What better place to be the day after Amazon unveiled its $199 Kindle Fire tablet (plus three Kindle models starting at $79) than a conference on e-readers? Long scheduled for September 29 and 30 in San Francisco, Intertech’s two-day eReaders 2011 conference offered an even better platform than its organizers could have dreamed to examine a fast-changing digital reading marketplace.
Besides extending a look at all facets of the digital marketplace, the conference provided a first response to an impressive new multimedia device—not a tablet in the iPad sense, but a multimedia device designed to take advantage of Amazon’s ability to deliver not just books but movies, TV shows, apps, games, and music. For its price and functionality, Amazon’s Kindle Fire may have as much impact on digital content consumption and reading—not to mention Amazon revenues—as the original Kindle.
Throughout the conference the Kindle Fire was praised for not being the iPad—the Kindle Fire is smaller, with a 7-in.screen, no cameras, no GPS, modest storage (8 GB) and a drop-dead price. If Amazon’s introduction of the Kindle in 2007 effectively kicked off the e-book market, many believe the Kindle Fire will drive the category to the next level of digital usse as mobile Web-enabled devices take reading to a new level. How? 900,000 e-books, 17 million songs, thousands of Android apps and games (Kindle Fire runs on an Amazon-developed version of Android), 100,000 movies and TV shows, and an innovative new Web browser, Silk.
The conference featured 20 or so digital publishing experts, including Doug Klein, Barnes & Noble’s v-p of program and product management, responsible for developing the original Nook and subsequently the NookColor. Klein’s keynote was a survey of the history of the e-reading market (he also developed the Rocket eBook) and offered thoughtful projections about where the market may be headed: the mobile Web—“20% of the traffic on BN.com is by mobile device and by Christmas 2012, I predict it will be 80%,” he said. Klein emphasized that the Nook is a tech phenomenon, going from scratch to a 250-person Nook development unit; zero to one million users in six months, and zero to 30% market share in 18 months.
He praised Amazon for “paying attention to us” by designing a “purpose-built device and not a tablet.” His point is that neither the Nook nor the Kindle Fire are intended to compete head-on with Apple’s iPad, a standard for a full-featured tablet computing device. Both devices are designed to deliver a defined suite of content. By contrast, he noted, HP’s WebOS tablet, a solidly designed full tablet that offered very little content, was “an epic fail” that was canceled 49 days after going to market.
Klein said the digital reading marketplace is driven by “devices, content, infrastructure, rights, and the reading experience.” The Nook, and potentially the Kindle Fire, offer the infrastructure—“the plumbing to support all this stuff.” Rights, he said, are always difficult; “the content, the mental part, is where the value is, but it’s confused with the physical book.” Now, he said, the challenge is to continue to develop the reading experience: “With digital reading 1.0 we created a digital copy of the analog reading world.” He said digital reading 2.0 will be “a seamless blending of content, discovery, consumption, and the social book that blurs the line between all of those aspects,” pointing to Flipboard as an example. Flipboard is an iPad app that turns a user’s Facebook and Twitter feeds as well as content feeds from magazines or blogs into an oddly satisfying virtual booklike experience on the iPad.
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Steve Mather, principal analyst at IHS iSuppli, which provides technology research and analysis, said Amazon is “booming” and projected $2.6 billion in revenue from Kindle hardware and $1.8 billion from e-book content this year. By 2014, Mather projects $3.8 billion from e-readers and $4.6 billion from e-books. IDC research director Tom Mainelli said the notion that consumers will settle on one device has been discarded. In the U.S., consumers average 6.6 devices/person, while the rest of the world averages 4.8 devices per person. “Multiple devices per person is the new reality; dedicated e-readers remain relevant thanks to lower prices and improved reader experiences; and the best content delivery experience wins. Hardware won’t sell if content selection is limited,” Mainelli said.
Among the publishers at the conference, Paul Michelman, director of new products at Harvard Business Review Group, outlined the need for HBRG—indeed publishers in general—to create new business models that incorporate user feedback to develop new kinds of “digital-first products.” “What we call a book,” he said, “isn’t necessarily the future of what we’re doing.”
Also presenting was Kno, a technology company and software developer that converts print textbooks into interactive digital texts for the iPad. Kno CTO Habur Habib, who has multiple masters degrees and a PhD in semiconductor physics form Princeton—said he cofounded Kno after figuring he paid more $10,000 on textbooks over the course of a decade long college education. Kno titles maintain the look of the physical textbook edition and mimics the analog print work because, Habib said, “that’s what students like and want. Students don’t know what a digital textbook is.” Habib said Kno’s success so far—it’s attracted nearly $90 million in investment funding and offers more than 100,000 textbooks titles from all the major publishers—comes from “catering to what students want; if we do the right thing for students we will capture this market."
But while Kno mimics print texts, it adds all kinds of ingenious functionality to them—easy touchscreen highlighting, animated 3D molecular models in chemistry texts; textbook illustrations that become interactive quizzes and students can upload photos directly to the textbook. And the company is always looking to add new functionality, “rapid incremental changes on a bi-weekly cycle,” said Kno v-p of markting Ousama Haffar. All Kno titles are about 35% off the list price.
There was much direct and incidental discussion of the Kindle Fire at the conference. While Amazon was generally praised for the Fire, there was some concern that Amazon would “lock the platform down,” like the iPad. The fear among some attendees was that Amazon may set up an in-app purchasing policy much like Apple’s, forcing content providers using its platform to pay them a cut of every sale while preventing them from selling directly through their own apps.
After his keynote, Klein was asked if B&N planned to compete with the Kindle Fire by lowering the price of the NookColor. “Price is important,” he said, but he emphasized that the Kindle Fire is focusing on video and media consumption. “We have a different focus. The market is big, and there’s plenty of room for both of us.”
That was the prevailing sentiment among publishers back in New York as well. While some in the book world speculated that the lower-priced Kindles and Kindle Fire would result in a significant leap in Amazon’s market share of e-book sales, the heads of several houses viewed the Amazon announcement as expanding the entire market. Others expect that B&N will make some response with the Nook family and that Google may give its e-book efforts a kick-start. None seemed concerned that what will surely be a banner holiday season for digital reading devices and e-books will eat into sales of print books at stores, but some booksellers at the Mountains & Plains Independent Booksellers Association meeting are worried that the low-cost Kindles could wreak havoc on holiday sales and the weeks immediately afterwards when people are shopping for print and e-books.