The interest in e-readers, or e-books as they are called now, has reached a fever pitch. Amazon CEO Jeff Bezos fields nothing but Kindle questions at the company's shareholder meeting.
The interest in e-readers, or e-books as they are called now, has reached a fever pitch. Amazon CEO Jeff Bezos fields nothing but Kindle questions at the company's shareholder meeting. Prime View picks up E Ink, the company that supplies the screen to Amazon's Kindle, for $215 million. And companies ranging from Google to Interead are aiming to upset Amazon's early advantage.
Why? There's money in those hills. After years of false starts, the e-reader market has arrived. Oh sure, today it's just a bunch of book lovers and early adopters willing to pay top dollar for a device. In two years, the price equation will blow as the number of devices beyond the Kindle explode, according to a Forrester Research report.
How crowded can this market get? Check out Forrester's map. In a report, Forrester analyst Sarah Rotman Epps has a bevy of graphics that are useful, but this one summarizes how crowded the e-reader world will become.
If you buy that future landscape, it's pretty obvious why Prime View gobbled up partner E Ink. Prime View can get an early edge in the market---before the pricing floor falls out.
Forrester outlines the following timeline:
2007-2009: E-reader adoption is driven by early adopters.
2009-2011: More mainstream folks buy e-readers as features like animation, content ports to other wireless devices and the $199 price point is breached.
2011 and beyond: Video and color appear and the $99 price point becomes reality.
2013-2020: The green movement drives e-reader usage.
The key element player in the market---and driving down the price will be China. Consider the textbook tipping point:
The textbook tipping point won't come from Harvard, MIT,or even Stanford: We think it will come from developing nations like China and India, whose universities will use technology to leapfrog ahead of Western counterparts. China especially is already a fast-growing market for eReaders like Jinke Electronics' HanLin eBook, which sells for US$299 and includes 600 free books. We expect the textbook eReader market to start this year with modest sales of content through the Kindle DX, with greater adoption starting in 2011 and reaching more sizable numbers by 2013.
Examining the players
Forrester acknowledges that the e-reader market is currently captured by Amazon---at least in terms of buzz. The killer app for Amazon is its store more than the device. But things are brewing.
Epps notes that
Fujitsu launched a color e-reader in Japan (right), Samsung is launching a device in South Korea and iRex has Europe targeted. Meanwhile, there's Sony, Amazon, FirstPaper, Plastic Logic and Bookeen Cybook -- all with devices planned or launched for the e-reader market today. Tomorrow, you can count on Google, Apple and publishers to join the fray.
The earlier versions of the Kindle, despite their initial success, were far from perfect. Amazon has done Sony and its future competitors a great service by making consumers more familiar with e-readers; six months after the Kindle launched, more than half of US online adults said they were aware of e-readers. The Kindle's weaknesses, however, leave room for competitors that want to improve the device experience itself.
These Amazon rivals want to expand content beyond books, launch new features, enhance sharing and add color, video and other perks, argues Epps.
The plan for many of these rivals is to open up in markets abroad and then swoop in on Amazon. Epps writes:
While Amazon is the largest eReader vendor in the US, it doesn't have a strong presence in the rest of the world. Sony is better poised for success in Europe and Asia. iRex Technologies, a spinoff of Royal Philips Electronics (one of the initial investors in E Ink), has a B2B eReader business in Europe and elsewhere, with a strong presence in the Netherlands and France. Jinke Electronics, which produces the HanLin eBook, is a major player in the Chinese market. Fujitsu (which doesn't use E Ink technology) is focusing on the Japanese market, and Samsung is starting with South Korea. Brazil and India have huge potential demand for eReaders and currently are not served by any vendor.
Nothing but Kindle...for now
Does Amazon have a blind spot with its Kindle? Perhaps. Epps notes that the market of frequent book buyers---the same folks buying e-readers today---is a market of 5 million households in the U.S. That market will be saturated by 2011. These frequent readers justify the cost of the Kindle based on the cheaper books they can buy. If a consumer buys two to three books a month the Kindle or Sony Reader pays for itself in 18 months, says Epps.
Going forward, however, e-reader devices will aim to go beyond books.
In other words, Amazon's focus on books may ultimately be a Kindle handicap. If that's the case you certainly wouldn't know it judging by Amazon chief Bezos.
At Amazon's shareholder meeting last week, Bezos fielded mostly questions about the Kindle. For a device in "investment mode" that contributes little to Amazon's top or bottom lines, the interest was telling.
Here's what we learned:
Bezos will never reveal Kindle units shipped. "I'm not sure we ever will reveal all the numbers," said Bezos, who noted there's competitive advantage in "keeping the numbers close." "You may just have to remain curious. I understand the curiosity---especially since I look at the figures avidly every morning," quipped Bezos.
There are environmental benefits to the Kindle. Rest assured, Bezos will let you know about them when the time is right.
Kindle will matter to Amazon's economics---in a few years. "If something is successful it takes 5 to 7 years before there's a meaningful contribution," said Bezos.
Color screens aren't ready for prime time, according to Bezos, who has seen a few prototypes in Amazon's labs.
