Of iPads, embargoes and the confrontation with reality

I’ve been settling into my new job, designing the next generation of Microsoft’s TechNet service, but have not turned away from the e-book market or its hijinks. Oh, what a week. Where to start and where will it end?

First off, the Apple iPad. My thoughts: It was one of Steve Jobs’ worst presentations in many years. It was dull. He lacked energy and attitude, which reflected on the device he was introducing more than the device itself was a let-down. Because, really folks, can any one device save publishing? And movie-making? No. However, the iPad is another example of a fascinating blend of pragmatism and accomplished design that is going to be attractive to the average person who has been thinking of a lighter, more convenient PC, an e-reader or a new television.

At the entry price, $499, it’s a steal compared to the comparably priced Kindle DX and sexier than all the netbooks on the market wrapped in a big ball of sexy, with sex on top. The iPad is going to eat the low-end of the market that Apple has so famously “missed” during the past couple years—as though not selling MacBooks for $500 was doing the company damage—for its proverbial lunch while barely cannibalizing Apple’s MacBook sales. The higher cost iPads will be subsidized by carriers wanting to compete with AT&T.

Moreover, with the next generation of e-readers clearly stuck somewhere in the same price range, iPad is poised to destroy the glutted market of E-Ink devices by presenting a singular color-capable choice as an alternative to one of the 50+ e-readers on the market now. Amazon will counter by licensing Kindle features far and wide, getting its PC client onto new netbooks in exchange for a small fee or a small share of ongoing revenue from the PC OEMs.

But Amazon’s real challenge will be staying hip when it’s business strategy is looking so very square. In a little remarked posting by Kara Swisher at AllThingsD, she shared a video clip of Steve Jobs talking with her colleague, Walt Mossberg, after the iPad announcement. In that clip, Jobs says that the $9.99 e-book price point will soon be a thing of the past, because publishers will “pull their books” from Kindle to sell them for a higher price—on iPad. Many took this to mean that Apple will sell books for $9.99. Others missed this completely because they focused on what Jobs has said in the past about reading. But listen carefully. Jobs clearly says, in response to Walt’s question about why someone would pay $14.99 for an iBook title when they could get it for $9.99, that it will not be a problem as soon as publishers decide to draw the line with Amazon. Jobs says “the prices will be the same,” meaning that prices will rise as people shift to a reading experience they value more.

And MacMillan did draw that line this weekend, pulling down its Kindle books. As I have been saying for a while, $9.99 isn’t set in stone and cannot last. Amazon has never been in the business of selling e-readers, only the process of building libraries it can serve to digital readers. This is why Kindle on the iPhone and iPad are more representative of Amazon’s future than the Kindle hardware it sells today. Jobs hasn’t crushed Amazon, he enabled it to get out of the hardware business. Look for Kindle books for the iPad to be priced higher and have more features—you don’t think Amazon has had Mac and PC coders around for 18 months without making some real improvements on the Kindle software, do you?

What of MacMillan, which initiated an embargo on Amazon’s $9.99 price point? It is just the first publisher to launch a salvo over e-book prices, it won’t be the last. Amazon has been losing money on best-sellers for almost two years. The business is unsustainable at $9.99 for Amazon and publishers. In one real way, Apple is saving publishing, because it is pulling the biggest book distributor’s fat from the fire, as PaidContent explains here.

Final thoughts on the iPad. The name is awkward, but the trash talk will settle down. It’s unfortunate that Apple managed to alienate women, one of its target audiences for the iPad. At the same time, in many dialects, “iPad” will sound exactly like “iPod.” The biggest change in the hardware between the announcement and shipping will be the appearance of subsidized hardware deals, most likely from T-Mobile.

We haven’t seen the future as much as version 0.92 of the future. Pads ahead, as well as books. But look for many tablets from other manufacturers, too.

Updating Kindles sold estimate: 1.49 million

Based on the ever-vague guidance provided by Amazon.com in the form of obscure comments from CEO and Founder Jeff Bezos and fluffy PR releases, such as today’s holiday sales update, I’m continuing to update my educated guesswork on the number of Kindles sold.

