Why the Apple iPad won't cannibalize the Kindle e-reader

Why the Apple iPad won't cannibalize the Kindle e-reader

Summary: Is the next-generation e-book reader dead on arrival thanks to the Apple iPad and its coming slate tablet PC siblings? The answer may surprise you.

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Is the next-generation e-book reader dead on arrival thanks to the Apple iPad and its coming slate tablet PC siblings?

According to Freescale Semiconductor, not at all.

In fact, the chipmaker predicts that the e-reader market will continue to grow -- and it's hedging its bets with the introduction of its next-generation i.MX508 applications processor, which integrates an 800MHz ARM Cortex A8 core with an e-ink display controller to bring page refreshes down to a half-second and resolution up to 2048 by 1536 at 106Hz.

Freescale has 90 percent market share in selling application processors. I spoke with consumer marketing director Glen Burchers to discuss why the iPad won't kill off the Kindle.

ZDNet: The world has met Apple's iPad. What will happen to e-readers?

We believe that market is going to continue to grow. For the average e-reader customer, leisure reading is the primary leisure activity -- before TV, before the Internet.

The average e-reader customer is 47 years old, makes $75,000 a year and reads two books per month.

But the tablet market consumer is much different: their primary function is web surfing. The typical web user is younger -- student age, and not into leisure reading.

The average American teen is online 35 hours per week. They're on their phone 30 minutes per day. They need a bigger screen device.

ZDNet: If I understand you correctly, you're saying that older folks will choose e-readers over tablet PCs for their simplicity.

In the middle of last year, our research focus shifted from the clamshell to the tablet. The iPad is great at web browsing, e-mail and media playback. The e-reader's main inhibitor? Price. The breaking point is $99.

But that's very difficult to achieve. But if you lower the price from $249 to $199, the amount of prospective buyers double. If you lower it from $199 to $149, it doubles again.

The potential market in the U.S. for people for whom leisure reading is No. 1, that's just under 10 percent of the population, or 20 million people in North America. About 3 million units have been shipped in North America thus far.

ZDNet: What's the price proposition? Both the Kindle and the iPad are fairly expensive.

So we asked ourselves, how can we bring the price down?

Today, all e-readers use ARM 11. The new generation, Cortex A8, is more than twice as fast. That shows up in the performance of the device -- the screen refresh.

The Kindle takes two seconds to refresh. The Nook takes three seconds. With the next-generation of e-Ink, plus fast decoding on the processor, we'll get page turns down to 0.5 seconds, which approaches the physical limits of the e-ink technology.

None of the chips in e-readers right now use chips built especially for them. This new generation is the first to do so.

Cost savings also comes in other ways. For example, using LPDDR2 instead of mobile DDR memory.

With everything, we managed to take off $15 to the bill of material savings. That's a $30 retail impact.

ZDNet: And that's enough of a price difference to get more leisure readers to bite.

I'm very bullish on this market. Our forecasts are for 2.5 to three times volume growth.

Kindle sales worldwide are a big help to this growth figure. Europe has similar reading habits to U.S., Also, we think that China could possibly have those habits, too.

Leisure readers don't want a complicated device. Both could exist and not cannibalize each other.

Topics: iPad, Apple, Hardware, Mobility

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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33 comments
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  • e-ink

    you had me at "to bring page refreshes down to a half-second"
    /end sarcasm.
    bannedfromzdnetagain
  • RE: Why the Apple iPad won't cannibalize the Kindle e-reader

    Even though the ipod took a huge chunk of the market, there are still plenty of portable media devices. The ipad will do the same in its market category.
    R.L. Parson
  • RE: Why the Apple iPad won't cannibalize the Kindle e-reader

    I am really suprised he did not mention one of the biggest differences. You can read an eInk device outside in full sunlight. By the pool, on the beach, on the deck, etc. You cannot do that with an emmissive device like the ipad. Additionally, it is much easier on the eyes, meaning you can read for longer without getting eye strain. I have the kindle and I love it. I will also be getting the iPad, but I am doubtful that it will be my primary e-reader.
    davidinlynnfield
    • It's not the backlight, it's the light scattering

      e-Ink scatters light the way a real ink does. LCD's and even Pixel Qi panels will never be able to replicate it because the light they output is more direct, like a laser.

      e-Ink will always have a place even if people decide to use something else for eReaders in the future.

      Personally, I don't see what an eReader needs to be a video capable computer. As long as it gives convenient access to books and magazines at a good price it's doing it's job.
      T1Oracle
    • Another thing

      is the power usage. Kindle uses power only for page turns and wireless access. This means if you download a book that you want to read and then turn off the wireless and start reading the book, you can go many days without charging the device. That is one less charger to carry with you.
      mKind
      • It's a lot smaller too

        It's more portable and it's size makes it ideal for laying in bed and reading. I love my kindle and don't plan on using a tablet to read books
        gtaylor2
  • Nook Refresh Speed

    I have a Nook and it does not seem to take 3 seconds to refresh. Nook "page turning" is faster than turning an actual page. Blink and you will miss the turn.
    danceblade@...
  • I am young and a leisure reader

    I am considered a younger reader, and i have yet to buy a kindle or nook because of the limitations of publishers. Instead i read on my blackberry, and utilize an ereader/publisher that gives me deals and reward points, which is something i can't get from the kindle or nook. I like to buy the best deal on ebooks which means if i want to use five different publishers, i can. The IPAD give me that freedom! Why limit myself to just an ereader when i can web browse/ play games/ and load hundred of apps. I will finally settle on an ereader and it will be the IPAD!
    Leanne912
    • Re: I am young and a leisure reader

      >> Why limit myself to just an ereader when i can web browse/ play games/ and load hundred of apps.

