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Summary:

If I were to bet on a device that would benefit most from wireless access, it wouldn’t be a digital book reader, not in a nation where roughly half the people don’t read novels. A personal navigation device, an MP3 player on which one can download songs, even a handheld gaming unit all seem to be more popular with consumers — and offer better opportunities to show off wireless access. So why the focus on e-readers?

Kindle2(11)Best Buy, along with e-reader maker iRex said today they will launch an e-reader that will run on wireless access provided by Verizon and retail for $399. The announcement comes on the heels of a similar one from Barnes & Noble and another one from Sony, both of which will see their devices wirelessly enabled by AT&T.

But what is it about e-readers? If I were to bet on a device that would benefit most from wireless access, it wouldn’t be a digital book reader, not in a nation where roughly half the people don’t read novels. A personal navigation device, an MP3 player on which one can download songs, even a handheld gaming unit all seem to be more popular with consumers — and offer better opportunities to show off wireless access. So why the focus on e-readers?

First we have to look at the carriers, which up until recently were reluctant to sell access on their wholesale networks for consumer devices. That changed, however, when Sprint decided to support Amazon’s Kindle. Suddenly (thanks in large part to the marketing push made by Amazon) carriers (and consumers) wanted connectivity on e-readers. The only other consumer device that comes close to combining a standalone gadget (a music player) with wireless access is the iPhone.

And because those in the consumer gadget market can sometimes be reluctant to innovate, the success of the Kindle has prompted both device makers and carriers to bet on the e-reader model. Sure, only 1 million of the devices were sold in 2008, according to iSuppli, and only 5.2 million are expected to be sold this year, but like lemmings, gadget makers will follow successful trends off a cliff. Look at the amazing number of touchscreen phones released after the iPhone.

So while we’re about to be awash in e-readers, what other consumer devices with embedded wireless connectivity can we expect? Dash Navigation with its personal navigation system and a $15 monthly subscription wasn’t a success, but I think it was the subscription, not the connectivity on a personal navigation device, that was the issue. Indeed, carriers need to think carefully about their pricing models for wireless access, perhaps relegating monthly subscription charges to the dustbin. Pricing wireless service into the cost of content as is done on the Kindle, or possibly having a consumer buy a prepaid card that allows them to download a certain number of songs or send a certain number of photos from a wirelessly enabled camera probably makes more sense.

Readers, what devices do you think carriers and consumer electronics makers will connect next?

  1. you are right on about eliminating monthly subscription charges. consumers do not want any more billing relationships than they already have. they want devices that they can pay as they go for services and than put away in the closet for a while paying nothing until they decide to take it back out.

    i am a bit surprised though that there has not been web development targeting the kindle’s free web browsing. for example a webmail service designed specifically to work very well the the kindles very limited browsing capabilities. although it would cost amazon a bit in network usage charges it would also help to popularize the device. of course the webmail service could charge a small subscription and/or use advertising. i definitely see a future for web sites optimized to e-readers limited browsers.

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  2. There are many possibilities for single-purpose mobile wireless devices, but most of them have much larger bandwidth demands and much lower revenue potentials than e-readers. Online gaming is one example where the bandwidth demands are higher and the revenue potential, especially per kilobyte, is much less. The e-reader is a good match for mobile wireless because its bandwidth demands are quite modest, and the content has a relatively high value. E-books can go for $10 or more. Another application with low bandwidth and high value is real-time stock trading, and that has been around for a while, though its market potential is much smaller.

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    1. Stacey Higginbotham Wednesday, September 23, 2009

      John, that’s a great point. Looking at the per kilobyte cost on the type of data that might be sent over each device may eliminate some gadgets and/or content.

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      1. Per Kilobyte cost, only occurs if you actually use the GPRS/3G network.
        A lot of the heavy data usage will happen over the Wifi network.

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  3. It’s all about selling content. The big retailers like Amazon and B&N just want to sell you books at a huge profit, not give you a compelling technical reason to use wireless access. The wireless access is strictly needed to make purchasing a one-click process, no matter where the consumer is at the time. It’s retail driving this boom in e-books, not wireless.

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  4. Any cheerleader or purveyor of dedicated hardware should instantly be suspect, the examples in this post ( telcos, movie studios, book publishers, newspapers ) are perfect examples.

    If you have the antiquated business model of making information closed, your walled garden is your bread and butter, you *must* find a way to put off your extinction for another fiscal quarter – proprietary, closed hardware that encrypts information is the perfect way to do it.

    No one, and I mean *no one*, ever asked for an e-reader, book publishers and newspapers did.

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    1. Todd – this sounds profound when you are talking about Amazon. But I think if you substitute “ipod + itunes” as the subject, you’d come up with the opposite result – they too use dedicated hardware, closed information, walled garden, etc., and no one is predicting their extinction …

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  5. @Stacey,

    I think we’ll see shared photo (then video) connectivity between cameras, smartphones, and digital photo frames. This combined connectivity will drive integrated usage with social networks like Facebook, and should see a very healthy uptake if the carriers price the services for value.

    My $.02.

    Best,

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  6. The success early on of portable music players showed us how dedicated devices can create a significant market. Sure, the PMP is now a swiss-army-knife for media playback, but at first, we reached mass adoption with a device that just played music.

    Half of Americans may read novels, but that’s a 100 million plus person market. If you wanted to identify an entertainment consumption behavior that has only yet begun to be impacted by the Internet and mobile computing, reading books is near the top. The e-reader is what changes that.

    Ultimately this becomes a discussion of e-readers vs. multipurpose devices for consuming books. People will say the e-reader is unnecessary when you have a netbook, etc. I think there is a market for dedicated function-specific devices like an e-reader, and there will also be a significant market for devices that can optimize a close-enough experience to e-reader (read web-pad). Both categories are going to benefit as the habit of “reading books” transitions significantly to digital in the coming decade.

