Is Google building an eReader? Readying ad-supported books?

The Kindle might be getting a brand new eReader rival.

It seems that Google has bought out a company called eBook Technologies Incorporated. The acquisition is notable for a few reasons –

  1. ETI has two LCD based eReaders and 1 eInk based eReader – the latter looked surprisingly like the BeBook. This might mean that Google is looking at building an eReader. It makes sense to build on one of ETI’s eReaders, instead of starting from scratch.
  2. ETI has 8 very important eReader patents including ones covering advertising in books and secure ebook delivery. These were mostly granted on December 16th, 2010. This might mean that Google already has an eReader ready, and just wants to protect itself from patent lawsuits. Given that Amazon and B&N already have several patents, and that companies like Discovery Communications also have eReader related patents, it makes sense to buy a portfolio of patents that would keep a Google eReader safe from patent lawsuits.
  3. ETI has technology for an eBook platform which includes an ebook publishing and distribution system. This is something Google would definitely need if it were to get into eReaders. In fact, it would need this even if it sticks with just ebooks.

Here are some links of interest –

  1. Cache site for the ETI-Proto – ETI’s 6″ eInk eReader
  2. Cache site for ETI Product Overview – ETI’s eReaders, Online Bookshelf, eBookstore, and Tools
  3. TechCrunch’s Coverage – Some intelligent comments on a rather amateurish post.

However, the real question is – Why did Google buy eBook Technologies Incorporated?

Is Google Building an eReader? Will it build on top of ETI-Proto?

The first possibility is that Google decided that instead of spending $1 billion on B&N’s Nook division, or Sony’s Sony Reader division, it makes more sense to spend $50 million on a smaller company like ETI or Cool-er.

Then it could take the devices ETI has, pick one or more, and build a Google eReader using the technology. As a nice bonus, it gets a bunch of eReader patents that ensure it can release the new Google Reader without any problems.

Will Google go with an eInk eReader or a LCD eReader?

Here are the three ETI eReaders Google could build on (please note that most of this information is from 2007, and is thus pretty outdated) –

  1. ETI-Proto. It has a 6″ eInk screen, a single button, and seems to be a BeBook clone.
  2. ETI-1. It has a back-lit, 8.2 inch, 16 bit color LCD touchscreen with VGA resolution. It has brightness and contrast controls. It also has an internal 56K modem, an ethernet port,  a memory card slot, a Motorola processor, and a stylus.
  3. ETI-2. It has a back-lit, 5.5 inch, 4-bit grayscale LCD touch screen with half-VGA resolution. It has page turn buttons on the front left side. It has an internal 33.6K modem, a USB slot, a stylus, and a Cirrus Logic processor.

It seems ETI had an entire range of eReaders – eInk, grayscale LCD, color LCD. The eReaders also seem pretty decent given these specifications are from 2007.

Given that it’s Google, it’s likely that it will use this technology to build a reading tablet, and not an eReader.

How likely is it that Google is building an eReader or a Reading Tablet?

Very likely.

Google built a phone secretly. Then it built a netbook/laptop secretly. There’s little doubt it’ll build an eReader sooner or later. It has search traffic, it has books, it has public domain books, it has an ebook store, it has cloud infrastructure – the only thing missing is an eReader.

In fact, it’s quite possible that Google has an eReader almost ready – that it’s buying ETI simply for eReader patents.

Is Google buying patents to protect an almost-ready Google eReader? To sell advertising supported books ?

Let’s take a look at the impressive eReader patents ETI has. Thanks to Dave at TechCrunch for the clues.

Patent for advertising in Books

[Advertising in Books] System and Method for providing Sub-Publication Content in an Electronic Device – A patent about showing ‘master content’ and then showing sub-content that might be a book review, news, sports news, classifieds, book-related, and so forth. It includes advertisements as sub-content. This might be the BIG patent. Amazon has a patent for in-book advertising. Now Google just got a patent for in-book advertising.

You can also read the entire eReader patent.

Patent for Secure eBook delivery and offline eBook shopping

From the Management page at ETI’s website we get this –

 John is co-inventor and patent holder of a system to provide secure electronic book delivery. He is also a co-inventor of a patent-pending system to provide offline catalog shopping on an electronic book.

Those are two very important patents. Can’t find the patent numbers. Please do leave a comment if you can find them.

Flexible Electronic Device

Update: This is actually Skiff.