Two interesting factoids emerge from the marketing verbiage: First, Kindle books outsold paper books on Christmas Day, the first time that has ever happened; Second, the Kindle is the “most gifted item ever in our history,” according to Bezos. The first may not mean much, since Christmas Day isn’t necessarily a normal shopping day, though the volume of Kindle books sold suggests that on that day a lot of new Kindle users started stocking up on e-books. The second, an aggregate figure that appears to reflect all gifted items over all time, may be very significant or mean absolutely nothing at all, as the increase in online shopping and gifting continues to dwarf previous “record-setting” gift sales by the law of large(r) numbers.

Nevertheless, it is clear that this was the Kindle Christmas. During the third quarter of 2009, I estimated that Amazon sold 289,000 Kindles on sales growth of 60 percent year over year. We can assume, given the disappointing availability of most competitors, that Kindle grabbed a very large percentage of e-book reader sales this holiday season. However, it was also a poor Christmas overall, in terms of retails sales, even if Amazon did sell more stuff than ever before.

So, how many more Kindles sold between the end of the Q3 and Christmas Day? Extrapolating from previous quarters, and assuming this was a break-out sales season for Kindle, meaning that it more that doubled over the previous quarter, factoring in the sales of Kindle books versus paper books as Christmas gift cards were redeemed yesterday, I estimate Amazon sold 419,000 Kindles in the fourth quarter, or 145 percent of the sales in Q3.

That would make the total number of Kindles sold to date 1,491,000. Kindle now represents approximately 65 percent of the hardware reader market despite the appearance of Barnes & Noble’s Nook, which may reach 30,000 units in the quarter because of delays.

I still don’t think Amazon is in the hardware business for the long term. It’s all about building digital library lock-in.

Smashwords gets Kindle distribution deal

Smashwords, the e-book self-publisher services company, is for real. The company has won a series of distribution deals, including through Barnes & Noble, Sony and Shortcovers e-book stores. Today they added Kindle distribution, paying authors 42.5 percent of the sale list price of their Kindle books.

As an author services play, Smashwords has sped to the front of the pack for e-book authors. Congrats to Mark Coker and team.

Updating Kindles-sold estimates: 1.072 million

Based on Amazon CEO Jeff Bezos’ comments on the third quarter results for the company, Kindle sales are accelerating. Bezos is quoted: “Kindle has become the #1 bestselling item by both unit sales and dollars – not just in our electronics store but across all product categories on Amazon.com. It’s also the most wished for and the most gifted.”

Working from my previous estimate, 783,000 as of July 1, and building in unit volume growth of 60 percent—sales revenue gains in electronics in the U.S., $217 million higher in the first three quarters of 2009 than in 2008, seems to be driven heavily by Kindle sales—I estimate Amazon has sold 1,072,000 Kindles as of Sept. 30, 2009. That would be 289,000 Kindles sold during Q3.

Kindle books come to the PC

kindle-for-pc-tcg-coming-soon._V229480704_Platform expansion is the logical counter to new competition at the device level. Amazon, facing the introduction of BN.com’s Nook and other e-readers this week, has announced it will support reading of Kindle books on Windows 7, Vista and XP Service Pack 2 PCs in November.

The application offers a few enhancements compared to the Kindle device, including a larger number of font sizes and the ability to adjust the number of words per line and zoom capabilities on Windows 7 PCs, as well as supporting cross-device synchronization of last page read, bookmarks, notes and highlights.

Customers can sign up for an email alert that the software has been released at the Kindle for PC page. I’ve been predicting this for a while, and am not at all surprised to see it come two days after the Nook announcement. It will not be surprising, either, when Kindle books are available on the Mac.

It’s all about making the customer library accessible across devices, so that Amazon—and BN.com, etc.—can keep a customer over the long term.

All in a week’s brutal competition.

Nook clarified: Really solid progress for e-readers

Yesterday, I posted a long analysis of what I thought was right and strangely wrong about the Barnes & Noble Nook. Matt Miller today got a clarification about my main concern, which was that Barnes & Noble seemed to have said, according to several published reports, that Wi-Fi would work only in its stores at launch and be “opened up.” A PR representative for Barnes & Noble’s agency, Fleishman, attributed the Wi-Fi information to “an error, so we’re glad to clarify it today.”

Matt asked the question of William Lynch, president of Barnes & Noble on a press call this morning and got the clear answer: Nook Wi-Fi will work in stores and on Wi-Fi networks operated by third-parties and on home computer networks to allow shopping in the BN.com store. I’ve been able to get some additional details and, to some degree, my criticisms in yesterday’s article have been addressed. I’m going to leave that article up, with clarifications and corrections as part of the public record. I have confirmed it, as well, though only on background.

