Why E-Book Readers are Like Netbooks

In some ways, e-book readers are in a situation similar to netbooks, which is to say, they both are product categories that face substitute products. E-book readers are going to be pressured by tablet PCs and even smartphones, while netbooks are going to be pressured from one side by tablets such as the iPad and notebooks whose better features and prices will continue to make them suitable substitutes for netbooks in perhaps seven out of 10 cases.

According to the latest research from Informa Telecoms & Media e-reader sales are expected to peak at 14 million in 2013, before falling by seven percent in 2014 as the segment faces increased  competition from  a wide range of consumer electronic devices.

Multi-function devices notably mobile phones and tablet-form-factor computing devices are the chief competing types of devices e-book readers will face.

This is likely to lead to a segmentation of the e-reader market into two groups; low-price, low-feature models and higher-price devices with advanced features, Informa predicts.

In order to survive, there are a number of approaches that vendors can take. They can develop low-cost e-readers with minimal features that can be used in conjunction with a PC or USB dongle to access additional content. E-readers like the Kobo ($148), may appeal to the cost-conscious reader, for example, Informa suggests.

Alternatively, high-end e-readers will start to resemble tablet computing devices. These will in effect become more like smartbooks than e-readers. Early steps in this direction include Barnes & Noble's latest software update for the Nook which adds games and a more open web browsing functionality.

Many e-reader companies are already looking to develop an electronic reading platform, initially based on their e-reader devices, but that will extend across e-readers, mobile phones, netbooks, note-books and desktop PCs.

The point is that netbook and e-book product segments likely will change as more tablets and smartphones provide end-user functionality that competes with e-book readers and netbooks.

Barnes & Noble Runs Out of E-Book Readers, Demand Stronger than Forecast

Barnes & Noble says it has run out of available stock of the new Nook e-book reader. Customers who ordger now won't get it until the week of Jan. 4, 2010. "Preorders have exceeded our expectations," said Barnes & Noble spokeswoman Mary Ellen Keating. The company says its $259 e-book reader "continues to be the fastest-selling product at Barnes & Noble.

That has been true for Amazon's Kindle, as well, which is the leading e-book reader at the moment. Analysts have been ratcheting up their sales forecasts over the past two years as consumers exceed earlier forecasts.

Apple, meanwhile, is rumored to be preparing a tablet style device that could double as an e-book reader, and, rumor suggests, will be available early in 2010.

So there is lots of "action" in the e-book reader space, interesting for what it implies about the future economics and distribution formats to be used by the publishing and news industries, the sustainability of "single-purpose" mobile device markets over time, contrasted with "multi-purpose devices," and the associated impact on mobile service provider business models.

There doesn't seem to be much question that distribution of print content now is at the beginning of a change that music already has gone through, and that video also is undergoing. Book distributors and publishers have to be wondering whether this is all such a good thing for them.

From an end user standpoint, one of the interesting angles is whether the e-book reader remains a stand-alone, single-purpose device or whether it ultimately becomes a feature of a multi-purpose device. The answer obviously has huge ramifications for smartphone, netbook and e-book providers.

There is no single historical pattern here. TV displays, home audio systems, microwave ovens and landline phones generally have remained single-purpose devices. The iPod has been a single-purpose device, but the "touch" and now the iPhone might be changing that situation.

Smartphones are multi-purpose devices. Portable navigation devices traditionally have been single-purpose devices, but the Motorola Droid is challenging that notion.

Apple's rumored tablet would be an attempt to provider a multi-function device, and that probably is the form factor necessary for such a convergence. Though people have speculated on smartphones becoming e-book readers, the challenges of form factor (small enough to fit in purse or pocket, light enough to use as a phone, plus large enough screen size to read) seem rather implausible in a single device.

Besides Amazon and Barnes & Noble, other companies offering e-readers include Japan's Sony, Britain's Interead, and Dutch company IREX Technologies.

Forrester Research estimates that three million e-readers will be sold in the United States this year, up from a previous forecast of two million units.

Forrester said it expected 900,000 units to be sold in the upcoming holiday season alone and for e-reader sales to double to six million units in 2010, bringing cumulative sales to 10 million units.

Citi analyst Mark Mahaney thinks Amazon will sell 1.5 million Kindles in 2009, up from his previous estimate of one million. Mahaney thinks Amazon will sell 2.7 million Kindles in 2010.

“Book applications for smartphones have the potential to become a bridge to other devices such as tablet readers and netbooks,” said Mr. Weiner. “Apple, for example, could migrate the more than 500 book applications in the iTunes store to a tablet device and Google, which recently announced a browser-based e-reader, could offer applications for Android-based devices of various form factors,” he says.