Device Update: Year-end edition

Predictions for 2011: the dedicated ereader market will crest, and focus will turn to the ebook experience.

I agree with other analysts in the industry who believe this holiday season will mark the tipping point for ereaders and ebooks. Here’s why:

  • The release of Apple’s iPad kicked off a wave of new, ereader-friendly devices.
  • Access to these devices is getting easier. Most leading office supply, electronics, and department stores sell one or more dedicated ereader devices.
  • The flexible application strategies from Amazon, Google, and Kobo mean that even if you don’t get a shiny new mobile gadget as a gift, you can download an ereader application for your mobile phone, laptop, or desktop computer.

I sense a strange irony emerging from such an over-active ereader marketplace. With the strong application strategies of Amazon, Google, and Kobo, it’s unlikely that any device manufacturer will end up owning a majority of the marketplace. Up until the release of Google’s eBookstore platform, I thought it was premature to anticipate the future of dedicated ereading devices. But It’s clear to me now that dedicated ereading platforms will only be a niche market. Any of the multiple platform approaches that manage a user’s library in the cloud will ultimately be the preferable option. Surely there will continue to be innovation in the dedicated ereader device market, but strong competition will keep profit margins low. The real competition in the ereading marketplace will happen with software, not hardware.

Looking forward into 2011, I see two areas that will be important within the ereader and ebook market: first, we’ll see an implosion of the dedicated ereader device market. Subsequently, the focus will shift to the maturation of the ebook market.

Prediction 1: The dedicated ereader market will crest

When Apple launched the iTunes store in 2003 and established a marketplace for digital music, most of the commercial electronics makers were taken by surprise. Apple’s capture of this new market was so swift, no one was able to mount a serious challenge. Even now, I don’t believe any company will break Apple’s stranglehold until the experience of consuming digital music changes.

When Apple announced plans for the iPad and the iBooks platform earlier this year, the commercial electronics marketplace was determined to prevent Apple from repeating their digital music success with digital books. While Apple has built a commanding lead in the tablet marketplace, competitors flooded the market with a plethora of different devices.

Despite bold predictions of an expanding market for dedicated ereading devices (here and here), I believe that demand for these devices will peak in 2011 and rapidly surrender to the growing popularity of multiple-purpose tablets, like the iPad and its competitors.

The downsides inherent with dedicated ereaders will work to decrease consumers’ desire for these devices. The disadvantages include:

  • Complications resulting from device lock-in, such as the inability to migrate purchased books to a different platform.
  • As readers settle into using their new devices, the experience of identifying, obtaining, and recommending titles will become increasingly more important. Due to their limited functionality, these single-purpose devices may prevent readers from sharing their reading experience with friends and family.
  • With very few devices offering color displays or strong graphics capabilities, consumers may determine that text-only books aren’t worth the price.

Prediction 2: An increased focus on the ebook experience

As the holiday decorations go back into storage early next year, the pressure will really be on the publishing industry to deliver the goods for the freshly-minted marketplace of ereaders. The most interesting aspect of the ereader tipping point will be the evolution of the ebook experience. By “experience” I mean the full environment of ebooks: how readers discover books, purchase them, read, and share titles. While a portion of this environment will be built into specific ereader devices, the remaining aspects of this environment will have to be built from software.

It seems natural to expect that new ebook consumers will want to replicate their existing reading-related behaviors. While I’ve seen how sites like GoodReads and Shelfari have become an active part of this process, it is less clear how sites like Facebook and LinkedIn help readers share their love for books. It’ll be interesting to see how this emerging ereading environment integrates into existing social networks.

Tim Berners-Lee recently noted the importance of ebooks remaining part of the Internet. His concern was that by packaging books into binary applications for consumption on mobile devices, they would become invisible to the Internet. This is similar to what happened with content that was packaged in Adobe Flash files, which were hidden from search engines up until very recently. I agree with Berners-Lee and submit that, while of great interest to many publishers, books as applications will be a passing fad because they cut readers off from the rest of this ereading environment.

Looking forward, the publishing industry has a few areas that might become obstacles to long-term growth in the ebook market. First, with millions of books pre-dating the ereading tipping point, how will publishers make those titles available to consumers in digital formats? In this regard, Google’s efforts to scan books may become their default answer.

The second tricky situation involves localizing content for a global economy. As broadband and wireless access expands into more countries, the demand for digital books in languages other than English will grow. If that material isn’t available, digital sales will be hampered.

2011: Trial by fire

Several years ago, I could already see drastic change approaching the publishing industry. The uncertainty of how the industry would react to those changes, coupled with the opportunity to actively participate in that change, is what sparked my interest in the future of publishing.

For most publishers, 2011 will be a critical period. The digital book changes publishers have already made will meet fully with the harsh demands of a significant consumer base. Authors, agents, publishers, and bookstores will need to agile if they want to keep up with the demands of digital readers.


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