Patent Application Number – 20100315399. This is a patent that covers a flexible electronic device and a method of manufacture. This patent specifically quotes the Kindle and Plastic Logic’s Que –

In many cases, electronic devices have replaced traditional, non-electronic devices.

For example, for many, electronic reading devices have replaced traditional paper books. An example of such a device is Amazon’s Kindle wireless reading device, which allows a user to download an electronic book, and then read that book using the device. Another example of a similar product is the Plastic Logic Reader. These devices, while providing functionality for the user, still resemble small, inflexible computers.

It’s interesting that Skiff has patents for a flexible eReader. Thought that News Corp had closed it down. This might be a pretty valuable patent. Skiff has at least two more eReader related patents –

  1. [This is Skiff] Electronic Display Controller – System for controlling an electronic display, such as an electrophoretic display.
  2. [This is Skiff] System and Method for Providing Spatial and Temporal Content in an Electronic Device. Includes Advertising which makes it a hugely important patent.

It’d be worth investigating what other patents Skiff has. Perhaps in a later post.

Additional Patents

ETI also holds a few additional patents –

  1. Electronic Paper Display Whitespace Utilization – A patent about how ePaper content formatting is presented. It literally talks about figuring out how best to display content on an eReader, and which content to display, given a certain amount of available space left. It’s a bit ridiculous there’s a patent for how words are shown on a page.
  2. System and Method for delivering Publication Content to Reader Devices using Mixed Mode Transmission – A patent that talks about multi-casting content to multiple eReaders. It also talks about using mixed mode transmission.

It’s interesting that nearly all of ETI’s patents mention devices using electronic paper displays. Why would it focus so much on eInk when it had just 1 eInk based eReader?

Is Google buying ETI’s Platform and Distribution Technology?

After looking at the patents ETI has, this possibility seems really unlikely. However, let’s see if there’s something worth acquiring.

ETI has a platform consisting of four parts –

  1. eReaders. Which we’ve looked at above.
  2. Online Bookshelf. This is ETI’s equivalent of WhisperNet/the Cloud. They talk about ‘the ability to purchase and access ebooks anywhere, and at any time’ – which sounds identical to the Kindle’s ‘Buy a Book Once. Read it Everywhere’ sales pitch.
  3. eBookstore. The equivalent of Kindle Store. ETI mentions relationships with over 24 major publishers. It also talks about accessing the store through an eReader, a browser, an offline catalog, or through an alternate web retailer.
  4. Content Conversion and Publication Tools. Apparently, ETI’s founders were founding members of the International Digital Publishing Forum, which created ePub. ETI has a tool, eBook Publisher, which converts books into ePub format. It can process text, ePub, OEBPS, Html, Word, and Powerpoint files. ETI also has a tool, Auto Publisher, which performs pagination, compression, and encryption of ebooks.

It’s clear that ETI’s platform, and its distribution technology and tools, might be pretty valuable too. ETI’s President is on the IPDF board and helps set direction for ePub – which definitely helps since ‘openness’ and ePub are going to be used as weapons in the eReader Wars.

Is Google buying itself an eReader Development Team?

ETI’s management team –

  1. John Rivlin, CEO, was the VP of Software Systems at Softbook Press. SoftBook Press released one of the first eReaders in 1998 – the SoftBook. This company was acquired by GemStar, and he was then responsible for design, development, and operations of the Gemstar eBook server platform.
  2. Garth Conboy, President, was the VP of Software Engineering at Softbook Press. At Gemstar he was the GM for the Gemstar eBook Group which was a combination of SoftBook Press and the company behind the RocketBook.

More details at the cached page for ETI’s Management Team.

By acquiring ETI Inc. Google instantly gets some of the people with the most experience in eReaders and eBooks.

Closing Thoughts

Google acquired – eReader technology, some extremely valuable patents, a distribution system and platform, two people who know an awful lot about eReaders. It’s a pretty good acquisition.

There are two very likely consequences – a Google eReader will arrive in 2011, Google will try advertising-supported books in 2011 or early 2012.

Kindle and Helping other people get what they want

The Kindle isn’t just facing Google Books now. It’s facing every single indie bookseller who thinks she/he can make money from ebooks.

Consider this quote from Zig Ziglar –

You can get everything in life you want if you will just help enough other people get what they want.
                                             – Secrets of Closing the Sale by Zig Ziglar.

It’s crucial because it’s the entire foundation on which Google is basing its eBook strategy. Amazon is matching the feature, but unless it matches the philosophy it won’t be able to compete.