Nook Wi-Fi will work at launch anywhere you want to use it.

That said, I still think the Nook has some flaws, which are fewer and less bizarre than I thought.

I also received clarification of another important point I raised yesterday: Shopping in the Barnes & Noble e-books store is free via 3G, but it was not clear that Google Books titles would be accessible via free 3G service. That would have raised a lot of synching issue for customers who, frankly, don’t want to synch as much as early adopters are willing to do it.

Barnes & Noble, through its PR firm, said that Google Books will be downloadable from the BN.com eBookstore. So, B&N is subsidizing its customers wireless access to free out-of-print books offered by Google, which is a very good thing indeed.

If you are visiting BN.com, you will have access to more than one million e-books, more than twice the total available at Amazon.com. There are issues of quality in Google Books, but the solution is for either volunteer or for-profit editorial fixes of those books. That means a lot less synching than I thought.

Finally, one of my disappointments (based on the potential for an Android device described in this pre-launch posting) was that the Android OS was not accessible to programmers (never mind the potential for cracking it, I want to see programming supported by B&N). It struck me as odd that, for example, there was no Android B&N e-reader client for smartphones with which a Nook owner could share an e-book downloaded on the Android-based Nook.

B&N, again via Fleishman, said that an Android e-reader client will be introduced soon. No specific date was given.

Several readers excoriated me via email, and they are welcome to criticize but not to deploy abuse. The process of reporting a story, especially as an unpaid blogger, is somewhat different than having a budget to fly to New York to attend a press event. So, I must rely in doing analysis on breaking news on what is written by people who do attend. The New York Times, The Wall Street Journal and TeleRead all reported that Wi-Fi worked in the stores but not outside, based on comments made by B&N people at the event. You will have to forgive me if, in trying to find out the truth by treating FAQs with skepticism when they use very vague language that seem to create exception situations, I raise questions for which I do not currently have an answer. I tend to trust people who cover an event more than the company holding the event, because that is our job as customers, to question until the truth is perfectly clear. It wasn’t clear yesterday and it is more correct today.

Having gotten clarification, I believe what I wrote yesterday, that Nook enters the e-reader race in a dead heat with Kindle 2 for anyone not currently invested in a Kindle library. That’s pretty good for a first try, a triumph for Barnes & Noble. I don’t think it is a revolutionary device, particularly because an almost identical dual-screen Android-based device, from Spring Design, was announced the day before.

In addition to yesterday’s non-Wi-Fi related criticisms, I’ll add: Nook should allow books to be loaned more than once. It should be using the Web features of the Web-centric Android OS, it ought to open Nook to third-party development that could substantially enhance the reading experience. And, ultimately, all these hardware devices offered by booksellers are transient devices whose primary purpose is to get readers engaged with a bookseller’s library management services.

In the long run, this is not about selling hardware but all about selling books. The Nook and Kindle will not likely be what we use to read in five years. We will, though, still want and use access to the titles we buy on those devices today.

Cross-posted to my ZD Net blog, where a lot of discussion is going on.

B&N’s Nook: Weirdly unrevolutionary

In addition to this posting, please visit this clarifications posting to get the whole picture.

It would be nice to say, as Matt Miller has, that the e-book and e-reader market was revolutionized today. It simply got more interesting. A careful reading of the $259 Nook’s features, and the comparison offered by B&N to the $259 Amazon Kindle 2, reveals that, while it packs a lot of new ideas, Nook is a combination of innovation and the extraordinarily conventional.

Highlights:

  • Two screens, one 3.5-inch LCD for navigation and purchasing and a six-inch E-Ink display for reading;
  • Virtual keyboard via the LCD display
  • ePub and PDF formats supported;
  • Free 3G connectivity when shopping via BN.com;
  • Sharing of books, across Nook, smartphones and PCs;
  • Wi-Fi built in, but with strange limitations at launch(see below);
  • Synchronization of location, notes and annotation across multiple devices;
  • Audio is supported, though only MP3; Audible books not supported.

There is much I like about this device, but I am not at the announcement today, where I would be asking a lot of questions I have not seen answered in any coverage, so far. Here, with the apparent downsides first and foremost, is what is known to me at this moment.

