Another historical perspective on e-books, this from the August 8, 1994 edition of Digital Media: A Seybold Report. I’d published my first interactive book, in Voyager’s Expanded Book format, about a year earlier.
A market in hand for electronic publishers?
With so many industries focused on getting the interactivity into televisions and PCs, there’s not much interest anymore in delivering digitized information to handheld computers. Excitement has shifted from John Sculley’s prognostications about a $3 trillion market portended by the introduction of Newton to the similarly warm, fuzzy fantasies of the information superhighway. Nevertheless, there’s a world’s history worth of data that could find a very lucrative marketing on handheld devices—at bargain prices compared to the cost of interactive television programming.
Sooner or later, the bad feelings engendered by the poor reception for handheld computers, especially in the press, will pass. As handheld devices take off, someone’s going to cash in on the publishing opportunity in carry-along digital data. It’s tough to take a digital book along on the commuter train or into the park. A desktop PC or Mac’s got about five feet of leeway before it loses its connection to a power outlet, and portables don’t make good company during a quiet moment, or even a noisy one when a single bit of information is needed.
From the start, personal digital assistants (PDAs) have delivered more promise than palpable benefits. But the potential locked up in the Newton, General Magic’s Magic Cap and Microsoft’s upcoming WinPad operating system is immense. They tear off a large part of the functionality in a computer and fold it into the pocket. If used intelligently by publishers, handheld formats can enhance the experience of information.
Everyone’s familiar with the trail of tears traveled during the past two years by Apple’s Newton, AT&T’s foster child, the EO Personal Communicator, and the Tandy/Casio Zoomer. PDAs were pummeled by Time, Newsweek and The Wall Street Journal, with negative adjectives piling up faster than sales receipts.
Sales of Newton, which started out briskly, have slowed in recent months. Despite that, the average consumer electronics company would jump for joy over Newton’s numbers. About 100,000 units have sold through dealers. Tens of thousands more Newtons have been shipped direct from Apple to corporate buyers. EO took the big dirt nap after wracking up sales of only 9,000 units in a year. The Zoomer, which runs the GeoWorks operating system that will be shipped in several new handhelds in coming months, has earned about 40,000 users, according to the most optimistic reports.
Developing titles for this market is an unattractive prospect in almost anyone’s book. It’s tiny and fragmented. All told, there’s less than 2000,000 handheld devices out there using four incompatible operating systems. But that is today.
We expect a small but significant explosion in handheld sales that will boost the market size for handheld books to more than two million in the next two years. That’s without the Sharp Wizards and Hewlett-Packard 95 LX/100LXes. The screen resolution and user interfaces of these devices aren’t up to the requirements of a mass market electronic book, Franklin’s text-based platform notwithstanding (see related story).
According to a 1993 study by Deloitte & Touche Information Technology Consulting Services, chief information officers in several industries planned to invest in handheld devices during 1994 (see Figure 1). PDAs, it appears, will emerge as a mainstream product through improved electronic mail features that appeal to corporate customers. (That should make business titles especially hot in the early going.)
The mass in this market
The long-awaited arrival of Microsoft’s At Work Handheld Operating System, known as WinPad, could account for this increase through sales to only a few percent of the Windows 3.1 installed base. The Microsoft software will power handhelds from a half-dozen hardware vendors by the end of 1995, including Motorola and Sharp. General Magic’s Magic Cap operating system, still gestating after all these years, will spring to life on three or four hardware platforms during the same time frame. Those wondering when Magic Cap will finally ship should get an answer at Comdex this fall. Newton technology, too, will persevere, appearing this year in several new devices, including Motorola’s Lingo.
Why might WinPad succeed wildly, selling into the millions of units? It raises lower expectations. It’s a Windows product. [It never shipped, being salvaged to create Windows CE after several years.]
Microsoft has crafted WinPad to serve as an extension of the PC, according to published reports. Millions o fPC owners will recognize that a light, long-lived electronic calendar, notebook, address book and electronic mail reader makes a lot of sense. Newton suffered not just from from John Sculley’s exuberance, but from the fact it was so Apple, a different kind of device full of vision like the Macintosh. WinPad’s got pragmatism written all over it, a reputation that is only enhanced by incessant shipping delays.
Improvements in wireless communications networks—broader bandwidth and lower prices are on the visible horizon now—will also drive the adoption of handhelds as people get used to the idea of convenient, tetherless data communications. The novelty and variety of combinations possible for electronic books that get updates over wireless networks might just be enough to get consumers to respond to PDAs.