A Few Examples of How Helping Bookstores is helping Google

At the Bookselling This Week site, there’s a very interesting report on how eBook Marketing is progressing –

  1. The Book Bin is offering loaner Sony Readers. That’s absolutely brilliant.
  2. Bookstores are sometimes featuring Agency Model books, and sometimes featuring non-Agency Model books.
  3. Gallery Bookshop & Bookwinkle’s Children’s Book hosted a digital petting zoo.

Within the first few weeks, we have booksellers trying out better things than ebook stores have tried in 3 years.

This is one of the most amazing examples of promoting ebook sales I’ve ever read of –

The bookstore will also lend Sony Readers to the digitally curious.

“The deal is you buy the e-book from us, we’ll download it onto a reader, and you can use it,” said Book Bin manager Allison Mengarelli.

“We will charge you the cost of the book(s) that we download at your request. We think they really are handy for traveling.”

All these bookstores are promoting Google eBooks – In their stores, on their websites, in their email lists, and through the Press.

An Army of Still-Alive Booksellers

Out of nowhere an army of booksellers has risen to fight on behalf of Google. It’s an insane amount of publicity and exposure.

Here’s one store creating a digital petting zoo –

Gallery Bookshop & Bookwinkle’s Children’s Books in Mendocino, California, combined a petting zoo with a holiday party.

“We had a computer set up and were showing customers how to buy e-books from our website,” said owner Christie Olson Day.

“We also had preloaded books on an iPad, iPod Touch, Sony Reader, and laptop.”

This is just indie booksellers. It’ll be interesting to see how websites will promote Google eBooks. You have to wonder what impact it might have. If indie bookstores and website owners keep coming up with innovative ideas, there’s a possibility they will end up playing a big part in the eBook Wars.

Kindle might face serious competition next month – Google

It seems that the Kindle suddenly has to take on a new competitor – one that doesn’t even have an eReader to sell.

Thanks to Robert for the update –

Google Inc. is in the final stages of launching its long-awaited e-book retailing venture, Google Editions, a move that could shake up the way digital books are sold.The long-delayed venture—Google executives had said they hoped to launch this summer—recently has cleared several technical and legal hurdles, people close to the company say. It is set to debut in the U.S. by the end of the year and internationally in the first quarter of next year,

Original Article – Google Set to Launch eBook Venture.

If the article is right, and there’s no guarantee it is, Google has negotiated all the legal hurdles and is going to release Google Editions in the US in end 2010 and internationally in early 2011.

Kindle in Danger – The Huge Threat of Google Editions

Well, there are a few things about its newest competitor that should really worry Amazon –

  1. More Exposure – Every single search and video and map and email that has a reference to books will get a link to a Kindle Store competitor. More people will know about Google Editions than about Kindle Store.
  2. More Exposure Part 2 – For some strange reason all the independent bookstores think they can get into the digital book market via Editions. It’s an interesting tie-up and it’ll give Google a ton of exposure with bibliophiles.
  3. Download-free reading – It’s a competitor that will offer books in the browser. It’s not clear how this will work – There’s a chance it might have some big advantages over downloading books.
  4. Every Device Works – It’s browser-based so it’ll work from every device. Plus users don’t have to download a special app.
  5. Use What You Have – Google may very well push the ‘you don’t have to buy a Kindle, just read on whatever device you already have’ angle.
  6. Across most eReaders – Google might tie up with each and every eReader company not named Amazon or B&N. Sony seems to be the prime candidate to hand over its book store channel to Google.
  7. Free of Amazon’s controls – Since its browser-based there’s no way Amazon can stop Kindle owners from buying and reading Google’s books. It might block sites over 3G but over WiFi it can’t do anything.
  8. Wider Range of Books – All signs point to Google having more books. No idea what’s going on with the big settlement but a decision might be close. It’ll be the first time a store will have more new ebooks available than Amazon.
  9. Possibly Lower Prices – It’s quite likely that Google will be super aggressive on pricing and will try to under-cut Amazon. Perhaps it’ll be via value (sharing, resale, something else), perhaps it’ll be just cheaper prices.
  10. More Money – Google will also be the first company selling ebooks that has larger cash reserves than Amazon. Please note that we’re not considering Apple because it isn’t really selling books seriously.
  11. Possibly Orphan Works – If the big book settlement goes through Google will have access to a huge store of Orphan Works.

