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Wednesday, June 9, 2010

Apple Gobbles eBook Share; Amazon Needs to Go Cheap to Compete

Apple is devouring the eBook market and the strictly eReading devices need to cheapen-up to remain in the game...At least that's my opinion, as well as others like Geoffrey A. Fowler of the Wall Street Journal:

Fowler writes:

At Steve Jobs’ Apple Worldwide Developers Conference keynote on Monday, he dropped a stat that’s become the buzz of the publishing business. In the first 65 days that the iPad has been on the market with Apple’s new iBookstore, Apple customers have downloaded some 5 million e-books — and the company has captured a 22% share of the e-book market, he said. Presumably that count will go up when Apple releases its iBooks app for the iPhone later this month, too.

There’s plenty of room for debate on what those sales statistics mean, exactly. Apple, like other e-book retailers, “sells” a lot of free e-books that would pad the tally. Also, there are many different ways to count the size of the publishing industry, depending on the sorts of books one includes. Gartner analyst Allen Weiner said it must have been based on “some sort of voodoo algorithm”, given the secrecy that surrounds sales figures in the publishing industry. Jobs said only that he got the market share figure from “five of the six biggest publishers in the US.”

Nonetheless, the stats have renewed speculation about what this means for Amazon’s Kindle, which has led the market both in e-reader and e-book sales. Last month, Amazon’s CEO Jeff Bezos told investors that the Kindle wouldn’t have color for some time, and that the company was focused on making the device serve hard-core readers.

Amazon introduced its current-generation Kindle device in February of last year, and dropped the price to $259 last October.

Writer Seth Godin had a modest proposal for Amazon: Amazon should cut the price of its Kindle dramatically.

Godin dubs a $49 device the “paperback Kindle.” It wouldn’t be hard to hit that price “if you use available wifi and simplify the device,” he wrote. Or even, he suggests, make a “Kindle of the month club,” whereby people who sign up to get a Kindle book each month would get the device for free. The impact could be that the Kindle could quickly blow away some of its competition from companies that depend on gadget sales, not e-book sales, to make a profit.

“You can’t out-Apple Apple,” Godin said in an interview. “If all Amazon does is try to come up with something sort of like an iPad but less colorful, they are going to fail.”

Moreover, he said the current Kindle isn’t cheap enough, and doesn’t contain the social reading functions — call it a virtual book club — that would really differentiate it as a reading device from the iPad.

Already, other single-purpose e-reading devices are playing in the sub-$200 market. Sony has offered discounts that drop the price of its entry-level reader to $169. And Kobo’s basic e-reader sells for $150.
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