Described as having a larger touch-screen than the Kindle's 6-inch display, while being physically smaller than the Amazon device, Apple's baby has been dubbed a ‘mediapad.’ The larger screen would be a more pleasant way to view movies or the Internet than an iPod or iPhone and the device could have decent speakers, too. By using a touch screen, Apple could save space necessary for Kindle's keyboard, resulting in a smaller device. W
hile not pocket-sized, the Apple mediapad would be easy to carry and offer an entertainment experience a smaller device could not match. Reading a book might be such an experience, right?The Kindle for iPhone app is on a screen is just too tiny. I do not own a Kindle and have little interest in paying over $350 for what, to me, would be a single-purpose device. An Apple mediapad would doubtless do everything an iPod touch does, only larger. And it could do everything a Kindle does, too, only in color.
I cannot imagine that Amazon really wants to be a consumer electronics hardware company. Its investment in Kindle was necessary to kick-start the e-book industry. Many companies had tried e-books previously, without much luck. Amazon has shown that an e-book reader can find customers, provided the content is available. Amazon has the content part nailed and will, presumably, be happy to see Apple create a much larger installed based of e-book-capable hardware than Kindle ever will.
A popular prediction is that if Apple really does the mediapad, Kindle will go away. But, probably not until Apple can reach a $350 price for its rumored new product. That make take a while, as estimates are that the super iPod touch will cost $500 or more when/if it is released.
In which case, the Apple mediapad and Kindle will coexist for a time, but eventually there will be no need for the Kindle and Amazon will be happy to be out of the hardware business.
Jeff Bezos today announced that among books that are available for the Kindle, 35% of the copies Amazon sells are Kindle editions. This is a surprising number (at the Kindle 2 unveiling in February it was 10%) and is further proof of the huge land grab that Amazon is now enacting. Only slightly mitigating those sales figures is news that the DX will support the commonplace PDF format, leaving the door open for a future in which most ebooks sold can be read on any reader, no matter what company manufactures it.
Think of what that means. Amazon has tens of millions of customers. It sold 500,000 Kindles last year, Mark Mahaney of Citigroup estimates. So even if it has twice that many in distribution, that is a lot of e-book buying by a small number of people. The Kindle must have an enormous penetration of what is a very distinctive, and for Amazon, quite lucrative, segment: very heavy buyers of books.
Amazon has also been making waves on the device agnostic side of things with last month's purchase of Stanza, the popular free ebook application for the iPhone. Amazon had already unveiled the Kindle app for the iPhone, and this move further solidifies its presence there (and presumably in the app-centric ecosystems of future smartphones).
The Kindle itself, of course, is the main focus. The longer that Amazon can keep its hands on the ebook market (a market that will eventually embrace open formats, one has to assume), the longer Amazon can rake in its monopoly profits. The iPhone moves, as well as the decision to support PDFs on the DX, meanwhile, are a smart hedge and a tacit acknowledgment that ebooks will one day be predominantly sold in formats that aren't tied to any one device.
Chris Anderson made the idea famous that you can make something and sell it to the masses, that can be a great business. But sometimes selling something to a much smaller group can also be quite lucrative, if you pick the right product for the right customers.
A large percentage of the books are bought by a small number of readers. We hear a lot about the long tail — how most items in a product catalog have a small volume of sales. But the same curve can be applied to customers of most businesses. The “head” — a relatively small number of people — represent a disproportionately large share of profits.
Amazon already served many of those people with its mail-order store, and it built a product that a large number of them have adopted. Most of the rest of its customers — the long tail who read a book every now and then — shrug and ask why they need another gadget when they already have a phone and computer.
By contrast, mass adoption was critical for the iPod, which earns money for Apple mainly through hardware sales. Apple has said it runs the iTunes store at only a small profit. And most people get most of their music from CDs, file sharing or other sources that don’t bring dollars to Apple.
The Kindle is about selling books, not eReaders. There is very little book piracy at the moment, and Amazon no doubt sells the vast majority of the books read on the Kindle. Why wouldn’t it? Its wireless store is amazingly convenient, and its prices can’t be beat: $10 or less for a best seller.
On a conference call with investors in January, Mr. Bezos even said that the Kindle hadn’t cannibalized the company’s paper book business: ‘We see that when people buy a Kindle, they actually continue to buy the same number of physical books going forward as they did before they owned a Kindle. And then incrementally, they buy about 1.6 to 1.7 electronic books, Kindle books, for every physical book that they buy.’
Apple’s proposed device would no doubt be a mass-market product with many uses and a very different proposition than the Kindle. It would be interesting to see how the market reacts to a color, back-lit, touch-screen device with much shorter battery life than the black-and-white Kindle.
In some ways such a device may undercut the new markets Amazon is staking out for the new Kindle DX: students and news fans, both of whom may value color and speed more than book readers. Moreover, a Web-oriented interface would offer, at least for now, free content from newspapers and magazines. In fact, one might assume that the only reason the DX was announced only a few months after Kindle 2.0 is to get the media discussing the applications of the device, especially the textbook application that will be discussed here later this week, before Apple could steal their thunder.
But Amazon has already hedged its bets here. It has a Kindle application for the iPhone that most likely will also run on the new Apple device, potentially competing with an Apple e-book store.
An interesting technology that is going to affect the e-book reader industry in the next year or so is the screen from the One Laptop Per Child. Mary Lou Jepsen came from One Laptop Per Child. She invented the screen, which is actually called Pixel Qi — Pixel Q-I. It’s based off the E-Ink technology and LCD, and it’s mashed together, and it creates a color version of E-Ink that you can actually switch between this LCD with full movement to E-Ink in low-light situations and low power and things like that. So she’s going to be shipping those devices, the screens in November or so which means that we’ll probably start seeing them in the market place in the next year or year and a half, which should be really interesting if we assume that they won’t be edged out of the market.
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