Kindle Watch? Kindle Phone? What’s Next for Kindle?

Mary Meeker has her annual Internet Trends report up. It instantly made me think of Amazon releasing a Kindle Phone, and perhaps even a Kindle Watch.

Basically, Mary Meeker points out some amazing things –

  1. There are 2.4 billion Global Internet users. US has 78% population penetration. On the other hand, China has just 48% population penetration and India has a measly 11% population penetration. Amazon obviously recognizes this as it’s made Kindle Fire HD and its App Store available in China. It even added support for paid apps in China before Google did.
  2. The population penetration of the Top 14 Markets is just 34%. That suggests a doubling in the number of people who have Internet access isn’t inconceivable. The new growth is likely to come from smart phones and phones and tablets.
  3. Mobile OSes made in the US (Android, iOS, Windows Phone) have 88% market share. Six years ago they had 5% market share.
  4. The Mobile Market is so big that Amazon has to get into it. Kindle Phone isn’t an IF, it’s a WHEN.
  5. The rate at which companies and businesses can grow is unprecedented. What does that mean for Kindle? That a hit Kindle Phone or a hit Kindle Watch could reach tens of millions of users really fast. Perhaps even cross 100 million users in their first 2 years of existence.
  6. Mobile Traffic is 15% of Total Internet Traffic. In China, the percentage of users accessing the Internet via their phone or smart phone is LARGER than the percentage accessing the Internet via their PC.
  7. 45% of Groupon’s Transactions are via Mobile.
  8. There are 1.5 billion smart phone subscribers worldwide. China is the largest market by number of users. US is second.
  9. Smartphone penetration is just 21%. That’s a great opportunity for Amazon. Kindle Phone has 79% of the market that hasn’t even bought a smart phone yet. There are 1.5 billion smart phone users and 5 billion mobile phone users. So, it’s a GIANT market that’s going to grow A LOT (3-4 times).
  10. Apple is growing at 1.4 times (It now has 22% market share). Samsung has grown 7 times in the last 2 years (it has 29% market share). Amazon with Kindle Phone is starting off at zero market share. It could take off and could capture a large part of the market. The smart phone market itself has grown from 55 million units in Q1, 2010 to 219 million units in Q4, 2012 (4 times).
  11. Kindle Watch would be an opportunity to move from smartphones to wearable computing. And that would be a new market. There would be competitors (Google, pretty sure Apple has something for end 2013, Microsoft, Samsung). However, if Kindle Watch comes out by 2014 then it has a shot at being a market leader.
  12. Tablets are growing faster than smartphones. iPad sold at 3 times the rate of iPhone. Note: This is an unfair comparison in some ways. iPad rode on the App Store and the branding and the customer base that iPhone created.
  13. 3 years after introduction, Tablets, in Q4 2012, sold more than desktops and laptops (separately, not combined).
  14. Kindle Fire HD is a hit. Tablet Market Share, according to Mary Meeker, is – iPad at 51%, Samsung at 13%, Amazon at 8%, Asus at 5%.
  15. Mary Meeker thinks the third cycle (after Smartphones and Tablets) will be Wearables (and Drivables and Flyables and Scannables).
  16. Smartphone users check their phones 150 times a day. Wow! That figure seems absurdly high.
  17. A lot about wearable computing. It’s very difficult to take out incumbents. Much easier to create a new market and/or to establish yourself as one of the leaders in an emerging market. That’s why a ‘Kindle Watch’ or ‘Kindle Goggles’ would have a much higher chance of success than a Kindle Phone. The downside is that the wearable computing marketing might never become very big.
  18. Mary Meeker thinks we have a lot to learn from China. She also thinks that China is pointing to what the future of computing will be. Well, everyone’s paying attention. The sheer size of the Chinese market makes it hard to ignore.

The incredible strength of Mobile, the incredible growth of Mobile (which is continuing), and the huge market (billions of users), mean that Amazon has to make a Kindle Phone. It just doesn’t have any other option.

The exceedingly fast rate at which things take off, in our new world, means that Amazon just has to get things right once. If it does, it could displace the existing incumbents in the Phone and/or Tablet markets in just a few years. 7 years ago, neither Android nor iPhone had significant market share. Tablets didn’t really exist 3.25 years ago.

If Amazon can create a new niche, and use that to displace Tablets and/or smartphones, that would be the most elegant path forwared. Unfortunately, it seems like Apple and Google will perhaps release wearable computing devices first.

