Author & Publisher Strategies Book and Reading News

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.