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    1. So given the choice of reading a book using FireFox+Google Books vs. an e-reader, you’d pick an e-reader?

      Also,

      I do not know a single person who carrier both a mobile phone and a MP3 player with them. Do you?

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      1. @Todd – yes, actually, I do. BTW – most people I know over 40 (i.e. the prime book reading audience) wouldn’t ever read a book on a small screen like a phone. In fact, most people I know under 40 wouldn’t read a book on a phone.

        Have you talked to a Kindle owner? Most are effusive about the experience. They talk about how its completely changed their reading habits.

        BTW – Google/Firefox isn’t a mutually exclusive thing from an e-reader. The context here is the hardware. Most people who use an e-reader are mainly taken with the feel/tactical experience. I think you could do that with a browser on an optimized e-reader hardware device.

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      2. Definition of “prime book reading audience” must include college students, who do read book on their phone – pervasively

        I would love to see a poll of people of all ages who *must* read for either work or school and find what percentage do so with an e-reader vs. plain old laptop. I suspect e-reader usage is around 1%

        To answer your question, I have in fact talked to a handful of kindle owners, all of who are:
        1 – Very wealthy, successful people, with copious amounts of disposable income
        2 – Total geeks, one of whom has a Nikon D1 as their “junker” camera
        3 – None have any prominent requirement in their professional life that requires high volumes of document reading.

        Ultimately I cite the rancor around Google Books as being proof that consumers are not the driving force behind e-readers. Book publishers and newspaper are. The world got along just fine curled up in bed with a paper book, or a lap top.

        P.S. comment nesting FAIL!

        :)

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      3. Todd – the primary fiction reading audience today is older women, something well recognized by the publishing industry. They happen to be, without a doubt, the largest discretionary spenders on books, without fail.

        Coincidentally, the main folks I happen across using Kindles are older women. Everyone I’ve talked to love their Kindle. I have no doubt these same women would never read a book on a smartphone, on a netbook, etc. Again, its the holistic experience, with large parts tactical/feel of the e-reader.

        As far as college kids using phones for their studies – hmm, I don’t have data on that. Sure, lots will read books on smartphones, but again, most of these younger folks aren’t driving the publishing industry – its the female book buying audience that is.

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      4. I would pick an e-reader over FF+Google Books. In fact I have I have. I own a Sony 505 reader and I carry both a phone and an MP3 player at times. Reasons:

        1. The readability E Ink far outstrips that of LCDs

        2. I have a plain old RAZR phone my employer pays for, I have no need for a “smartphone” or it’s associated ~$100 a month bill.

        3. I would rather have a dedicated device that does one thing really well than a single device that does everything fair to middling. Also, one device – one battery, better stay close to a spot where you can plug a charger in. My reader will go two weeks between charges even with daily use, I have yet to see a phone pull that off.

        4. What’s the fuss about carrying two small devices? No pockets on your “skinny” jeans? Carrying a flip phone and an MP3 player isn’t exactly a heavy burden. If a person can’t find a way to manage having two small devices on their person I think perhaps they have larger issues than their choice of digital gadgets.

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  7. Maybe 1/2 of the US don’t read novels but that’s still a market of more than 150 million and eReader are not used for novels only. I have the older Irex device and I use it to read pdf’s, technical documents and others. I can convert any document to pdf and that what the reader is good at.

    I really don’t care about wireless access from cell phone carrier. I guess it’s important for people who want to subscribe to newspapers. However for myself I just download stuff from my computer. The computer can gran all the documents for me. All I have to is send it to the eReader.

    In the end, I don’t buy content. There’s a sea of free content on the web. As for news. I subscribe to my local paper and I like to read it in true paper. Not using eReader. The big width gives me a quick view of everything. on an eReader there will be a lot of scrolling which I don’t like.

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  8. Hi Stacey,

    My thesis is that whereas Kindle and iRex seem to be predicated on the construct of the book as less than the current experience (i.e., mostly text), the industry is headed for a full-blown re-boot that takes advantage of interactivity, touch/tilt, social engagement, movies, pictures, animation and sound, a topic that I expound upon in:

    Rebooting the Book (One Apple iPad Tablet at a Time)
    http://bit.ly/zOoEu

    Check it out, if interested.

    Mark

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    1. Stacey Higginbotham Wednesday, September 23, 2009

      Mark, all cool ideas, but let’s not call those books. I have no problem with new ways of telling stories but believe that old ways of doing so won’t fall completely by the wayside. The upside is we’ll still have text-based stories much like we still tell oral stories. Likely they’ll be less popular, but there will still be room in the market for the thousands of words in my beloved Anna Karenina without animation or a need to interact with the story beyond imagining it in my head.

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      1. Thanks for the counter-perspective, Stacey, and I certainly don’t mean to imply that good old text is going away or that every type of book is applicable to a reboot (just as TV isn’t simply radio with moving pictures), but I like the construct that Sean Cranbury & Hugh McGuire put forth in ‘THE FUTURE OF PUBLISHING,’ as I think that it gets to the “IT” of what makes a book, a book.

        They say that “the primary thing a book has to do is fulfill its promise as a transmitter/inspirer of ideas, art, thoughts, story, entertainment.”

        That leaves a lot of room for maintenance of the current and iteration of the new.

        Best,

        Mark

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  9. [...] Posted on September 23, 2009 by switch11 At GigaOm, Stacey Higginbotham has a post entitled ‘What Is It About eReaders?’ in which she asks – But What is it about e-readers? … in a nation where roughly half the [...]

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