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Ereading Update: Ebooks, tablets, and app confusion

Kindle editions eclipse paperbacks ahead of schedule and tablet competition increases.

During the recent announcement of Amazon’s 4th quarter results, Jeff Bezos highlighted that Kindle books have now overtaken paperback books as the most popular format on Amazon.com. While Bezos had previously predicted that ebooks would become the most popular format by the 2nd quarter of 2011, he admitted, “this milestone has come even sooner than we expected.”

So not only are ebooks the most popular format, but the growth of ebook adoption is even faster than Amazon predicted, a strong sign that ebooks are now mainstream. Or, to put more simply, ebooks are the preferred format for readers. So now what? How does this shift impact authors, agents, publishers, and bookstores?

With such a clear tipping point, it is important to recall that this is just now happening, so it is going to take some time before everyone accepts this shift and realizes what it means for their business. While many in the industry could see this shift approaching and started the process of adaptation, I think the shift has come much earlier than most anticipated.

Tablet market remains hectic and very competitive

I can’t recall a more competitive market than what we are currently witnessing for tablet computers. While Apple continues to sell iPads like hotcakes, competition is beginning to eat into the market. According to Strategy Analytics, the iPad lost ground in Q4 of 2010. The iPad took 75% of the shipments, which is quite a decrease from the earlier 96% share.

Samsung is reporting that they’ve shipped some 2 million Galaxy Tabs in the two months they came onto the market in November of last year. Unfortunately they are experiencing an above average level of returns. The researchers at Strategy Analytics have found that the customer return rate for the Galaxy Tab is 15%, compared iPad’s return rate of 2%.

Again, the battle of the tablets will be won by the company that delivers the best software experience. Unfortunately for Apple, this is where their closed garden approach to software may ultimately diminish their share of the tablet market. I’d be very surprised if an open solution didn’t gain the most favor for owners.

Software may offer a competitive advantage in the long term, but vendors are currently focused on hardware. Below I take a look at two new devices.

The LG G-Slate

slate.jpgThe G-Slate will launch using Android 3 Honeycomb, and it will be the first tablet to launch on T-Mobile’s 4G network. The G-Slate will have an 8.9-inch screen, a dual-core 1 GHz Nvidia Tegra 2 CPU, 32 GB of internal memory, two cameras (5 megapixels on the back and 2 megapixels on the front), LED flash and HD (1080p) video as well as stereoscopic 3D recording capability.

The T-Mobile G-Slate will be among the first 4G tablets to fully benefit from the tablet-optimized Android 3.0 platform, which was designed from the ground up for devices with larger screen sizes.

Brainchild launches the Kineo Android tablet for schools

kineoHands.jpgAimed at the education market, Brainchild’s Android-based Kineo features an 800MHz dual-core processor, 256MB of RAM and 2GB of storage, as well as WiFi connectivity, an SD card slot and an HDMI output for streaming data through HD television screens.

In a way, the Kineo represents the first signs of the second level of integration of tablets into society. Considered more utility than a resource, these specialized tablets focus on solving a singular problem.

Other news

Things started to get messy when Apple blocked the Sony ereader application because it would have gone around Apple’s proprietary purchase system. Sony responded by conceding to Apple’s demands and adopting Apple’s in-app system. Apple responded by clarifying that apps must only provide equal access (an option) to the Apple in-app purchasing system.

Interpretations of these requirements differs. So far, there are many applications currently in use on iPads — like the Kindle app — that take iPad users to a website for them to complete purchases. Apple has not indicated if they will crack down on these applications. Amazon has yet to comment on the prospect of having to include an Apple purchasing option. Currently it is estimated that 40% of iPad ebooks are bought directly from Amazon. Another 12% are bought from Barnes and Noble Nook bookstore. What’s at stake is the automatic 30% cut that Apple takes on all iBookstore purchases.