It’s a huge danger for Amazon. It’ll be interesting to see what Mr. Bezos and the Kindle team do to counter it.

There are three vectors of attack that Amazon will have to defend against.

Three main threats to Amazon

The first main threat to Amazon is that lots of people will hear about Google Editions and at the same time not know about Kindle or that there are Kindle reading apps. A lot more people do searches and use Google than the Amazon main site. So a huge number of people are going to think ‘eBook = Google Editions’. This threat can’t be understated – If you aren’t even on the customer’s radar you have zero chance.

The second main threat to Amazon is that a large portion of casual readers are going to prefer books in their browser over the hassle of a custom reading app or a custom device. Amazon has prepared itself for this (they have a Kindle Book Preview in HTML feature they’ll expand into reading in the browser). However, the association of Kindle with a device you buy or a reading app you download is very strong. The path of least resistance is browser reading and Google gets a big edge because it becomes the ‘read in your browser’ option.

The third main threat to Amazon is that the combination of the WebKit browser and WiFi on the latest Kindles means that new Kindle owners can access Google’s books freely. With every other ebook store the books had DRM and Amazon didn’t support the DRM or the format. What’s Amazon going to do to stop a browser-based solution? What can it do?

We’ll look at what Amazon could do to counter Google Editions in a later thread. Let’s conclude this post by taking a look at Amazon’s strengths.

Amazon’s strengths – Things Google Editions will struggle against

Amazon and Kindle do have quite a few strengths –

  1. 5 million or so Kindle owners and another few million users of Kindle Apps. These users aren’t going to leave the Kindle and the Kindle Store unless a notably better solution appears.  
  2. People who love books and read a lot or would like to read more would always want a dedicated reading device. We’re excluding the LCD-compatibles. People also wouldn’t want a device made by one company working with a store run by another company as there are always integration problems.
  3. Years and years of customer data. Amazon knows what book readers want and has a treasure trove of data. Google has a lot of information on what readers search for and Amazon has a lot of information on what readers buy and read.
  4. Customer Service. Amazon has excellent customer service – Have no idea what Google’s customer service is like.
  5. Focus on Books. Amazon is very focused on books and it’s unlikely Google will bring the same level of focus.
  6. No Fragmentation. Amazon can make sure the reading experience is very similar across all its apps and that users don’t have to keep re-learning how things work. How is any company going to be able to get IE, Safari, and Firefox to behave the same?
  7. Not having to share a cut with Device Manufacturers and Book Store Owners. It’s safe to assume that all the devices that will add support for Google Editions will get a cut – as will all the book stores that sell Google Editions.  
  8. Kindle = Reading. The common perception is that the Kindle is the best choice for reading and Kindle Store is the best choice for eBooks. Google will have to fight against this.
  9. WhisperNet. Amazon has put together a nice collection of services – sync your place in a book across devices, sync highlights and notes, check on popular highlights, and so forth. It is a pretty big advantage.
  10. International reach. You have to imagine it’ll take Google at least a year or two to get the International Publishing contracts in place. There’s a slight possibility everything is already done and there really will be a full launch in early 2011 – that would be super impressive.
  11. Potentially the Kindle App Store. If Amazon plays it right it could get enough reading related apps that the Kindle becomes even more of an advantage over the browser. 

Might have missed out a few advantages.

For any company other than Microsoft, Google, and Apple – Amazon is almost unbeatable. However, these three companies have the money, technical skills, and power to take on Amazon. Apple hasn’t really focused on books so it’s no longer a huge threat. Microsoft probably doesn’t want to enter a market that’s so competitive. That leaves Google and, unfortunately for Amazon, it has decided to jump right in.

It’s a difficult test for Amazon and there are sure to be some nasty surprises. Kindle sales to the core group of Kindle owners and regular book buyers should be mostly unaffected – On the other hand, Amazon’s Kindle sales to casual readers and the revenue stream from Kindle book sales (to casual and hardcore readers) are in massive danger.

Google has, in some ways, approached it perfectly. It’s not making the hard investment of making an eReader – it’s leaving the core eReader market alone. It’s just going for the book sales – book sales to everyone. If it manages to stay focused on books for 2 to 3 years it could easily eat up 30% of the eBook market.

We’re basically seeing the eBooks and eReader markets break up into segments – Nook Color threatens to steal casual readers and Google Editions threatens to steal book sales to casual and hardcore readers. The Kindle really needs some help and it might be time for a Kindle Tablet.