The market’s migration toward greater emphasis on connectivity is driving established electronic publishers to look at how their titles can remain competitive in the next decade. For example, Franklin Electronic Publishers Inc. is examining the electronic mail option for its electronic books.
If communications is the crowing feature of the next generation of electronic books, publishers have two options: Build on the search and display capabilities of handhelds to spice up and update reference materials; or invent a new kind of content that defines the need for carry-along data. They should not try to convert warehouses of titles into electronic versions that can be read on a still-murky PDA screen. People will opt for the paper book that’s easier on the eyes than the display resolution of today’s and many of tomorrow’s screens.
Voyager Inc., publishers of the Expanded Books line, is steering clear of Newton books, despite its strong ties to Apple. “The PDAs we’ve seen don’t have the screens to do what we’ve done with the PowerBook,” said Todd Wade, director of marketing for Voyager. “We don’t need a 640 by 480 [pixel resolution] display to make a book readable, but what we’ve seen in PDAs hasn’t been satisfactory.”
Pragmatism over passion
Generally, PDA makers have talked most about the information generated by an individual, not the management of the Niagara of data pouring into everyday life. Offering control of the information torrent is the publisher’s task. An artful mix of content and editorial control can make a very valuable handheld data product. Recalling a fact (such as the population of Pakistan) from anywhere on the road or at home is just part of the problem a handheld title must solve. If electronic books are to compete effectively with paper books, there has to be interpretation to give those facts meaning, as with any good publication. At the least, handheld titles need to help the reader make connections between facts more adroitly.
A winning title will combine a lot of information with an interface that’s interesting, meaningful and pleasing to use. Because handheld operating systems place a premium on compact software, the coding of such an interface is relatively inexpensive from a memory standpoint. However, the sheer bulk of data needed to attract a wide readership can cost an awful lot to put on a PCMCIA storage card.
Apple’s BookMaker program for Newton makes creating an electronic book easy. However, the resulting titles don’t deliver very sophisticated or pretty interfaces or search capabilities. To do a really attractive, useful title one must use the Newton application development tool kit, which demands a skilled programmer’s touch.
Apple’s PIE [Personal Interactive Electronics] group has pursued relationships with publishers wanting to give the handheld titles market a try, even providing assistance in coding electronic books in many cases. Random House’s $119 Fodor’s ’94 Travel Manager is an electronic version of the well-known travel guides that lets readers search for the nearest Chinese restaurant or four-star hotell in eight major cities and view their locations on a map. Fortune magazine’s $99 Guide to American Business automates access to a wealth of information about its 500 top companies. These are not exactly mass market price points. After adding in the cost of content, marketing, Apple’s share (for acting as distributor), and the cost of memory cards on which the book is published, the high list price is unavoidable.
“A good Newton title displays information in novel ways for mobile people,” said Ken Wirt, director of Apple’s Personal Interactive Electronics retail marketing. A hit title will sell to 10 percent of the installed base of Newtons (about 13,000 units). A super-hit garners about 30 percent of the installed base.
The most interesting titles will combine fixed information with the reader’s own data and observations. But making these titles is very costly.
The publishers looking at Newton as an information platform are a very different bunch than game designers who are schooled in the features that attract Nintendo owners in basketball shoes. Apple must evangelize more than the platform before gaining a new title. It has to educate publishers about the novel uses of a handheld system. “We don’t try to recreate or compete with the editorial expertise of the publishers,” Wirt said. “We work with publishers to find the best way to display their intellectual property on the [Newton].”
The most interesting titles will combine fixed information with the reader’s own data and observations. But making these titles, which must be installed on PCMCIA cards with both writable RAM and unalterable ROM, is very costly. Such cards cost about $80 per megabyte of RAM. The RAM allows readers to add their information, while the ROM provides low-cost storage for the publisher’s data.
Some developers have gotten around the cost of memory cards by shipping Newton titles on floppy disk. The strategy merely transfers the cost of storage cards to consumers. One company followingg this path is Fingertip Technologies Inc. of Newport Beach, Calif. Its Fingertip for Stats is a baseball scoring, player and team history reference that can be updated by dialing an online service. Buyers must install the $129 title on a PCMCIA card in the Newton.
Still, $129 is a long way from the $29 to $39 pries for paper baseball encyclopedias. Franklin, however, claims its $199 The Big League Baseball Encyclopedia outsells all the paper references about America’s favorite pastime.
