Kindle 3 year anniversary thoughts

We just passed Kindle’s 3 year anniversary.

As the Kindle 3 and Kindle WiFi get ready for a holiday showdown with Nook Color and the new Sony Readers it’s worth taking a moment to reflect on how far we’ve come. Let’s look at the big Kindle + eReader surprises, the disappointments, and the hard to believe things.

12 Biggest Kindle, eReader Surprises

  1. Reading is cool again.
  2. That eReaders made it. While all of us were hoping that a device made just for readers would survive – you have to admit that most of us had a few niggling doubts.
  3. That eBooks are now 9% of the book market and might be 10% by end of 2010. To put it another way – Not only did eReaders survive they took the book market and in just 3 years turned 10% of it into ebooks.
  4. Apple getting into Books and releasing iBooks. It’s just not a good fit.
  5. We still don’t have a decision on orphan works and we still don’t have an offering from Google. 
  6. Amazon and Sony stuck with a dedicated eReader. At every turn it seemed like the companies would morph their eReaders into tablets and it’s a pleasant surprise that 2 of the big 3 have stuck with dedicated eInk eReaders.
  7. That the main-stream media and tech blogs still don’t get it. Just one more million eReaders sold and then they’ll believe eReaders really do exist – they promise.
  8. That there’s an entire eco-system around eReaders – Blogs, sites, cover manufacturers, independent authors, service providers, ebook publishers, iPhone book app publishers, public domain book sellers, and people making software for eReaders.
  9. The sheer number of companies that are taking a shot at making an eReader or selling books.   
  10. That ePub has amounted to nothing. eReaders supporting ePub were supposed to take over the world – Well, where are the 75% of people who were waiting to buy eReaders supporting ePub?
  11. That we’ve gone from $399 to $139 in 3 years. Price drops are expected but to drop to a third in 3 years is a good surprise. This probably also reflects Amazon’s focus on selling books rather than eReaders.
  12. The company behind eInk selling itself right when eReaders really began to take off.

A little more on one of the biggest surprises – That eReaders made it.

eReaders have made it and they’re transforming Publishing

We have somewhere between 5 and 10 million eReaders in the US. That’s exactly 5 to 10 million more than what the experts thought would sell.

eReaders have resulted in ebooks accounting for 9% of total book sales. They’ve given independent authors a channel to reach customers directly. They’ve put the fear of God into Publishers.

Companies like Apple and Google are trying to jump in. Every Tablet is pretending to be an eReader or claiming to be ‘great for reading’. Every company under the sun is making its own eReader.

eReaders have made Reading cool again.

One survey says eReaders are the #2 most wanted gift this Christmas and another says #3. Yet another survey says that more kids over 13 wants eReaders than iPhones. A high school in Florida has given every student a Kindle. Kids are reading again.

Lots of kids and grown-ups who couldn’t access paper books can now use large size fonts and text to speech to access books.