An e-reader designed to get you into the physical Barnes & Noble store. This, and the question of how to get non-BN content onto the Nook, represent the most backward features of the Nook. When you visit a B&N retail store, you’ll receive offers and, soon, the ability to read some e-books in their entirety while in the store. Everything deleted below, while part of this critique has been clarified and extended in this posting.

There, however, is the rub.

I’d pointed out before that wireless services for browsing the 500,000+ titles available for free through Google Books, a notable feature of the Nook, probably wouldn’t be supported over the built-in 3G wireless service. It isn’t. You’ll need to download and synch the Nook with your PC, via a USB connection, to move any content not sold by BN.com onto the device. From there, it gets bizarre.

According to The New York Times’s Motoko Rich, the built-in Wi-Fi networking works only inside Barnes & Noble retail stores:

With the market for electronic readers and digital books heating up by the day, Barnes & Noble sought to differentiate itself with the wireless feature that consumers can access in any of the chain’s 1,300 stores. Outside of the stores, customers can download books on AT&T’s 3G cellular phone network. (emphasis added)

A review of the BN.com tech specs for Nook adds the caveat that free wireless service is available “from Barnes & Noble via AT&T.” Note that they are saying you get free wireless service when buying or browsing Barnes & Noble, not when accessing other sites or services. Put this and the quote from the Times together and you get: Free 3G service anywhere, when buying from BN.com. Free Wi-Fi in Barnes & Noble stores, but no Wi-Fi connectivity outside, where you can shop wirelessly on BN.com.

Comments from riffraffy in TalkBack point to this section of the Nook FAQ, which I read but still find very vague, since they refer only to travel and Wi-Fi:

Q. Can I use my nook while traveling abroad?

A.Yes, when you travel abroad, you can read any files that are already on your nook. You can connect to Wi-Fi hotspots that do not use proxy security settings, such those commonly used in hotels, and download eBooks and subscriptions already in your online digital library. You cannot, however, purchase additional eBooks and subscriptions.

Q. Will new issues of eNewspapers and eMagazines be downloaded to my nook while I’m traveling?

A. Yes, if you are traveling in the United States, or if you are abroad but connected to a supported Wi-Fi hotspot, new issues are delivered to your online digital library in both cases. When travelling abroad without Wi-Fi access, new issues are not downloaded to your nook (automatically or manually).

Two things:

In the first answer, they specifically say that you cannot purchase eBooks or subscriptions over an international Wi-Fi connection. That suggests it is not a fully functioning Wi-Fi connection. Maybe because you are connecting from overseas, maybe not. If you had full Wi-Fi access and a valid BN.com account, what should stop you?

What is a “supported hotspot” in the second answer? If they mean an AT&T hotspot, my concern remains.

I wrote that I hoped I was wrong. I think the language here and in the announcement is strangely vague (having seen a lot of strangely vague FAQs turn out to bear bad news) and would have liked to be present at the announcement to ask.

UPDATE: Paul Biba, who attended the event, added this to his report, which seems to answer clearly the question whether the Nook provides ad hoc Wi-Fi access:

Wifi can only be used in store for events and in store content. Plan to open up later on.

B&N should enable ad hoc Wi-Fi access at launch, or disclose more clearly that it will not be available in order to avoid disappointing all the people who are expecting to be able to use Wi-Fi at home or elsewhere not served by an AT&T Hotspot. To do otherwise would be doing damage to the credibility of a very impressive piece of engineering.

The rest of the content you want to put on the Nook will have to be downloaded via a PC and synched to the Nook. That’s a step back from what the promise of built-in Wi-Fi would lead a buyer to expect—particularly because Nook is advertised as providing access to 500,000 Google Books titles that, in fact, aren’t accessible through the device, but must be synched.

I hope I am reading this wrong or, that if this is correct, B&N changes the Nook to support ad hoc Wi-Fi access to Google Books. It would be a blunder, forcing readers into retail stores when we want to get away from them, into virtual stores with much broader inventories.

UPDATE: Google Books, per the updated posting here, can be downloaded free of charge over 3G and Wi-Fi connections.

