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Industry Insight

Developments in the eReader Market

Developments in the eReader market are happening faster than anyone can keep track of,

By Bob Sacks
Published: October 26, 2009

Developments in the eReader market are happening faster than anyone can keep track of, and that includes me. It seems that new products are being released on a daily basis. And each of these products has new, interesting and advantageous technologies.

The Barnes and Noble new eReader has what I think may be a Kindle killer function. It has the ability to lend books to your friends. Yep, just like a real book - when you are finished reading the book you can lend it to a friend. When they have it either in the dead tree version or the e-version your friends can read it and you can't. Simple enough. And after 14 days it digitally reverts back to you, the original owner. That is clearly a step in the right direction for eReader.
enTourage

Also today a hinged two page netbook-like product was released called the enTourage eDGe™. It claims to be the world's first dualbook, combining the functions of an eReader, netbook, notepad, and audio/video recorder and player in one. What it has is an ePaper left hand page and a full color LCD page on the right.

The thing is, technology is morphing faster then we can imagine. And the cool products that I just mentioned above will be antiques in less than a year. That is what we are all up against - speed of light transformation. How do you make a long term strategy and business plan on a moving target?

 

Discussion

By Michael Jahn on Oct 27, 2009

You may not have noticed, but unlike a real book that is returned to you after lending it to someone, you can't lend that eBook again - you can only loan a single book once.

Hardly a "Kindle Killer" feature.

Nevermind that most Authors or publishers would think this is a horrible idea in the first place. This is not like music, where it may spur a sale - anyone can read the entire book in 14 days.

Sounds like something from "the land of bad ideas" to me.

 

By Per Helge Seglsten on Oct 27, 2009

How do you make a long term strategy and business plan on a moving target?

Well, it will help if you can figure out in what direction the target is moving. And when it comes to e-readers I think the direction is quite forseeable: Larger displays, colour displays, bendable displays. The only questionmark is which technology will be the first to break the task of making coloured epaper.

I don't think developing the perfect e-book or business document reader is what is driving the e-reader technology forward, but rather the strive for a device that can save the hard struggling newspaper/magazine publishers. And the coming e-readers will probably be designed with this in mind. The first finishing tape will be a black and white epaper display that is large enough to contain a tabloid newspaper page. The next is a coloured epaper display that will be suitable for presenting glossy magazines. When these finishing tapes are taken, the obvious advantages of not having to use 50-60 percent of expenses on printing and transport will make the publishers push hard to speed up the transition from tree paper to e-paper. When the displays are made bendable or even rollable, the pushing will be a lot easier. And when the displays get fast enough for video, tree paper will no longer have a place in the publishing industry, I think.
The timeline for this development is probably shorter than we can imagine today. There is a lot of money to be saved, and saved money has always seemed to be an effective fuel for new technology. I have a bet going on, that I will win if my company (Hjemmet Mortensen in Norway) has abandoned paper for e-paper in 8,5 years. I'm not sure I'm going to win the bet, but I'm not sure I'm going to loose it either.

 

By Miichael J on Oct 27, 2009

"How do you make a long term strategy and business plan on a moving target?"

It depends where in the market your are focusing. At the top of the market the margins are razor thin because of the ferocious competition.

But if one focuses at the bottom of the market, it's much easier to see opportunities for product redesign and sustainable margins.

In the world of financing the clearest example is Mohammed Yunus and the micro lending. His organization pioneered taking the friction out of very small loans and spawned a huge previously non exitant market. After 10 years it's profitable and the big banks want a piece.

The opportunity for print is that most of the margins are made from non book items at retail. Even Amazon used books as number one, but they have moved on to become the internet retailer for everything.

The size of the potential market becomes more clear when one faces the fact that most people most of the time don't read and in fact the "reading public" has always been a tiny niche.

I think I saw stats that said the adult illiteracy rate in the States is around 23%. The US Army writes it's manuals to a 4th grade reading level.

As literacy continues to grow in the States and around the world, the mass market for appropriately priced print will continue to grow.

