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Don’t Expect A Microsoft E-Reader Any Time Soon

We’ve heard a lot lately about companies piling into the e-reader business. One company that’s not: Microsoft (NSDQ: MSFT). Entertainment and Devices division president Robbie Bach was asked about the e-reader market Thursday, and suggested that Microsoft wasn’t interested in making its own e-readers: “From a first-party perspective, so for Microsoft producing a device, we’re actually pretty selective about which ones we want to get into, in part because we know what it takes to scale hardware businesses like that,” he said. “You know, if and when we do devices, we’re going to pick areas where we know there’s big scale.” Following up, Chief Research Officer Craig Mundie said it’s not clear there is even a need for specialized e-readers, considering that PCs could eventually offer many of the same functions.

Executives, however, seemed to leave open the possibility that Microsoft could provide operating system software for e-readers, saying that the company’s family of Windows Embedded operating systems for specialized devices was “growing.” Microsoft already offers Microsoft Reader, software that makes it easy for users to read e-books on Windows-based devices. Microsoft, however, doesn’t host its own e-book marketplace and instead links to third-parties from its Microsoft Reader site.

The company has had mixed success in the hardware market. Its Xbox video game console has been a hit, but the Zune music player is another story. MarketWatch ran a story earlier this week that pointed out that sales for the non-gaming business of entertainment and devices, which includes Zune, fell 42 percent last quarter. Microsoft is fighting on: A new Zune is coming out this fall.

The Zune also may provide an example for how Microsoft could eventually enter the e-reader market with its own device. The iPod was already a break-out hit when Microsoft released the Zune in 2006. Perhaps Microsoft will wait until a competitor — possibly Amazon (NSDQ: AMZN) — proves that there is sufficient scale to make a go of its own.

3 Responses to “Don’t Expect A Microsoft E-Reader Any Time Soon”

  1. Karel Byloos

    At this stage of the game, companies that are considering entering the e-reader business would be wise to source a device, rather than attempting to build their own. Even for a company like Microsoft, building a device and designing a functional business model takes valuable time that they do not have; the e-book/e-content industry is simply growing too quickly.

    On another note, I have to respectfully disagree with Mundie’s assessment that PCs could eventually offer similar functionality to an e-reader. An ‘all purpose’ device like a netbook will never give you the comfortable reading experience that a dedicated e-reader will – it’s not easy to just grab it with one hand, or lay on your back while reading, for example. The LCD screens are not built for book or document consumption either. Another challenge is battery life – e-readers offer days, even weeks of battery life, not hours.

    – Karel Byloos, IREX Technologies

  2. Joseph Tartakoff

    Here's Mundie's full quote (http://www.microsoft.com/msft/speech/FY09/bachmundie_FAM2009.mspx):

    "One of the things we've often asked ourselves is, as a stand-alone, dedicated device, you know, and if it turned out you had a full PC capability whose ergonomics weren't substantially different than what you get out of the book reader, would it essentially flip over and people say, 'Look, I do the book reading on either the Tablet version or some super-thin flip-around version of a PC?'

    So I think one of the reasons we hesitate to jump in and say that's a specialty category that makes the same grade as the other three screens where we have a Microsoft SKU strategy is we can support them all today if they emerge using the embedded toolkits. And we still always have the option of taking those services and putting them on full PCs. We're pretty optimistic about the decline in cost, size, and improved battery life for the PC itself."

    — Joe Tartakoff, paidContent.org

  3. "Chief Research Officer Craig Mundie said it’s not clear there is even a need for specialized e-readers, considering that PCs could eventually offer many of the same functions."

    That's like saying there's no market for specialized MP3 players because PCs can play back music. Clearly, Mundie just doesn't get the usage model for e-readers.