Excerpt II, The Book Ends

Continuing where we left off the other day….. This segment, which is going to be torn apart and used in other ways, shows how quickly any writing on the e-book market ages.

Why Kindle is the early leader

As of this writing, in March 2009, e-books have limited network connectivity. The most forward-looking implementation of networking in an e-book reader is Amazon’s Kindle, a somewhat elegant, often clumsy device that, in my opinion, is poised to dominate the first-generation of e-book adoption. All that the network in the Kindle enables is electronic distribution and backing up of annotations added to a book consumed using the device. Called “Whispernet,” the Kindle network, which is provided by Sprint, with wireless delivery priced into the cost of individual books sold by Amazon.com, is an excellent first step because it eliminates several steps that other devices require before purchasing a book, including finding and paying for wireless connectivity. But because the Kindle remains a tightly controlled proprietary format—the books that people buy on the device today do not augment reading with connections to other readers, the author or communities of experts or critics that can extend the experience of reading—it remains an unattractive option for many, particularly those who would rather read one of the half million or more books available for free from archive sites such as Project Gutenberg and Google Book Search. Nevertheless, with the introduction of Kindle for iPhone in March 2009, Amazon has made its book format, which is based on HTML and a digital rights management technology owned by Amazon, the de facto choice for authors or publishers wishing to reach the largest possible audience with a book for sale.

Many who read this will object. Open standards, open formats such as ePub, and a variety of devices will be raised as alternatives to Amazon’s Kindle and the format of Kindle e-books. Unfortunately, I’m relatively old and have seen too many ideal products fall before the good-enough and mundane and that succeeds in reaching a critical mass in the marketplace, to think that individual features and benefits of ideal products will drastically change the developing audience for books on the Kindle. Business success is defined by the ability to sell something and culture has always demanded that creative work be compensated in order to sustain the creator—patronage was the primary compensation model until 250 years ago.

The Kindle has not locked up the market for all time, only for the foreseeable future because it offers all the new books available on any other reader or in any other format, while providing an even wider choice of titles through conversion and a relatively simple form of reader annotation with synchronization across multiple copies of a given book. There are still many shortcomings to the Kindle, but they’re the same shortcomings as competing devices, such as the Sony Reader and iRex Iliad, while Kindle does some things better than competitors. That is just good enough at a early adopter’s competitive price, in light of Amazon’s vast reach in the marketplace, to make it the device and format of choice at this time. Later in the book, I’ll explore the many devices and formats in greater detail, pointing to features and opportunities that will disrupt the e-book market in the future.

By Christmas of 2008, by my calculations based on conversations with Amazon executives and booksellers, Amazon had sold 379,000 Kindles (it’s an odd figure because they gave some away) and, because of production shortfalls had back orders for an additional 50,000 to 60,000 devices, which were delivered shortly after the Kindle 2 was introduced in late February 2009. After Kindle 2 shipped, the company sold approximately another 220,000 units for a total sold as of late April 2009 of about 655,000.  [As of July 1, 2009, I estimate the total sales of Kindle 1, Kindle 2 and Kindle DX is 754,000.]

It was the addition to Amazon’s market of the iPhone platform, in a Kindle reader application for iPhone, that will be seen as a definitive moment in the genesis of consumer e-books, because there are more than 24 million iPods  in the market already. The iPhone application multiplied the number of screens that could immediately be able to view the Kindle books by 53,000 percent, precisely the kind of accelerator that defines markets.

After 18 months, I estimate 655,000 Amazon Kindles had been sold. That’s more than any other reader device and, now that Amazon has introduced its iPhone reader software, make any title in its catalog more convenient to buy for the largest number of readers. Kindle is designed to extend the opportunity to read. As an analogy, I suggest comparing the situation today in the publishing market to that in the office productivity environment at the dawn of the PC era, when the ability to build the spreadsheet on a computer justified the mass adoption by business of the IBM PC and Lotus 1-2-3.

Jeff Bezos, founder and CEO of Amazon.com, told analysts during a conference call in early January of 2009 that people who buy a Kindle “buy about 1.6 to 1.7 electronic books, Kindle books, for every physical book that they buy.” This suggests that people read more and, possibly, buy electronic copies of the printed books they already own so that they can be read when the paper book is not available or practical.

Taking a book along in a device that can be read virtually anywhere, not to mention the possibility of taking an entire library with you when you travel away from home, has made the Kindle the early leader. In the long run, the e-book reader will certainly not be just a stand-alone reading device (the Kindle  and Sony’s Reader are multi-function devices that play audiobooks and music, too), though reading may be the primary use of an e-book device. Nothing’s guaranteed in technology. Reading is built on millennia of habit that will endure to some extend in the readers of tomorrow. Technology changes quickly, humans are slow to change.

About Mitch Ratcliffe

Mitch Ratcliffe is a veteran entrepreneur, journalist and business model hacker. He operates this site, which is a collection of the blogs he's published over the years, as well as an archive of his professional publishing record. As always, this is a work in progress. Such is life.
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