasn’t evolved in years, the eReader market is ripe for taking over. All you have to do is change the concept of what an eReader is from ‘a device built for reading’ to ‘a device you can read on’.

That’s exactly what Apple is doing and its smart strategy. It is going to lead to less reading because people with dedicated readers will read more books (it’s not like you can watch a movie instead). However, it sells iPads so Apple will obviously paint it as the best eReader available.

Kindle 3 and Nook 2 and the next generation of Sony Readers have to ramp up their offerings or they might end up losing sales to a device that isn’t even an eReader.

Pretending to be an eReader is better for the iPad

It’s pretty annoying to always have the iPad compared with Kindle and Nook and to hear all sorts of strange things –

iPad is the best-selling tablet – selling more than the Kindle tablet.

iPad is going to become the #1 eReader.

Kindle was the best tablet before the iPad came out.

There are two main ideas that are being propagated –

  1. The iPad is an eReader and it takes on eReaders like the Kindle and Nook and Sony Reader. 
  2. The iPad is a Tablet and eReaders are tablets too.

It all makes sense when you dig deeper.

The real competitors the iPad is scared to be compared against

There are actually two categories that the iPad is much closer to than eReaders –

  1. Netbooks. 
  2. Mobile Phones.

Why Apple doesn’t want the iPad compared with Netbooks

The rhetoric of revolutionary and magical aside the iPad is extremely similar to netbooks. Yet if it were to take on the netbook there are only 2 possibilities –

  1. Apple sells 2 to 3 million iPads in 2010 and that pales when compared with the 20 to 30 million netbooks sold. It’d come in at #4 or #5 and that doesn’t sound very good.
  2. Apple sells 5 million iPads or a bit more in 2010 and still can’t impress when you consider the total number of netbooks sold. It’d still be #3 or #4.

So Apple does the smart (or perhaps cowardly) thing and shies away from netbook comparisons.

Why Apple doesn’t want the iPad compared with SmartPhones

Notice how the iPad is identical to the iPhone in almost everything except size and name and inability to be used as a phone. They have the same operating system, they look the same, and they have the same closed eco-system fed by app developers.

Yet if Apple let the iPad be compared with the iPhone they can’t win. There are 85 million iPhones and iPod touches. A few million iPads sold in 2010 wouldn’t even register in people’s minds.

Apple goes for easy markets – even if they aren’t accurate

Apple is scared to take on netbooks and it definitely does not want comparisons with the iPhone. It therefore picks two other niches to be in –

  1. Tablet PCs. This is somewhat fair since it is a tablet.  
  2. eReaders. This is totally inaccurate since it’s not a dedicated reading device.

Why being considered a ‘Tablet’ is good for the iPad

There is no Tablet that’s sold a significant number of units. In fact every Tablet has been an abysmal failure. That means Apple sells 1 million iPads after 3 months of hysteria and claims it’s the #1 Tablet.

There is such lack of competition in Tablet PCs that writers are forced to pretend that the Kindle is a Tablet.

iPad is a better tablet than the Kindle tablet sounds much better than – iPad is the best tablet because there aren’t really any other Tablets.

Putting the iPad into a non-existing category creates the illusion that the iPad was so good that in a month it became the #1 Tablet. It plays into the illusion of it being something magical.

Why pretending to be an eReader is good for the iPad

There are dual benefits –

  1. Apple can trick people interested in buying a dedicated eReader into buying an iPad. Since eReaders are an exploding and emerging market it’s especially easy to pass off any device as an eReader and well worth it.
  2. Amazon and B&N and Sony are all silent on numbers. This lets Apple claim it’s the #1 eReader in sales.

eReader companies are doing a particularly bad job of fighting this misconception.

The Paradox of Being Revolutionary and not competing with established markets

Let’s contrast the rhetoric –

iPad is revolutionary and magical.

iPad is going to transform personal computing.

iPad is defining the future of mobile media and computing devices.

With the reality –

  1. iPad isn’t comparing itself with the computers and PCs and laptops it’s claiming it’s going to replace.
  2. iPad isn’t even comparing itself with netbooks – which are a newer, rapidly growing market.
  3. iPad isn’t comparing itself with mobile phones.

It’s revolutionizing personal computing because it sold 1 million iPads – Yet Windows 7 has sold 100 million copies. Doesn’t sound like a revolution to me.

The iPad is so revolutionary that it’s comparing itself with Tablets – A category so devoid of competition that we couldn’t even name one. It’s so magical that it’s pretending to be an eReader and steal off some of that market.

