Circa 1994: Electronic Books—Eight Years and Going Strong?

This is a sidebar I published in Digital Media: A Seybold Report in August 1994 about where the electronic publishing market had come in its short life and where it might be going. You’ll see we’ve come a long way and, in many ways, hardly progressed at all since the mid-Nineties. — M.R.

More than six million “copies” of Franklin Electronic Publishers Inc.’s electronic books have move through the consumer channels. Franklin issued its first title, a dictionary, as an embedded document in a small inexpensive handheld  device in 1986. Franklin’s books have never come in the prettiest covers, they are made to fit a niche at the lowest possible price.

“If you look at what has transpired ofer the last three years,” same Michael Strange, executive vice president of Franklin, “we were the only company that focused on the content, not the technology.” Indeed, Franklin has positioned itself as a publisher rather than a computer company. Despite the fact that it has introduced several significant storage capabilities to the mass market, Franklin has found it’s better to talk about what in its high-capacity memory modules—from Bibles to extensive dictionaries of foreign phrases—than the modules themselves.

The company’s handhelds have followed a pedestrian design philosophy that combines a keyboard with a low-resolution one-, three- and 10-line LCD screen that displays only text. In the past couple of years, Franklin has added audio and communications capabilities to its devices. For example, it’s now possible to download data from a PC to a Franklin electronic book device or make a Franklin dictionary speak in Stephen Hawking’s digital voice.

More than 50 Franklin titles are available today. The company’s content includes several versions of The Bible, the Concise Columbia Dictionary, a series of “Language Master” translators, and, a complete statistical record of Major League Baseball pitching and hitting. Prices range from about $40 for spelling assistants to $350 for translators with speech synthesis features.

A hit title generates sales of 100,000 to several hundred thousand units, according to Strange. “We are truly following more of a paradigm of a publisher with a back list and a main list,” he said. This allows Franklin to sustain less popular titles, which sell between 40,000 and 60,000 copies.

By and large, Franklin’s success was built on two markets: Business and education, both of which depend heavily on reference material. Dictionaries, spellers and translators, sued for the most part by students and business professional, also play a large part. Strange said only 50 percent of the company’s customers use a PC, just slightly less than the share of the population that uses a computer at work (55 percent), according to a recent study by the Times Mirror Center for the People and the Press.

Notably, Franklin sells between 17 percent and 21 percent of its titles through the hardcore tech-weenies channel, at Radio Shack. The past two years have seen a leveling off of sales growth. During that time, the biggest gains came in the medical market, where Franklin recently inked an agreement to deliver updates to its Pocket Physicians Desk Reference over SkyTel’s paging network. Franklin expanded on its reputation for reference materials with entertainment titles that combine data with game playing. For instance, the company’s baseball title, The Big League Baseball Encyclopedia, outsells all other baseball statistics books in paper and electronic form, Strange said. Cookbooks, diet manuals and new entertainment titles, like a guide to wines, are holding their own in the market.

What will become of Franklin’s niche as more people make the switch to graphically interesting interfaces offered by PCs and handhelds? Strange said his customers are willing to pay incrementally for their information, adding a device or title as needed or desired. This bodes well for the company’s future, provided it can continually upgrade the display and sound capabilities of its low-cost devices to compete with PCs and handhelds.

But in the last two years, Franklin has experienced some contraction of its growth. Sales are mostly flat, falling three percent in the quarter that ended December 31, 1993. Franklin had redesigned its product line to accommodate communications features and larger storage media at the same time that its electronic books faced new competition from the publicity storm surrounding [Apple’s] Newton and its PDA brethren.

The writing is on the wall for Franklin. It has begun to cope with the cost of upgrading its books to compete with more versatile PDAs. Newton can display a passable drawing and nicely formatted graphics; [Microsoft’s never-shipped] WinPad will. Strange said Franklin is examining adding electronic mail services to its devices, and improving display quality.

“Where does the market of the totally-connected person stop and where does the market for fixed platforms begin?” Strange asked. Franklin believes that in the short term its text-only books will continue to perform strongly, because “people still prefer to buy the content one time, fewer than want ongoing online access to data,” Strange said. With a strong product line in place, Franklin will focus on improving its hardware to keep pace with the new kids on the block. An emphasis on the content (not to take a phrase from Condé Nast) has proved successful for Franklin so far.

Note: Franklin is still alive and kicking, but it has never ventured outside its reference comfort zone and seen large parts of its market conquered by PC-based and, mostly, online alternatives. Its stock trades for two dollars and change today, in 2009, far off its highs of $41 in 1995 and 1996.