10 Biggest Disappointments

  1. That there isn’t a tough 4-way or 5-way race in eReaders. All we have in dedicated eReaders is Kindle 3 in front with Sony and Nook 1 struggling to keep up. B&N is trying to create the reading tablet segment which is commendable but doesn’t do much good other than motivate Amazon to launch a color Kindle sooner.
  2. That there isn’t a tough 3-way or 4-way race amongst ePaper companies. All we have is eInk and a bunch of companies that love to talk about all the amazing technology that they will one day show off at CES and then never release.
  3. Publishers – They’ve been raising ebook prices, limiting availability, turning off text to speech and LendMe. Worst of all, they kicked off the Agency Model in early 2010 and almost managed to slow down ebooks.
  4. We don’t yet have a color eInk eReader. We don’t really have any big breakthroughs – unless you consider the 50% better contrast of eInk Pearl to be one. In 3 years all eInk/PVI has done is taken us from 8 shades of grey, decent clarity, and 1.2 seconds per page turn to 16 shades of grey, much better clarity, and .5 seconds per page turn. eInk technology seems to be following reverse Moore’s Law – Every 2 years the technology improves 25%.
  5. Sony – It started the whole category but lost the script and is now fading away.
  6. B&N creating a reading tablet instead of making a dedicated, eInk-based Nook 2. Nook Color is very impressive but it’s not a device crafted for dedicated readers.
  7. The hotshot color eInk technologies have all failed to show up – Pixel Qi, Fujitsu, Mirasol, eInk’s own color eInk, Keny Displays, Nemoptic, Bridgestone’s QR-LPD, and LiquaVista are all still ‘in development’ or ‘arriving soon’. There’s talk of a Mirasol eReader debuting in Q3, 2011 which would be almost exactly 4 years after the Kindle 1.
  8. The non-stop deaths and disappearances of smaller eReader companies. Everyone from Readius to Skiff to Cool-er to Notion Ink to Plastic Logic is either dead or indefinitely delayed.
  9. That apps and services for eReaders haven’t really arrived. Where’s the great recommendation engine? Where’s the eReader to eReader social network? Where are the services and software that will add real, solid value to readers’ lives?
  10. Larger screen eReaders. Kindle DX is one of the few available choices. All the large screen eReaders seem expensive when compared to the smaller eReaders. A lack of competition has really hurt this segment  

The first 2 disappointments are critical and may very slow down the advance of eReaders.  

Lack of Competition = Lack of Innovation

We currently have Kindle with a huge lead in eReaders and PVI is the only viable ePaper manufacturer. That just kills innovation.

When the Nook first came out we saw Amazon add PDF support, cut prices, and add a bunch of other good features. With the threat of a Nook 2 looming we saw a Kindle 3 that was an improvement across the board and much cheaper.

Now, with B&N releasing Nook Color instead of Nook 2 and Sony Readers being priced so high, who’s going to force Amazon to evolve?

It’s the same with eInk/PVI which is happy to add one feature per decade while other ePaper makers produce Press Releases rather than ePaper.

In both eReaders and  eInk/ePaper we need a lot of competition – competition that forces Amazon and eInk/PVI to improve, competition that forces all eReader companies to evolve, and competition that will undoubtedly create revolutionary new technologies that will accelerate eReader and eBook adoption.

11 Hard to Believe Things

  1. Amazon’s level of dominance – 50% to 70% of eReader sales, 80% or more of eBook sales. An iPad survey claims more iPad owners use Kindle for iPad than iBooks – for the first time ever an iPad survey might be right.
  2. Nook and Sony Reader both being sold out during 2009 holiday season and handing everything to Amazon. You have to try very hard to run out of stock during holiday season - Despite Amazon messing up in 2007 and 2008 its competitors didn’t learn and gave Amazon the market.
  3. B&N releasing an eReader in 2009 and B&N releasing a Reading Tablet in 2010. At some level you expect B&N to slowly die without putting up much of a fight. You don’t expect it to be the catalyst that re-invigorates eReaders and forces Amazon to evolve Kindles drastically and rapidly.
  4. Publishers refusing to see the opportunity. You go up to a Publisher and tell him – Let me get rid of used book sales and book lending and eliminate returns and shipping costs. Let me also give you the opportunity to instantly meet user demand, know how well books are selling, and figure out what’s working and what’s not. The Publisher punches you in the gut and starts running around finding ways to upset readers. It makes no sense.
  5. The wide range of patents filed. Qualcomm has a device with 3 screens which morphs into different devices based on how you arrange the screens. Amazon has a patent for a device that recognizes gestures and also a patent for an electronic pen that syncs with the cloud. If even one of these patents makes it into an actual eReader it’d be a big step forward.
  6. Kindle Store becoming a viable place for independent publishers to not only get book deals but also to make a living. It’s only a few authors at the moment but it’s bound to increase.
  7. Publishers letting new publishing upstarts like Rosetta Books and OR Books get digital rights for a lot of good backlist books.
  8. That we still don’t know how many Kindles have been sold.
  9. New York Times will have an eBook Bestsellers List. It’s just 3 years and already there’s a separate eBook Bestsellers List.
  10. Amazon still doesn’t support library books.
  11. The sheer number of free book offers. It’s mostly the Kindle Store but even other stores get a lot of free offers. Now that we have days with 10+ free kindle books it’s hard to believe there was a time when there were no free book offers (most of 2008).  

