Headline 2010: e-Reader device failure

Headline 2010: e-Reader device failure

Summary: The market knows best, right? Markets are bloody paths to progress.

TOPICS: Hardware, Apple

The market knows best, right? Markets are bloody paths to progress. At this writing there are approximately 52 e-reader devices coming to market in the next 12 months. Fifty-two different devices coming to market (Here's what I wrote about Steve Jobs' approach to reader devices when there were just 45 e-readers on the horizon). Creative, the maker of MP3 players and computer audio cards, is the latest to announce their impending arrival, Zii MediaBook.

This is the definition of "glut" becoming reality. We can see a glut of e-readers coming and there's no waving off the Kamikaze piloting most of those e-readers toward the deck. Will they blow up the fuel supply needed to get the next generation of e-reading off the ground? No, but the coverage will likely make it sound like e-reader failures mean e-book failure.

With excessive abundance comes failure, and that spectacular conflagration of hardware products, unfortunately, will dominate the headlines in this market next year as many, indeed most, of these devices are pulled due to lack of sales. They are ridiculously expensive for a market where the vast majority of customers buy one book or less a year—more than 180 million Americans don't buy a single book in any year.

Many hardware makers will retreat and e-books, not the glut, will get the blame.

Today's dedicated e-readers sell for roughly 10 times the price of a new hardback book. Most people don't buy hardback books, so for argument's sake, let's say the average price paid for a book by the 120 million Americans who buy a book each year is $12. Amazon Kindle2 and Barnes & Noble's Nook, both of which sell for $259, cost as much as 21.6 books, which suggests they break the book-buying budget for most people. I don't want to suggest there is a magic price for reader hardware, because we'll see some of the new e-readers announced this year selling for $59 next year, because retailers cannot get rid of them. That is a result of fierce competition, but leave it to the press and bloggers to turn the whole process into a mandate on e-books, not the expensive hardware.

This isn't a horse race, but a complex evolutionary event, that cannot be reduced to headlines. Consider: "T. Rex extinct, world awaits silence of lifelessness" would have made the papers, if dinosaurs had had their Gutenberg.

Yet, it's a short step from "people don't want e-readers" to "people don't want e-books," one that hardware manufacturers will avail themselves of to explain to enraged investors whey they are bailing out of the e-reader market. That simple syllogism will lead to the wrong conclusion.

The most optimistic estimates are that five million e-readers will sell in the next 12 months, with approximately one million flying from shelves to eager readers this Christmas. Noelle Skodzinski, editor in chief of Book Business, speaking during the Digital Content Day @ Your Desk conference last week (which you can view on-demand for three months), cites very conservative sales levels, Simba Information's estimate that only 500,000 Kindles will have sold by the end of this year. That's a low number, I think.

Nevertheless, even if three million e-readers sell in the next year, there can only be two to five winners among device makers. Nook, Kindle, and the Sony Reader all have sufficient market exposure to ensure they will remain standing, but most others don't stand a chance of hitting 30,000 units in sales. Dozens of these unshipped products will fail.

In the meantime, e-book sales and downloads will skyrocket relative to current levels, but still be capturing single-digit shares of the total book market. That will be progress for e-books.

For the device makers, it will mean we are getting closer to some kind of "iPod moment." Skodzinski's slides from the event compare Kindle sales to iPod sales in 2002, suggesting that we are on the steeper part of the hockey stick, but it's not the right comparison. iPod marked a departure from the first-generation of MP3 players, but we are still in the stage of the market that music downloads was in the late 90s. There is no iPod, no Walkman, no IBM PC, yet. Kindle1, Kindle2 and DX are likely to the breakthrough e-reader yet unseen what iRiver MP3 players were to the iPod, and that is not to say that a future Kindle couldn't be the "iPod of e-books," though my instincts tell me the future of reading is a converged device.

For the "winners" in the hardware smackdown, their prize will be merely the opportunity to duke it out in the next round, when devices will have to be much cheaper or pack substantially more functionality at today's prices.

Let's not get distracted by the creative destruction going on all around e-book hardware, reading is thriving and certainly migrating toward digital uses.

Cross-posted to BooksAhead.com.