Kindle Phone – Chances of Amazon releasing a Kindle Phone, When it would arrive, Pros of releasing Kindle Phone

Well, let’s see –

  1. Kindle Phone Probability – 100%.
  2. Arrival – See my Kindle Phone Release Date post.
  3. Pros – Market is absolutely huge. Lots of opportunity to disrupt the existing players. Market that tends to cycle through leaders (remember RIMM, Nokia, Motorola). Trends based Market and therefore easier to capture (comparatively). Amazon already has a huge customer base in the US (the second most important smart phone market). Amazon already has an App Store.
  4. Cons – Well entrenched competitors (but Market shifts a lot). Apple has very strong customer loyalty. Samsung is very dangerous and very flexible. Amazon doesn’t have a good OS (it just skins Android) limiting differentiability. Hardware isn’t exactly Amazon’s strong suit.

Kindle Phone would be the logical successor to eInk Kindles and Kindle Tablets. Perhaps the third time’s the charm. Perhaps Amazon really blows away everyone with the Kindle Phone.

Kindle Watch – Chances of Amazon releasing a Kindle Watch, When it would Arrive, Pros of releasing Kindle Watch

Well, this is more difficult.

  1. Kindle Watch Probability – 100% if iWatch and/or SWatch (Samsung) and/or Google Glass take off. 25% otherwise. Amazon might wait to see how wearable computing does, before jumping in.
  2. Arrival – Perhaps end of 2014. Perhaps end of 2015. On the one hand, Amazon likes to wait and see. So it might wait to get a year’s worth of data on wearable computing sales. On the other hand, Amazon knows that being too late to the market makes things really difficult. Amazon might gamble on wearable computing sooner rather than later. I’d predict Amazon is cautious and Kindle Watch ships in early 2015.
  3. Pros – Brand New Market. No one has released anything yet. If Amazon can release by November 2014, it’ll be just 6 to 12 months late to the party. Amazon is gathering hardware customers and a lot of these will give Kindle Watch a chance.
  4. Cons – No one know if the market for wearable computing will take off. There will be an incredible amount of competition.

Kindle Watch would be more of a gamble. But it’s a gamble worth making. Perhaps even more so than Kindle Phone.

11 Kindle thoughts for 2011

The Kindle family has had a very busy 2011. Here are 11 thoughts:

  1. It’s pretty remarkable that ‘1 million Kindle devices are being sold every week’
  2. Kindle Fire is diluting the Kindle brand. In these senses: Forums are now taken over by Kindle Fire owners, People have begun to associate Kindle with ‘Tablet’ (as opposed to eReader), the concept of ‘eInk Kindle as the best reading experience’ is slowly being eroded, the visibility of eInk Kindles is diminishing. iPad wasn’t the Kindle Killer but Kindle Fire might be.
  3. Kindle Fire is surviving despite being the anti-iPad. Is it polished so much it shines and glitters? No. Does it have 100,000 apps for it? Not even close. Does it convey status? Not exactly. Does it meet some unknown bar of ‘feels right and scrolls magically’? Probably not since no one knows what the bar is. While every company was trying to win by cloning the iPad, Amazon has taken the route B&N did and won by anti-cloning the iPad.
  4. Kindle Fire has shown the power of the Amazon and Kindle brands. Any other company which released a Beta Stage Tablet (which, quite frankly, is what Kindle Fire is), would have been skewered over an open flame with an extra dose of not-iPad barbecue sauce. Kindle Fire owners are almost universally willing to wait for software upgrades.
  5. Amazon has really messed up on the eInk Kindle front. If there are serious doubts whether Kindle 4 and Kindle Touch are even as good as Kindle 3 (they aren’t, if you’re wondering) – then there’s a problem. If Nook Touch and Kobo Touch cannot be ignored in any ‘Best Touch eReader’ conversation, and are even being picked as the winner in some conversations – then Kindle Touch isn’t good enough.
  6. It’s an unknown whether Amazon will focus as much (or even much) on Kindles. A part of me still thinks Amazon approached books because there was no other company seriously making a device for readers. That eInk Kindle was just a dry run and the ultimate aim was to make a mini-Amazon store. Kindle Fire is much closer to that. Amazon is focused on gaining customers and getting them to make purchases. Kindle Fire becomes much more important when you view things in that context. 
  7. Books are almost destroyed in terms of value. There are 300+ indie authors each day making their books free. There are hundreds of books on sale for $1 and $2 every month. The price pressure is incredible. Instead of being the preserve of gatekeeper Publishers, books are turning into the preserve of Supermarkets that use books as loss leaders.
  8. Bestseller Lists and Kindle Daily Deal are turning into the ONLY channels (B&N also has equivalents). These 2 sources are becoming the only sources that hold any power. There’s not really any other way that you can reach a large number of Kindle owners.
  9. Publishers still don’t get it. However, they are beginning to get it. Can’t really expound much on this without it taking over the post. In Summary: Publishers are now beginning to do what they should have ideally done 10 to 20 years ago to safeguard against what Amazon has done (reduced books to loss leaders). It’s amazing that they did not understand this even after Kindle was released. It’s almost as if they’re in a time-warp and realize things 3 to 5 years too late.
  10. Readers now need Publishers. We’ve gone through the Golden Period and now we’re in the muck. Who’s going to pick out the quality books? Not Amazon. It benefits from users coming to Amazon, getting frustrated with the slushpile, and buying something else instead. Think about what Amazon has done – it’s randomized free book offers and turned the Kindle Store into slot machines. You don’t know whether you’ll get rewarded or not. You do know that you’ll go to
  11. Amazon’s 10 year plan might have NOTHING to do with books. All along the belief everyone was laboring under was – What is Amazon going to do with all this power? Is it going to take over Publishing? Perhaps the question should have been – What is Amazon going to do with this gigantic pile of loss leaders? Is it going to reduce books to complimentary glasses of lemonade that get customers in and get them to pay for a 4-course dinner?