The Organic Book
General Magic’s operating system will include a mini-application for displaying electronic books. Owned by a collection of the largest telecommunications and personal electronics companies in the world, General Magic has stressed the importance of personal messaging in its software. Yet, the book technology does nothing more than display text and graphics.
We think Magic, or a third-party developer, can create a startling electronic book application that combines editorial content and messaging, an “Organic Book.” The company’s Telescript agent technology allows publishers to create agents that can assist readers in making connections between one another, and to additional sources of information. Such a book would deliver information while allowing people to communicate about the ideas contained therein. The book itself would grow, adding the ideas and arguments of readers to the original text, hence “Organic Book.”
Ideas are at the center of communities of interest. A handheld or desktop computer that opens the mind through the pages of a book to the cogitation of many other minds is doing something decidedly new. As the Internet and commercial online services become more crowded with the noise of unregulated discussion, we believe readers who are concerned about ideas will search out a trusted source of editorial control.
Participation in discussion through a handheld like Motorola’s Envoy Magic Cap wireless communicator would be interesting and might serve to fill the boring moments of a commute or meeting wit a little intellectual stimulation.
It’s unclear whether Magic as well as the devices and networks based on its ambitious software will succeed [it didn’t]. However, if the company’s agent technologies games acceptance, it could provide publishers and authors the ability to sell titles that are conceptually and functionally similar to a paper title, but that extend the relationship with the reader far past the bookstore door.
A narrow functional role won’t limit Microsoft’s handheld operating system to a narrow marketplace of ideas. Built-in communications and a library of titles that can be converted from the Windows PC world will provide WinPad users with access to a broad range of information from the day it ships.
WinPad applications can be programmed in the same Visual Basic language used by Windows 3.1 developers. A synchronization feature will allow a desktop machine to share data with a handheld automatically. This is intended to provide up-to-date versions of calendars and address books on both the desktop and in the pocket, but it can also deliver electronic books and updates to WinPad devices. For example, a Windows PC could collect updates to the Central Intelligence Agency’s World Fact Book and send the latest data to a WinPad handheld through the synchronization function.
The Wall Street Journal has announced a version of the paper for WinPad, called Personal Journal. The title will update itself over an online service connection. Personal Journal will make it possible to keep in touch with breaking news. It’s not a replacement for the daily paper, but a supplement.
Dow Jones, WSJ‘s publisher, believes that a significant portion of Personal Journal subscribers will be younger, not as far along in their careers, a group that loves news but doesn’t have enough time to keep up with everything in paper. For example, the Personal Journal will track subjects specified by the reader. If a story breaks about a merger between two companies in the reader’s news preferences, that story will appear as a prominent headline on the WinPad screen.
Dow Jones is approaching Personal Journal as an experiment. The information age has long been described as a time of individualized, customized publications. The “bible of Wall Street” has the largest circulation of national dailies, which presents its publisher with the chance to attract a broad audience to its first handheld title. After testing reader response, the company plans to create specialized titles.
Innovate now, wait now
So, while the marketplace waits for dramatic improvements in display quality (so that handheld electronic book readers don’t end up blind from eye strain) and a substantial drop in the cost of low-power, read-write storage in PCMCIA cards, readers wait for titles that prove that they can’t live without digital information.
Meanwhile, early adopters of handheld technology will remain concentrated in the business market that can afford today’s high prices. Professionals are a natural target for information products. But because they are already awash in printed, recorded, broadcast and digital media, these readers are selective about new publications.
Business information services experienced 5.9 percent growth between 1992 and 1993, reaching $27.1 billion last year, according to Veronis, Suhler & Associates, an investment banking firm in New York. The market for business data has grown unabated through the last decade. Electronic information services, including online services, CD-ROM and electronic databases, account for 48 percent of the business information market (see Figure 2).
Electronic books offer publishers the tools to arrange their intellectual property in formats that enhance its usefulness to professionals. For example, a motivational title for WinPad could include forms that test how employees respond to different management strategies, or let readers check their progress in corporate sales contests. This can be a lucrative market, because individual corporations have proved quite willing to spend money for customized information technology, even if it’s just a form with their own logo and access to a particular corporate network in Kansas. With relatively small alterations to a title, publishers could sell several thousand copies to a single customer at a premium price.
When viewed from this vantage point, even a market of only several hundred thousand handhelds can begin to appear attractive.