Topics: Hardware, Apple

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  • There might be some bargains to be had in the wreckage (nt)

    • Doesn't change the fact the wreck's coming

      just a matter of keeping perspective.
      Mitch Ratcliffe
      • and whether anything useful can be salvaged from the wreck

        I have several boxes of hardware I got cheap because of one market "wreck" after another that won't work because the infrastructure they were made to run on no longer exists (e.g., the CRO "Cat," which was supposed to replace the mouse and allow us to use our PCs interactively with TV and newspapers - overtaken by events, now that newspapers have moved onto the Web and TV is blurring into PC technology - a matter of time until the Linux hard drive technology most DVRs run on is directly readable by PCs running Windows).
        • I have a CAT too....

          it's in a box very much like yours. There's a Motorola Marco, too, the
          wireless version of the Newton. And an EO Personal Communicator, a
          Sharp Newton, several early Palm Pilots, which actually were useful for
          their time. And it all panned out after about ten years, which is the
          timeframe for realistic e-book solutions, IMHO.
          Mitch Ratcliffe
          • MY Palm PDA (Handspring Visor PRO) is STILL useful...

            ...because it does more than just read eBooks, because it has enough RAM to store plenty of software to do things, and enough CPU to run the software.

            It keeps my daily schedule, does math for me (eerily reminiscent of Isaac Asimov's short story "A Feeling of Power"), takes and stores photos and small movies, tells me the time anywhere in the world, gives me sunrise and sunset for any place in the world, shows me the constellations at night anywhere in the world.. (pausing for breath), stores and shows me Ebooks and .pdf documents I download with my laptop... helps me brush up on American Sign Language, plays chess with me, shows me the positions of Jupiter's moons or the phases of our Moon at any given time, works out loan terms for me, stores mathematical equations and memos for me, shows me the positions of the planets for me, plays video games with me, teaches me Morse Code... and could do plenty of other things that I just haven't personally gotten around to with my Visor Pro.

            Why can't the eReader guys give us handy, easily portable little gadgets that can do all THAT? Oh, and they could throw in cell-phone and movie function at the same time and it wouldn't hurt MY feelings....
  • The way of all new markets

    This is the way of all new markets. It happened with fiber
    optics, the dot.coms, MP3 players, smart phones, and it
    will happen with e-readers. I wouldn't be surprised if
    Apple is the entity that comes in and dominates with a
    tablet device of some kind.

    Contrary to the commonly understood wisdom with Apple,
    they don't innovate or invent new markets. They wait until
    the time is right (usually after the first major disaster) and
    scavenge the remains by offering a brilliant product at a
    relatively reasonable price. They did this with the iPod and
    they did it again with the iPhone.

    The failures of the first generation of Mp3 players didn't
    spell doom for the music download industry nor will the
    failure of todays overpriced e-readers. In fact, I think we
    may go through two or possibly three more generations of
    e-readers before e-books come into their own. That gives
    us time to work out how DRM will work, authors and
    publishers will be compensated, and the thousands of
    other niggling questions smart people are asking.

    In fact, it's just recently that music downloads have started
    to represent any sort of significant share of the music
    market; and video content is still limping along. And it's
    been nearly a decade since Apple started getting
    aggressive with iPod and iTunes. I would say that we're
    probably a full decade off of omni-present ebooks as well.
    Rob Oakes
  • Hardbacks

    Are totally irrelevant to the price comparison. Paperbacks are barely comparable, and even then offer value that e-books and their readers can't match such as transferability, longevity, and sunlight readability.

    Which means that the "per book" breakdown is closer to $7.50

    Considering that the price of e-books from major resellers is generally higher than that, the reader itself is a net loss unless the e-books themselves can offer enough compensating value to overcome not only their own liabilities but also the cost of the readers (plural) needed to access them.

    Meanwhile, I have a collection of pure HTML e-books which cost me [i]less[/i] than paperbacks and are totally transportable. Reader economics are thus moot until publishers get over their dreams of charging hardcover prices, without the cost of printing and distribution, for the short-term library loan of a book to someone who doesn't get to keep it.

    The first step is going to be this train wreck as the reader manufacturers get over [u]their[/u] notion of selling hosts of incompatible locked-down devices with planned obsolescence.
    Yagotta B. Kidding
  • It's the channel, not the device

    Wonderful article. I know from my use (and my friends' use) of the Kindle, that it alters buying models. It's like living in a bookstore - with credit card in hand. I buy and read a lot more, and I suspect this is where the money is/will be made. The manufacturers of the hardware without a good channel are going to hard pressed to compete with Amazon/B&N. Enter the anti-trust lawyers...
  • RE: Headline 2010: e-Reader device failure

    It's the price and functionality. Give me a reader that's universal, has a built in browser and can use WiFi, 3G, and USB connectivity for $50 and you'll have my business and probably everybody else's who love to read. It's kind of like I've been telling Microsoft for so many years. Drop the price of Windows to $50 and I'll buy several copies for years to come. They'll figure it out sooner or later.
    • Microsoft is slowly coming around

      ...notice that Office 2007 (with all of its goodness) is now available in a "noncommercial" Home and Student version for around $70-$130 (for a 3 PC/household license)?