It’s very smart reality distortion – However, it isn’t reality

We know why Steve Jobs is doing this. It’s better to start off in smaller, weaker markets and try to dominate them and then move on to bigger markets.

It might work. Perhaps enough people will buy the #1 Tablet Rhetoric and some people will even fall for the Most colorful eReader nonsense. And then Apple can get to 10 million iPads sold and keep growing and eventually get enough sales to pretend it’s revolutionized computing.

All that Apple has revolutionized is marketing and locking out competitors. It’s admirable that Apple and Steve Jobs can so thoroughly convince some people that the iPad is revolutionary. However, it doesn’t become revolutionary just because you talk a portion of people into believing its revolutionary.

iPad as eReader experiment not starting well

Apple finally disclosed some official iPad sales figures and here are the three figures that stood out –

  1. 1 million iPads had been sold by Friday. That’s almost as many as the number of articles written about the iPad (think about it before you dismiss the idea 😉 ).  
  2. 12 million apps were downloaded. 
  3. 1.5 million eBooks were downloaded from the iBooks store.

It’d be nice to know some more details – especially the ratio between paid and free downloads.

Here are some interesting ways of looking at that data –

  • In the first month, when users are most likely to make purchases, 1.5 books were downloaded per user per month. Not very promising – We don’t even know how many of the 1.5 million ebooks downloaded were paid books.
  • Ratio of apps to books downloaded was 8:1. The notion that people are going to be doing lots of reading can be put to bed.  
  • The most hyped product in history sold 1 million units after 3+ months of publicity and 1.5 months of preorders and availability. Imagine how well it would have done if people could actually figure out what it’s for.

It just isn’t that impressive to sell 1 million iPads and get 1.5 million ebook downloads after the biggest launch of the year and 4 months of non-stop coverage. 1.5 million books downloaded in a month is hardly a threat to eReaders.     

Perhaps the high prices (of the device and the books) are getting in the way of the iPad’s plans of eReader domination.

Speaking of price, Buy.com has the Sony Reader Pocket Edition for $140 with free shipping. That’s a pretty good deal (courtesy CNet).

Playing Devil’s Advocate

Let’s take the same numbers and paint the iPad as the future of the eReader –

  1. All 1.5 million of those ebook downloads were paid books. That’s 1.5 books a month and 18 books a year. 
  2. Kindle for iPad and Kobo and other eReader Apps will add another 1.5 books a month – That’s another 18 books a year.
  3. This is just the beginning. By end of the year there will be 10 million iPads – each accounting for 36 book sales a year.

Perhaps we could go as far as claiming that people will actually read more books in later months than in their first month. Perhaps we start saying that not only will people buy books through eReader apps they will also buy individual book apps.  

It’s pretty easy to twist the numbers.

People’s Reactions

Not many people are talking about books. Nearly everyone thinks we should consider the iPad a success now.

Let’s wait till end of the year – Especially when it comes to assessing impact (or lack thereof) on the sale of eReaders.

For Apple lovers Teleread has a pretty sobering comparison –

Engadget has reported that 1.5 million ebooks were downloaded to the iPad in the first 28 days after its introduction. Wow! the press says. “It shows that the iBookstore will rule the world”.

Not.

Feedbooks distributed 2.6 million books during the same period!!

The 8:1 apps to books ratio is equally interesting. People are greatly underestimating just how difficult it is to focus on reading when you have thousands of distractions.

Is any company as full of itself as Apple?

Here’s a paragraph from Apple’s Press Release (split and highlighted by yours truly) which highlights why it’s hard for me to like the company despite them having made the iPhone –

Apple ignited the personal computer revolution with the Apple II, then reinvented the personal computer with the Macintosh. Apple continues to lead the industry with its award-winning computers, OS X operating system, and iLife, iWork and professional applications.

Apple leads the digital music revolution with its iPods and iTunes online store, has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.

This is the type of write-up professional resume writers probably dream of.

It reminds me of this billionaire in India who’s building an entire skyscraper (literally) as a house – Even after earning billions he still needs to have (and people to know he has) 3 floors of gardens and 2 swimming pools to feel good about himself.

Perhaps that’s what it is – perhaps Apple has a little bit of the nouveau riche thing going on. After all those years of losing to Microsoft they are delirious to be doing so well and can’t help releasing gaudy press releases and thrashing the very life out of words like magical and revolutionary.