A commuter uses a Kindle while riding the subway in New York June 1, 2009.
Will it or won't it?
The Internet is burning up with speculation about Apple Inc.'s plans for an "iPad," a potential new entrant in the e-reader market of low-power digital devices whose displays approach paper quality.
Amazon's Kindle and the Sony Reader together cracked the million-unit mark last year, but everyone - especially those in troubled publishing industries - is looking to the iPod maker to potentially bring digital reading into the mainstream, and transform their businesses forever.
Things have changed since early e-readers tried and failed to find a market in the late 1990s. The spread of mobile computing and the new gadgets' greater usability and convenience are fostering what a recent series of reports by Forrester Research calls an "eReader Revolution."
Electronic-ink technology has made long-lasting, slim devices possible, notes Forrester analyst Sarah Rotman Epps, and there's a lot more content available. Kindle owners can buy Amazon's books directly through the device, and Sony Readers can access half a million free books from Google, as well as from the Sony e-store. As a result, the number of e-reader owners has jumped by 150 per cent between the second quarters of 2008 and '09.
Amazon's introduction of the $400 (U.S.) Kindle in 2007 launched this new phase of electronic reading, tapping into the online generation's demand for instant gratification. "The immediacy of being able to fulfill a desire for new reading material on the go has great appeal for Kindle adopters," writes Rotman Epps in her report. "Kindle owners echo the delight that iPod owners felt at being able to carry their entire music collection in a slim portable device."
This summer, rivals hit back with a flurry of e-reader announcements, advancing both the technology and e-reader business models. One of Sony's two e-readers and a new unit from Samsung sport touchscreens. In Japan, Fujitsu has come out with the first colour e-reader. U.S. book chain Barnes & Noble, meanwhile, is trying to turn iPhones and BlackBerrys into e-readers by selling downloadable books.
And everyone is waiting for Apple to show its hand, with most betting on a hybrid tablet - something between a notebook and a Kindle-style pad - offering not just downloadable books (from iTunes, of course), but e-mail, music and other features. The company is already a de facto player in the market: There are more installed e-book apps on iPhones than on Kindles and Sony Readers combined.
E-readers' adoption is still tiny - just 1.5 per cent of American consumers own one, and fewer in Canada - but Ms. Rotman Epps believes these gadgets will change our reading habits while throwing several industries into turmoil.
According to her research, book publishers are where music publishers were in 2001 when the iPod launched: Their content has already been digitized, but until now there's been no compelling way to buy and consume it. "The rate at which book publishers' content is getting to full digitization is very rapid," she observes, with Google's digitization initiative having already passed the million-book mark. "Book publishers are truly facing a revolution," she says. "They're looking at a future where more of their revenue will come from e-books than from print, and the overall [revenue] pie will be smaller."
This will force a very painful transition. "As we've seen in other media industries, many times companies can't make the transition to being smaller, with smaller revenues," she says. Denying consumers access, as record companies tried to do, is pointless. "Book publishers need to understand that e-books are their future," says Ms. Rotman Epps. "Then they need to think very critically about how to build a profitable business" around them, perhaps selling subscriptions to their catalogues or partnering with retailers.
It's the textbook market, however, that Ms. Rotman Epps believes will be the e-reader "killer app." There are issues around colour (still not widely available), highlighting and note-making capabilities and various standards, but she thinks these will be solved over the next 12 months. Getting content ready will take longer. "For students to justify the cost of the device, nearly all the books and course packs need to be available," she notes. Still, the business proposition is irresistible for publishers and consumers: Publishers will slice into the used-book market and students will see their book costs drop by as much as 50 per cent.
Newspapers and magazine publishers are also eyeing e-readers, but Ms. Rotman Epps doubts the technology will solve the news industry's problems. "The terms are not good for newspapers - for example, Amazon keeps 70 per cent of Kindle revenue, publishers can't maintain customer data, and they can't show the ads." For that reason, some news organizations, such as Hearst and The Financial Times, are teaming up with technology companies to develop their own e-reader platforms. Ms. Rotman Epps thinks print media should consider subsidizing the devices for their subscribers to drive their adoption, and through them, the sale of digital subscriptions.
Not everyone sees e-readers as being quite so transformative. In a recent report, analyst James Belcher of NextGen Research points out that the parallel between publishing and music industries is imperfect. "Consumers have read books printed on paper for hundreds of years, without having to endure the multiple format changes seen in recorded music," he notes. "Getting the bulk of consumers to change that behaviour will require an experience superior to that of the printed page."
Such experience may not be far away. Inside the Xerox Research Centre of Canada in Mississauga, Ontario, for example, Paul Smith is overseeing development of "printable organic electronics" - light, flexible backplanes on which electronic circuitry can be literally printed. "A Kindle or Sony [Reader]are heavy, their structure is quite stiff and they're quite expensive to manufacture," says Mr. Smith. "You want e-readers to be lighter, flexible, more like a piece of paper."
Imagine rolling up your e-reader like a magazine and stuffing it in your pocket. Will that be enough to tear people away from their beloved paper? The answer may be available as early as next year.