      Likewise, for about the same price, a household can get a noncommercial upgrade from its current version of Windows to Windows 7, also for up to three PCs.

      By the time inflation has its say, these will be very good prices for the value offered.
  • iPhone - all the e-reader I need....

    I'm a lifelong voracious reader, but I'm reading more than ever since acquiring the iPhone. I use Stanza primarily with the Project Gutenberg public domain books comprising most of my downloads. I've also installed the Kindle app, but have yet to use it.

    I have easy access to books I never would have read without the iPhone. (Currently over 100 books loaded on the phone.) The portability and extreme ease of use is what I like about the iPhone. I can't really see any reason why I would need a dedicated e-reader device.
    • on a two inch screen

      how does one read a book on a rtwo inch screen?
      if possible, how does one enjoy the process?
      • I read on my Verizon HTC Touch for years -

        I have been reading books on my handheld - first a palm pilot (green screen) and then a Palm Treo - then a Window Mobile phone and now my HTC Touch - I use ebook Reader from Ebooks.com - how do you red on a small screen - make the type larger - I love the size I can put it in my pocket and if you if you can read this in this small box you can read from your phone, Iphone, etc... I would never purchase an EReader too big
        • same story with my Palm OS PDA

          I have used my Handspring Visor Pro PDA (running Palm OS) for eBooks for several years, now. I can read .pdf files from my computer as well as several other eBook formats with no trouble at all. Considering all the other things I use my PDA for, I would never consider giving it up to make room for a dedicated eReader.

          It's old technology, but very GOOD technology that also serves as a day planner, alarm clock, calculator - all sorts of things, more than I can list here. Before I spend a dime on an e-Reader I will definitely consider instead going on EBay to find the very best Palm OS PDA onto which I can move my present library of eBooks, software and other goodies from my present PDA. All it lacks is a modern cell phone/modem to be a complete traveler's companion.
      • I haven't had any problems on my 2 x 3 inch PDA screen

        - I've been reading Project Gutenberg and other EBooks on my Visor Pro PDA's 2 x 3 inch screen with no trouble at all for years.

        Considering that the reader software I use allows me to have up to a dozen different Ebooks and more copies of .pdf documents - books, magazine articles, scientific papers - in my shirt pocket, along with a powerful hand calculator, day planner, phone book, etc., I enjoy the access to this material very much - suddenly, the time I spend on buses, waiting in reception areas, for doctors, etc is time I can spend reading. How good is that?

        If I weren't as stingy as I am, I could enjoy the process much more than I do. But even being limited by my own choice to free material, I won't ever run out of things to read with a reader that (unlike the present crop of e-Readers) fits in my shirt pocket and costs nothing to use.
        • iPhone

          I carry over 100 books, and about 12 bibles in my pocket at all times.

          As a result, I'm reading more than I ever have. There's not an idle second goes by that I'm not able to read.

          I haven't had to spend anything on books (several of the bibles were not free). Project Gutenberg has over 25,000 public domain titles available.
          • while I store an indefinite number of books on my laptop...

            ... and swap them out to my PDA as I finish the older titles and want to read new books on the PDA. I can read eBooks on both platforms... so I have almost optimum flexibility (it takes only a very few minutes to move an eBook from laptop to PDA, and less time to delete the eBook from the PDA after I've done with it).

            While I do confess to a certain amount of tech lust for the iPhone, I can wait until I can afford a Palm Treo with almost the same feature mix, and Palm OS compatibility to boot.
      • iPhone - a great e-reader....

        I actually read faster on the iPhone. You first set the font to a reasonable size, and then, because the screen real estate is so small compared to a book, you can engage in a 'snapshot' style of reading, taking in the whole page in a couple of scans.

        I haven't read an entire paper book in 10 months. When I do try to read out of a book, I am frustrated by the awkwardness of holding a book, and the relatively slow reading speed.

        Another factor, as I approach 50, my eyesight now requires pretty bright light to read off of a page. Not a factor with the iPhone.

        Overall, it's a much better reading experience for me.
    • Battery life is a concern!

      Your iPhone isn't going to do you much good on a 12 hour flight! At least not in Coach, there are no charger ports in coach! From what I gather eading on an LCD screen is not so hot in bright sunlight either, whereas an eInk screen is both readable in bright sunlight and the eReader is good for a week of reading between charges! These are the main reasons I bought a Sony Reader instead of a Netbook for our European vacation!
      • iPhone Battery life

        I am getting about 8 hours of non-online battery life. If I were planning an extended time away from a charger of some sort, I'd have to invest in a portable charger.

        Under normal circumstances though, the relatively short battery life hasn't been a problem.