For me the hardest thing to visualize/comprehend is that there are now millions and millions of people with Kindles – It’s 100 huge stadiums full of people – each holding a Kindle.

It’s morphed from the early pioneers into pretty much 20% of the book reading population of the US.

Looking back in Wonder

Here are a couple of posts you might find interesting -

  1. Kindle, eReader Thoughts at the end of 2009
  2. Kindle’s First 2.25 years.  

It’s strange to see some things stay exactly the same and other things morph so dramatically.

Where are we headed?

2011 and 2012 promise to be very interesting and exciting.

Will we get to tens of millions of eReaders sold a year? Will eBooks account for 25% or more of market share? Will $75 and $100 eReaders become commonplace?

Will Amazon continue to dominate both eReaders and eBooks? Is there any revolutionary new technology or business model waiting to wrest away the momentum? Could Nook Color put B&N in the drivers’ seat?

Will we really see color eInk based eReaders next year? Does Apple really have a 7″ mini iPad that’s focused on reading? What will Google Books look like and what eReaders and devices will it tie up with?

What eReader services will we see? Will Kindle Apps and Nook Apps make a difference? Will someone create a better reading app for iPhone and iPad than Kindle for iPad and Nook for iPad?

The Kindle 3 is likely to take over the dedicated eReader market this holiday season and color eInk eReaders are set to arrive in 2011. Beyond that, everything’s up in the air.

There’s a lot to look forward to and we might be about to enter the golden age of eReaders - perhaps even a golden age of reading.

Kindle 2 year anniversary thoughts

Missed the Kindle’s 2 year anniversary a few days ago (November 21st, 2009 – although it was announced on the 19th). Here are a few thoughts on the Kindle being 2 years old -

1. Kindle might still be keeping up with iPod sales in its first few years

This is based on estimates – feel free to not believe it.

The Nook and Sony Reader Daily Edition selling out do indicate there might be some truth to high kindle sales estimates. Kindle sales are probably high enough to match iPod’s sales in its first few years.

For example, these are iPod Sales in its first few years (courtesy Wikipedia) -

Year Q1 Q2 Q3 Q4
2002 125,000 57,000 54,000 140,000
2003 219,000 78,000 304,000 (iPod V3) 336,000
2004 733,000 807,000 860,000 2,016,000
2005 4,580,000 5,311,000 6,155,000 6,451,000

Kindle sales estimates from analysts definitely match up with iPod sales in its first 6 quarters. (Please see my Kindle vs iPod Sales post for Kindle sales estimates from analysts).

The big question is -

Will Kindle be able to match the jump that the iPod got from iPod Generation 3?

The answer to that is in three parts -

  1. Kindle is probably already beating the 336,000 sales in a quarter that iPod had in its 8th quarter.    
  2. A really exceptional Kindle 3 will be needed to match the excellent 3rd year of the iPod i.e. sales jumping to 2 million in the last quarter.
  3. The astounding 4th year might be out of reach – Nook and Sony Reader provide two strong rivals. Something the iPod never had. That means the 2005 jump the  iPod had might get shared between 3 eReaders.

2. 2011, and not 2010, might be the Year of the eReader

That iPod sales table points out that the 4th year of the iPod is when 1-1.5 million iPods were selling each month. The same might happen for eReaders -

  1. Color might not be around until the end of 2010.  
  2. Prices are going down – However, $100 to $150 eReaders are unlikely to happen until 2010 Holiday season.
  3. People are assuming that perception will suddenly change overnight. It’s taken 2 years for people to accept that eReaders aren’t going away – it might be a year or two more before they embrace eReaders.