      This means that you are not in the market for a leisure reading device even though you claim that you are leisure reader.
      mKind
      • @ unkind mKind

        No, it means she is not in the market for an e-reader-ONLY device. The two books per month definition for 'leisure reader' leaves lots of time for other activities for many leisure readers. Your response suggests you are not interested in web-browsing/playing-games/apps; this is fine for you but not everyone. I got a used pen-top tablet as my e-reader/personal computer. No, the battery life does not equal an e-reader but for the same price, I got a FAR more capable electronic device which suits me better. Your wants/needs/capabilities may be more limited than ours. Perhaps you should not be so hasty to define what others are or are not based on them.
        Dave S2
      • @mKind

        I think what the OP is saying is why buy a unitasker when one can get a multitasker... I am a very avid reader and although I am not in the market for either the ipad or an ereader because I'd much rather have the actual book in my hands I would be much more likely to get the iPad over the Kindle or Nook because it does much more than a dedicated ereader.
        athynz
        • iPad missing features

          Check out Ziff's EWeek paper for articles on the iPad. Theys have some good ones on what is missing from the iPad. Specifically (the big three), it does not multi-task, has no USB port and the browser does not support Flash. Three pretty major omissions.
          chb777
          • Not really true

            The iPad [i]does[/i] multitask as does the iPhone and iPad. Apple just
            doesn't allow 3rd party applications to run in the background [it will
            reduce speed and battery life].

            With the camera kit it [i]will[/i] have a usb port - just put the proper
            kit into the 30-pin port and in the other end you will have usb.

            But it is correct that Apple doesn't allow flash to be used on its iPhone
            OS devices. It takes too much processor time and it has too many flaws.

            And now to the two reasons I have got for purchasing an iPad, mainly
            as an eReader.

            1. The Kindle and the Nook are linked to US bookstores with only
            English-language books. Being a European I would like to be able to
            read books in other languages, particularly in my mother tongue
            Danish but also in German and French. And English, of course.

            2. When aging, eyes deteriorate. With paper and eInk you will need
            stronger and stronger bulbs to be able to read. With an iPhone [and the
            forthcoming iPad] you just increase the light on the screen.

            BTW, I'm a 59-year-old Sixth Form College teacher [years 11-13, age
            group 16-20]. So I know how eyes deteriorate with age even when
            you're myopic.
            perronne
        • there is always a trade off between

          features-functionality-cost

          I don't need iPad features, I already have all
          that.

          I don't want iPad cost.

          I want eReader functionality.

          (unfortunately I also don't want the eReader
          cost either, so I'll just stick with my laptop
          until eReader costs drop. My first eReader will
          probably be hacked into by car for a stats
          display.)
          shadfurman
      • what is it about eInk people don't understand (nt)

        .
        shadfurman
  • IPAD the ultimate Ereader


    Leanne912
  • iPad will take the place of a small number of e-reader customers

    The primary advantages of say a Kindle type e-reader are:

    Battery life, a whole week on one charge
    Screen is much easier on the eyes
    No additional cost for cell service
    Can read anywhere, outside, inside etc...
    Thin & light
    Instant on; no waiting to boot up
    Simple operation from the start, get it, turn it on, sign up & go

    I am still having a hard time figuring out the real market for the iPad. I know they will sell allot of them in the beginning for the wow factor & to Apple fanatics. Maybe it will carve out a market that really does not exist yet. With the huge advances in Mobile smart phone's, there is not much difference between an iPad & smart phone except the screen size.
    tgschmidt
  • Cannibalize?

    Doesn't that mean you are pulling sales from your OWN products? Not the competition's?
    Metronome49
    • cannibusize

      "Doesn't that mean you are pulling sales from your OWN products?"

      I think he's speaking from the viewpoint of the tablet market as a whole. No distinction among manufacturers. From that perspective, he's saying a sale of an e-reader won't cause a loss of sale of an iPad type device.
      On the other hand, the HP slate would take a buyer away from an iPad, and vice versa.
      chefp
    • Just to clear things up.

      I've gotten a few (curiously angry) reader e-
      mails about this, so I want to clear things up.

      Yes, "to cannibalize" means for one product to
      encroach on another in the same portfolio of a
      company.

      And yes, you could take it to mean the whole
      tablet market as a whole, though that answer
      doesn't properly fit the word's definition.

      But Freescale offers chips for both these market
      segments -- and is thus defending against the
      possibility that its e-reader products won't
      encroach upon its smartbook/tablet business.

      That's the perspective with which I wrote the
      headline.

      Hope that helps.

      (As always, please use the "Email Andrew Nusca"
      link in my bio, found at the end of each post,
      to contact me with corrections or personal
      comments. I do read every one!)
      andrew.nusca