$25 for a hard cover book is not appropriate. The trick is to remove some of the friction from the publishing eco-system to be able to sell books at a profit at a price that people will buy.

The rule of media has always been the more, the more. In a growing literacy market there is plenty of room for print and ereaders and newspapers and magazines.

The problem is not the medium. The problem is earning margins.

 

By Clint Bolte on Oct 27, 2009

Technology enhancement will certainly have a bearing on the acceptance of eReaders. But single event occurances seem to be highlighting the dysfunctionality of the aging business models of book and periodical publishers.

Two examples: The announcement last week of WalMart and Amazon taking the Top 20 books and creating a price war at $9 for e-edition downloads in anticipation of Christmas gifts.

And the disruption last February in the distribution of news stand periodicals when the middle men insisted upon higher prices to reflect their unrelenting and unrecovered cost increases of the past decade. News stand sales represent the lion's share of profits for many publishers who give away subscriptions to get run length up to justify ad rates. Ads pay for first copy costs while subscriptions pay the running and distribution (Mail) costs.

The practicality of color eReaders would virtually in and of itself eliminate News Stand (and travel terminal) distribution not to mention the ease of use of "loaner" eReaders aboard airplanes and in physician waiting rooms.

The younger generation is not going to drive these last two evolutions. Its going to be the older folks and business travelers.

Michael J is right about earning margins but I think that will come from altogether different business distribution costs models.

 

By Gail NIckel-Kailing on Oct 27, 2009

In this month's Book Business magazine the cover story, "Are We on the Verge of an E-book Explosion?" looks at the e-book from a publisher's perspective.

Accompanying the article is a list of 30 e-readers on the market today at: http://common.bookbusinessmag.com/items/biz/bb/pdf/2009/10/bb-1009-coverstory-ebooks.pdf

I had to laugh, though, when I read the Guest Column by Jeff Gomez! Right there was a photo of NuvoMedia Inc.'s Rocket eBook that came out in 1998. It was so cool, even had a soft leather cover. I saw it at a Seybold conference and lusted after it!

Still don't have a Kindle, though I did read Dan Brown's latest - the Lost Symbol - on the Kindle app for iPhone. Same feel as reading the Da Vinci Code on my Treo when that book came out...

 

By Miichael J on Oct 28, 2009

Clint,

I wonder if you have any thoughts of new business models for print at the "bottom of the pyramid."

Based on the re engineered financial models that have been very successful, both in margins and at scale, I have to believe there are analagous possibilities for Print.

My focus is the education industry. Huge disruptive changes that probably mean the end of textbook formats. I think I see a path that versioned newspapers with QR codes could grow a traditional textbooks wither.

A good example of what I think I see has emerged in Berlin running on Oce equipment. http://ilnk.me/47e

 

By Clint Bolte on Oct 29, 2009

Miichael J, I can't comment on print biz models at the lo-vol end of the pyramid just yet.

However, let me pose another strain of thought around the hier ed textbook evolution. Textbooks on college campuses have been giving way for several years now to the custom built "course packs" being preferred by Professors. The course packs are a series of articles or book chapters or excerpts from any and all of these focusing on the issues to be taught and discussed in the particular class over the ensuing semester.

Currently the university in-plant scurries around getting copy right clearance for the various elements of a course pack and copies a quantity requested by the University book store, who sells the course packs to the students. In many instances the course pack cost to the student is not that much different then a case bound textbook.

While I don't have a financial model to share with you explaining what is driving this high cost, certainly in the eyes of the student, it is a known fact that a handful of students will buy one course pack for a common class and then copy enough sets for each member of the group. This results in the book store always being flustered at ordering 47 copies from the in-plant for a pre-registered class count of 45 (5-10% of class size grows due to late registrations) and then selling only 30-35 course packs total. (The in-plant is often expected to eat the copying costs of "overs.")

CDs, DVDs, PDFs, and hacksters virtual copies into e-readers will all add to the "spoilage" or unreimbursed portion of the cost of electronic textbooks or e-course packs. Security software will hopefully stop gap these leakages but the opportunity still seems to evolve.

 

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