Print This Post Print This Post
  • Author:
  • Published: Jan 5th, 2011
  • Category: Books
  • Comments: 2

Amazon’s Newest BFF

Last week Amazon announced that the third generation Kindle became the best selling single product in their history! (http://bit.ly/dOL8AQ) Triangulating this news with an insider rumor insider claiming that Amazon sold over 8 million Kindle’s last year puts the Kindle in the same sales range as the iPad.  One has to wonder what the reaction in Cupertino to this shocking bit of news.

This is important for a few reasons; first it demonstrates that there isn’t just one company out there able to launch and sell an entertainment device. In fact, it demonstrates that there is an incredible appetite in the reading world for a single use device. Giving customers the right business model and device/platform coupled with an unbending commitment does result in hockey stick growth in sales. The Kindle will never be sexy like the iPad, never provide 1/100th of the utility of the iPad, but it does one thing really, really, really well – immersive reading.

And as the Kindle has succeeded so have other major e-ink readers. Barnes & Noble’s Nook has had an amazing launch and sales of two devices this year, selling nearly 1 million units during Christmas.  Kobo is also gaining ground, especially in markets outside the US. Sony claims to be hanging on – even boasting that they will grab 40% of the market in fiscal 2012!  The rumored 8 million Kindles are clearly just part of the story – there were probably 12 to 14 million e-reading devices sold in 2010.  And all of this is before the supposed coming of the Android Tablets. Adding it all up and the stunning sales of the iPad don’t look so stunning anymore.

By allowing competing platforms on Apple devices, Apple has introduced the Kindle/Kobo/Nook platforms to millions and millions of new users.

The e-reader market is pretty impressive in its own right, but the impact of devices sold is only the tip of the iceberg. The e-reader market is about platforms and devices, not just devices. When one buys a Kindle, a commitment to a platform is born.  A Kindle owner isn’t likely to monkey around with multiple platforms for reading – nor is a Nook or Kobo user. You buy a Nook and you read on the Nook and your cloud content is stored on the Nook Cloud.  It would be awkward (or impossible) to use other platforms once you have invested in one.

As just about everybody who owns an e-reading device also has other electronic devices in their lives beyond their Kindle or Nook (pc’s, smartphone’s, entertainment devices, etc.), these devices are where platform matters most. If you are a Kobo, Nook, or Kindle user who owns an iPhone you aren’t likely to start reading ebooks on the iBookstore platform – especially if you have already purchased lots of books on your e-reader platform.  You are most likely to install the Kobo (or Nook, or Kindle) platform on your iPhone and read your books (and even purchase more for access on any of your devices).

This is key – the e-reading device is the home base for e-reading consumers. It will tie a reader to a platform because it enables access to the cloud-based content purchased on that device/platform. For the first time (to my knowledge) content purchases are completely transferable between completely different operating systems because of the cloud. The cloud lets us store our purchases and access our content on an endless array of free platform readers that work on nearly any device.

Ironically, Apple’s decision to allow other platforms into the App Store makes the iPad/iPhone better devices but weakens the iBookstore platform.  This has allowed tens of millions of OSX and iOS4 users to buy books on platforms that aren’t bound to OSX and iOS4. That in turn has created a devotion to, or reliance on, these platforms. And in the end that platform preference has resulted in the sale of non-OSX and iOS4 products.

The device, (iPad, iPhone, iMac, Macbook) is clearly what Apple cares about. Making those devices the center of your universe by allowing any platform app to run smoothly on those devices, even if it means competition for their own platform, demonstrates the commitment to the hardware. By limiting the iBookstore platform to Apple-only devices, iBookstore purchases aren’t as flexible as those made on other platforms.  That is, unless you plan to only use Apple products for the life of your ebook purchases.

For example, if you get an iPad and start using the iBookstore to read and then buy a new Android phone, you will not be able to access your ebooks from that phone. Nor will you be able to access it from your Windows PC if you are one of the zillions of Windows users.

Ironically, Apple had this same issue with iTunes before they launched a Windows version – but that was when Apple had a < 2% market-share. Now that they have the biggest market-share in three areas (PC’s, Smartphone’s, and Tablets), I cannot see them willing to open up their platform again.

As an all-Mac user in an all-Mac family, this isn’t personally important to me right now.  That said, I have also been a Kindle user from the very first day it launched in 2007. So when the Kindle made its way onto the iPhone and then the Mac operating system, and then Blackberry and the iPad, I couldn’t have been happier. I can access my Kindle books anywhere on any device I am using. And when I switch to an Android phone (now that Verizon has an Android world phone I am counting the days on my AT&T contract) I won’t have to think twice about bringing along my ebooks – they will be there in my Kindle cloud.

This reminds me of how Amazon benefited when Google launched Google Book Search in 2004. Back then, Amazon was one of Google’s biggest Ad Sense customers – buying literally millions of ads for every book they sold. Amazon purchased ads in bulk by ISBN, by Title, by Author name, by topic, etc. Amazon paid good money to Google to get anyone searching for anything that might result in a book.  Then Google launched GBS and suddenly the content inside the book was searchable. Over time, an enormous number of searches resulted in book pages being viewed, and on every one of those pages was a “buy button” with Amazon’s logo on it. Google became the best marketing partner Amazon ever had and Amazon had unprecedented growth in book sales.  Any publisher can tell you that the stats on GBS are incredible and the vast majority of “buy” clicks end up at Amazon.com.  Best of all for Amazon, the GBS program is free. Clearly Google saw this loss of income as a necessary cost to creating a better GBS platform.

There is a significant parallel between the impact of GBS on Amazon book sales and the impact of Apple allowing competing platforms on their devices on Kindle’s success. Just as GBS pushed millions of “buy-clicks” to Amazon, Apple has introduced the Kindle/Kobo/Nook platforms to millions of iPhone/iPad/Mac users.  And when those users want a better reading experience than a smartphone or laptop can offer, they are purchasing the far less expensive, easier on the eyes, e-reading devices called Nook, Kindle, Sony, and Kobo, not the iPad. Spending another $500-$800 seems silly if all they need is a lightweight, $150 e-reader.

Amazon, Barnes & Noble, and Kobo (Sony Reader doesn’t have an App) are all getting the benefit of free direct access to  hundreds of millions of Apple device users around the world, and they are turning that access into device sales.

2011 will be a very interesting year.  Will the dominance of the Kindle continue to grow? Will the Nook and Kobo continue to grow apace? Will Sony deliver on their 40% market share? Will Google Ebooks create a new dynamic in the market? Will Apple open the iBookstore platform to competing hardware manufacturers?  I look forward to tracking it all and reporting to you, my reader.

Enhanced by Zemanta

Tags: , , , , , , , , , , , , , , , , ,

© 2009 Black Plastic Glasses. All Rights Reserved.

This blog is powered by Wordpress and a guitar player's Blues Licks website.