Synching is cumbersome and, frankly, what keeps most people, the non-early adopting masses, from using dedicated e-readers. The popularity of smartphone e-reader Continue reading

Barnes & Noble prices book Nook

The Wall Street Journal reports that the Barnes & Noble e-reader, photos of which were leaked last week, will be called “Nook” and be priced at $259, the same price as Amazon’s Kindle 2. The New York Times has roughly the same details here. Both articles are based in part on ads placed in tomorrow’s edition of the newspapers.

Most interesting is the Nook’s ability to “lend” books to other readers via wireless connection. No details on how permissive the loan capability will be—presumably the owner of the book will not be able to access a loaned title.

There’s also no information about the cost of wireless service, which is expected to be bundled with books sold through the BN.com store, similar to Kindle. But unlike Kindle, the Nook promises access to the Google Books library, which are free; will users have to pay for wireless service to get that access?

We’ll know more tomorrow.

For now, we can only wonder about the naming process that produced “Nook.” Cute, but its rhyming with “book” will confuse people about whether they want a device called a “Nook” or to buy a “nook” version of a book. For digital natives it will be pretty clear. Think about the concept your grandmother would have to wrestle when asking for an e-book at a Barnes & Noble retail store.

BookServer: Internet Archive leaps into book indexing

Brewster Kahle, founder of the Internet Archive, announced the non-profit will launch a cataloging and book search system, called BookServer, that connects readers with copies of the books they want, whether in a library, online or at a bookseller. BookServer is an open alternative to the catalogues maintained by Amazon, Google and others that could connect authors offering e-books directly to readers.

The service is based on an open specification for digital book distribution co-developed by the Internet Archive, Threepress, Feedbooks, OLPC, Adobe, the Book Oven and other organizations, according to the announcement. The system is not designed solely to support distribution of free content, but also books and e-books for sale. It is also several years away from realization, CNET’s Daniel Terdiman reports.

The announcement goes on to say that everyone will benefit:

  • Authors find wider distribution for their work.
  • Publishers both big and small can distribute books directly to readers.
  • Book sellers find new and larger audiences for their products.
  • Device makers can offer access to millions of books instantly.
  • Libraries can continue to loan books in the way that patrons expect.
  • Readers get universal access to all knowledge.

The service was announced by the Internet Archive this evening in San Francisco. Kahle, who founded Alexa (which he sold to Amazon) and the Bookmobile POD service, along with the WayBack Machine service, doesn’t do small ideas. BookServer looks promising. I think it can be the foundation for a lot of interesting reading enhancements. We’ll discuss that later.

Dual-screen Android e-readers multiply

Spring Design's Alex e-reader

Spring Design's Alex e-reader

Last week, Barnes & Noble leaked information about a dual-screen e-reader running Google’s Android OS that it will announce this week. Today, Fremont, Calif.-based Spring Design sought to beat B&N to the punch. It announced an e-reader device, called Alex, with the same features, a six-inch E-Ink display for e-book content supplemented by a 3.5-inch touch-enabled LCD screen that allows Web browsing.

Unlike B&N, Spring Design is talking explicitly about augmenting e-book content with Web and multimedia, which I speculated about last week. This is potentially exciting stuff, promising to add to the reading experience (if done right) and support better annotation (though no clear explanation is given about social features that might be enabled by annotation in the Alex). According to the press release:

The revolutionary Alex livens up text with multimedia links, adding a new dimension to the reading experience and potentially creating a whole new industry for secondary publications that supplement and enhance original text.

Whether text needs “livening up” with multimedia or not is debatable. Text on the electronic page certainly needs to be networked and extended to provide new reading experiences.

Book provider partners and wireless service providers have not been signed up, but Spring Design expects to begin shipping the Wi-Fi, 3G, EV-Do and GSM compatible Alex later this year. Pricing is not specified.

The company describes its device as the “first Google Android-based e-book with full browser capabilities and patented dual screen” despite the B&N leak of last week. It’s an ominous sign for a market when everyone is racing to pre-announce hardware. If the number of Android dual-screen gizmos keeps multiplying at this rate, there will be tribble-load of them in weeks. There’s my second Star Trek reference of the day.

Notable question: Since Android is the common feature of both these devices, and both rely on two screens, does this point to a generation of two-screen Android devices? Video players, for example, that let you watch a movie on one screen and use Facebook or Google Wave in another? Now, imagine an Android-powered TV….

Thanks to Christopher Dawson for the pointing to this news.