Strangely enough, all this writing has brought on a few more thoughts:

  1. In a perfect market for books, there would be very little money left for 99% of Authors. The average author want to be read much more than the average reader wants to read.
  2. Amazon cares far more about bringing users into the Amazon eco-system than what happens to the future of paid books. Nothing wrong with that. Unless you’re an Author or Publisher who needs for there to be a future for paid books.
  3. Some readers want prices to go down from $10 to $1. Yet they still want Stephen King and Pat Conroy level books. This is the second biggest threat to the future of books.
  4. The biggest threat to the future of books is that the market is going to be controlled by a few stores/platforms. These few stores/platforms will have so much power they can do anything they wish.
  5. There’s not really a way back to a sustainable system. Amazon pays authors 35 cents for a $1 book, or it pays a few cents for the download costs of a free book. It then gets $X via other purchases by the customer who came in for the free/cheap book. Why would Amazon ever go back from this system? Ask any store whether it’d be willing to pay 2 cents per customer visit.
  6. All the eReaders and Tablets create an opportunity for a new platform to rise that goes direct from readers to authors. We need someone crazy like Craig Newmark or Jimmy Wales to say: Let’s just get authors 90% or 100% of what readers pay. What Louis C. K. is doing – except with a platform that lets any author do it.
  7. Books are in danger of going the way of content on the Internet. A large platform/search engine does Divide & Conquer and just uses content/books as free material to run ads against or as a lure to attract users.
  8. Author should be asking themselves why they are getting only 35% from books that are below $3. Why isn’t Amazon factoring in the money it makes from other things users buy? The 70% cut should be across all book prices. It’s a bit of a joke that an indie author strengthening Kindle sales and the Kindle Store and by selling his book for $1 gets only 35%.

This year has shown me a few things (which might be wrong assumptions or might be right ones) –

  1. Amazon understands what it is doing.
  2. Hardly anyone else understands what Amazon is doing. Perhaps no one at all.
  3. The same thing that Amazon has used to kill Publishers can be used to remove Amazon from the equation.
  4. Readers’ loyalties only lie with themselves. And to an extent with Authors. Amazon’s move to lock-in Kindle Store purchases now seems necessary and hardly evil.
  5. B&N will survive. If Amazon tries to buy it, there will be FTC and Justice Department interventions. Amazon should have bought it when it had the chance.
  6. Kobo is far, far more dangerous than anyone realizes. We’re talking about a company that is surviving amongst monsters. It’s evolving very, very fast. Kobo 1 was so bad it almost seemed a practical joke. Kobo Touch cannot be ignored. Kobo might be beating Amazon handily in eInk readers by mid 2012 (if it keeps improving at this rate).
  7. Authors are royally done for. The iron-handed but somewhat benevolent dictators/gatekeepers are being replaced by an unthinking, uncaring platform.
  8. The Book Revolution is almost certainly going to turn into the Book Apocalypse. Unless something or some company stops it in 2012 and 2013. We have just a few years to stop the ongoing destruction.

2011 has seen such rapid developments, especially in terms of the devaluation of books, that it’s very tough to figure out where we’ll be headed next. Unfortunately, 95% of the possibilities are dark and disquieting.

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.