2010 might seem like it’s the Year of the eReader – However, 2011 is going to be when a million plus eReaders are sold every month.

3. Nook is the first real rival the Kindle has had

 For 2 years Kindle had only Sony to worry about and Sony kept making blunders (touch screen layer that caused poor readability, no wireless downloads).

Nook’s feature list is basically a Kindle Top 10 complaints list. Consider just a few of the changes Amazon has made -

  1. Kindle for PC and the forthcoming Kindle for Mac.  
  2. A price cut to $259. 
  3. PDF Support. 
  4. Kindle Folders announced.

These increase the value proposition of the Kindle immensely.

B&N gave Amazon a gift by giving them some real competition – forcing them to make the Kindle better.

4. Google has changed the playing field

By giving Sony and B&N its million free books Google has helped them hide their twin disadvantages -

  1. Limited range of new books when compared to the Kindle Store. 
  2. Higher prices than the Kindle Store.

Both Sony and B&N now claim ‘a million plus books’ and have other white lies to hide their lack of ebook range.

If and when the Google Book Settlement gets approved, Google will be able to add orphan works to the mix and do a lot of other things. Things will get much tougher for Amazon.

5. Kindle is undeniably a success

When you have -

  1. Google entering into selling ebooks and tying up with your competitors. 
  2. 50 different companies launching eReaders.  
  3. B&N taking losses to rush the Nook to market.  
  4. Sony running TV Ads.

It’s a safe bet the market has been validated.

At this point people can only argue about the scale of success and talk about some potential kindle killer.

6. The Press tried to kill the Kindle, and it backfired

A ridiculously inept plot in two acts -

Act 1

  1. 1984 and other negative publicity. 
  2. Protests by anti-DRM people. 

It didn’t really work as the publicity only helped create awareness.

Act 2

  1. Talking up the Nook. 
  2. Mis-stating Facts.

The Press created a huge buzz and then the Nook sold out. Everyone buys a Kindle instead.

  • When Nook reviews come out and people realize it’s not a ‘color ereader’ and ‘sharing means lend once’ then we’ll have more balanced opinions.
  • While the Nook and Kindle are very close, there’s little doubt that the Press had anointed Nook the King of eReaders – without ever using it.

No one has read a single book on the Nook and there’s a lawsuit in the works - so let’s wait before we make a call.

7. Kindle DX gets massacred by the National Federation of the Blind

Have no idea why the NFB would want to kill a device that lets blind people get text to speech for a cheap $259.

However, they went after the Kindle DX university trials with a big stick of political correctness and beat the trials to death.

  1. Interestingly, lots of schools and libraries and universities are doing Kindle and Kindle DX trials of their own. 
  2. It’s a lesson to eReader companies - when it comes to NFB, no good deed goes unpunished.  
  3. NFB can now champion the $1,499 Intel eReader for the blind – which no blind student can afford.

Its a huge blessing for Amazon – the Kindle DX was going to get massacred for not having good note-taking abilities and now the NFB hide that flaw.

8. Kindle  3 is crucial, Kindle DX 2 equally so  

The Kindle 3 is crucial for a few reasons -

  1. To get back to being the clear #1 choice. 
  2. To match a potential Apple Slate – or at least minimize defectors.  
  3. To match and perhaps even exceed Nook 2 (end 2010) and Sony 660 (mid 2010).
  4. To match the Mirasol and Pixel Qi powered color eReaders that come out in mid to end 2010.

 The Kindle DX 2 is just as crucial -

  1. To prove that eReaders have a place in schools and colleges.  
  2. To establish a higher end line to take on the Apple Slate.
  3. 100% of students at Schools and Colleges read.
  4. Parents will easily pay well for anything related to education.
  5. You create readers and Kindle owners for life.

Those are all the Kindle anniversary thoughts tha came to mind – the Kindle gets the Holiday season to itself and ought to surpass the 9th quarter sales the iPod had.

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