While I’ve mentioned this before it bears repeating: Apple must concede that they will not own ebook distribution like they do for digital music downloads. What’s confusing is that Apple is a hardware company. Yes, they stumbled onto the iTunes monopoly, but iTunes was only a utility to get people to buy more iPods. So with an already commanding lead in tablet sales, why jeopardize that lead by forcing users to stay within their walled garden? We live in a highly networked world and consumers no longer accept inferior service delivery. They merely route around the failure and get what they need from the next suitable replacement. Time will only tell whether customers care more about Apple’s “it just works” strategy or freedom of choice.


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Comments: 6

  1. A very competitive market with one product accounting for 75% of shipments? And you don’t see why Apple will try with all means possible to replicate the ipod-itunes quasi-monopoly? Were you smoking something while writing this or do you have some hidden agenda?

  2. Though I am condemning AP’s use of insults, I believe too that the tablet market is not really competitive. Not only because of the market share of the iPad, but also because there are not really many tablets. If we make list, we will find it is quite short indeed. Most of the tablet are in fact demoed in places like CES. Of course, in the coming weeks or months this can change, not yet though.

  3. Yet another article copying misinformation from other blogs. Samsung shipped but did not sell 2 million tablets. They are being glib about what has actually sold to end users and about their high return rates, again fudging by claiming that only 2% of shipped units are being returned. The stats the writer mentions come from POS systems, they are not estimates, they are a sampling. No matter how you cook the numbers, there is no way that Apple’s share of the tablet market is ‘down’ to 78%. Who, exactly, are those 22% of the rest?
    And this tired open vs. proprietary OS argument again. The only people who care about ‘openness’ are early adopting geeks. iPads are selling like crazy because they are super simple to use,have great battery, zillions of apps, no learning curve, etc., etc. These are all the result of a proprietary OS that controls the user experience. Look at early reviews of Android tablets- they all decry poor batter life and awkward interface design.
    Is there someone editing this stuff?

  4. So you disagree with my opinions? Well that’s your right, and I’m glad you elected to share your opinion, but I don’t understand why you need to attack me or this forum. Freedom of choice is a way of life for some people, me included. If it’s not yours, I’m not upset you don’t agree with me.

    It seems clear to me that we’re missing the ebook market perspective. I think we can all agree, that the end game for tablets (the software & content) is what I’m talking about. Hardware is a commodity or will become one soon. With that in mind, I think the software experience is the most important issue.

    Doesn’t it seem probable that the tablet hardware market will come to resemble the iPhone and Android one? I think it will, and at an even more rapid pace than Android phones were able to balance the market for smartphones.

    As I mention, in the end, you’re right, the consumers will make the choice. Only time will tell if my analysis and predictions were right.

  5. I too agree that the tab market is not competitive yet. But, that is a characteristic of all budding markets. I think tablets are a genre just waiting to explode.

  6. Kevin, I’m surprised you’ve not responded to Martin’s note and have left the “75%” line in your article. Apple sold 7 million iPads to consumers in Q4, Samsung shipped 2 million Tabs to stores in Q4. Strategy Analytics numbers are utterly misleading. I do hope the iPad has great competition and we see tons of amazing tablets, but leaving this misleading — and frankly, simply wrong — info in your article makes no sense. You’re certainly fully entitled to your analysis and predictions, but misreporting the facts doesn’t help your case, it hurts it.

    On your comment question, “Doesn’t it seem probable that the tablet hardware market will come to resemble the iPhone and Android one?” No, it seems probable that it will resemble the mp3 player market, aka the iPod market, and here’s why: in the iPhone vs. Android phone world, sales have been tightly restricted by carrier, with the only ways you could buy an iPhone in the US being through AT&T or at an Apple Store.

    iPads, on the other hand, are available in Apple Stores, sure, and AT&T stores, and at Verizon stores, but more importantly at Target and WalMart and Best Buy and many other places, just like iPods. The lack of carrier restrictions makes the tablet market completely unlike the cell phone market, and Apple has become very, very good at selling electronic gadgets to the full consumer market.