In most of the ways that matter we can safely say that the eBook war is over. Owning a Kindle is no longer strange or a sign that one is obsessed with gadgets. Where does all this lead, though? In many ways there is nowhere left to go for these devices, or at least nowhere obvious, and while they will certainly persist in at least as advanced a form as they have already achieved there is the question of how much room for growth the eReader market will eventually have.
I bring this up because of reliability issues in eReading devices. Unlike most electronics that I have owned, my worry here is that they tend to be overly reliable. I have owned a handful of such devices since my first in 2006. That one, a Sony Reader PRS-500, still works as well as the day I bought it. The battery was a little worse for wear after sitting for six months in a closet, but the screen is fine. The same is true of every other example I have on hand.
Until now, upgrading was a matter of often drastic improvements in screen contrast and refresh rate. Five minutes on a first generation Kindle will have you tearing your hair out if you’re used to using a Kindle Keyboard. With E Ink Pearl displays we have hit a point where you are basically looking at paper. Thanks to the Nook Simple Touch w/ GlowLight, and soon its anticipated Kindle counterpart, we are able to read in the dark without trouble.
Short of introducing color and non-perceivable screen refreshes there is not a lot of room to grow. If anybody manages to figure out both of those without introducing severe downsides like battery life reduction then chances are good that the displays will be more useful on tablets anyway and the dedicated eReader will remain a niche purchase.
If we have a product that will not likely see much in the way of hardware improvement beyond the next generation or two, especially one that can last as long as a Kindle, it could cause rather lower sales rates than one expects in consumer electronics. The newest eReader I own has already outlasted the newest laptop I own despite having seen ten times the use. Looking purely at the hardware side of my purchasing pattern would give the wrong idea about my preferences as a consumer.
Essentially, I’m wondering how long the idea that the hardware and media sides of the Kindle business model can be kept even nominally separate. There may come a time when stagnant growth for the line is not the sign of problems.
I don’t doubt that eReaders in general and the Kindle in particular will continue to be updated. If nothing else, there are parts besides the screens that will need to be updated to keep up with new software features as time goes on. I only wonder how often people will feel the need to upgrade. It is hard to see huge performance improvement as a necessary factor when you’re talking about a device meant to emulate the experience of flipping over pieces of paper to see what’s on the other side.
According to some recent research by Pacific Crest analyst Chad Bartley, the demand for both Kindle E Ink eReaders and Kindle Fire tablets has fallen noticeably from Q4 2011 to Q1 2012. There is some fairly compelling argument to be made, however, that changing any predictions based on this would be at best premature. Regardless of the way things stood a month ago, the Kindle world is about to be turned upside down and interest can’t help but rise as a result.
This is not meant to be a criticism of Bartley’s analysis. Based on the information at hand when he was writing, his report was accurate. A combination of consumer polls about intended purchasing and inside information about Amazon’s supply chains show a marked decline in interest in Kindles from month to month. He attributes this to a maturation of the eReader market, an increasingly well covered customer base, and consumer willingness to read on a variety of things besides eReaders. All good points.
Since we now know that three of the Big 6 publishers have already settled with the US Department of Justice to avoid an ongoing legal defense of their price fixing arrangement, that is all more or less irrelevant. The beginning of the end of the Agency Model will mean a return to lower prices on popular eBooks and a far more active marketing campaign on Amazon’s part. There has literally never been a better time to buy a Kindle.
Regardless of where you stand on the state of publishing, it is undeniable that things are about to change in such a way as to allow for lower pricing. As most of the problem with adopting eReading recently has been the fact that eBooks are commonly priced higher than their paper counterparts, changing the balance of things will open up new markets for the Kindle. Customers who were previously on the fence about a purchase will now have much more appealing opportunities in front of them and Kindle ownership will be that much simpler to justify as paying for itself in savings over a short period of time for any active reader.
Will there be ongoing and constant increase in interest in the Kindle? It is probable that sales will plateau at some point. It is also probable that Amazon’s luck from the DOJ has pushed that point off into the future a bit. Estimates may be down for the moment, but they will be revised soon enough. If anybody knows how to exploit a major opportunity like this, it is Amazon.
This is a great time to have a Kindle. If you don’t have one of your own yet, it might be useful to check out the Kindle Keyboard. Still in many ways the best iteration of the product line to date, it will serve you well in any reading situation. Might as well take advantage of the situation, since the customer benefits more than anybody in all of this.
If you’re going to develop an application around the idea of ongoing micro-transactions, and many people have chosen to do exactly that, then the most important consideration is likely going to be smooth integration of payment options. Amazon used the essence of this in the creation of the Kindle Fire itself. The whole tablet is basically a way for customers to get the content they want without thinking too hard about where or how to get it, all while keeping the actual act of purchase as unobtrusive as possible. Until now, however, app developers wanting to cater to Kindle Fire users have been unable to turn this to their own advantage.
We know they have been looking into making this happen for quite some time, but apparently now we have some confirmation of active testing being done in preparation for a more large-scale roll-out. One of the founders of Skimble Inc, the maker of some physical fitness programs that have been involved with the pilot, revealed some of the details.
There will be both individual purchase options and the ability to set up a subscription. This will be handy for newspapers following Amazon’s recent recommendation that potential newspaper submissions set up their own apps rather than getting into the Kindle Store’s selection. Amazon’s cut on every sale will be the same 30% they take on eBooks and app sales in general.
This opens up whole new avenues of income both for Amazon and for app developers participating in their Android app store. Currently anybody looking for regular income from their users is forced to either sell ad space in free apps or arrange some sort of non-integrated system for content purchases. It is a smart move that puts the company in a much better position to capitalize on the Kindle Fire and Android app sales in general.
This is not a trivial thing to get going. Amazon absolutely needs to get things right. There have already been complaints about their parental controls thanks to poorly functioning and completely missing options in the initial release of the Kindle Fire. Users need the assurance that this will not be an issue in the future.
Many will remember the iPad in-app spending horror stories resulting from unrestricted purchasing options. Children were able to charge thousands of dollars buying virtual goods with no notice or warning screen until Apple came up with more refined controls. Such have not been nearly as necessary for the Kindle Fire before now, but adding this feature to the system will require some changes.
While Amazon has the best selling Android tablet on the market today, they have the smallest of the three major tablet app stores. Part of that is the heavy oversight they keep in place to ensure quality control among their offerings, but a lot is also lack of developer interest. While developers are likely to make significantly more on their app sales through Amazon than through Google Play, the initial sale is not the only source of income for many companies. If Amazon gets this working, and working well, it could lead to a huge boom in Kindle Fire app-building.
This is going to be a bit controversial, I’m sure, given how Amazon has gone about using their influence to beat down smaller publishers and other suppliers recently, but when it comes right down to it there can be no doubt that Amazon deserves to be on top of the market right now. It isn’t a matter of overhead or business ethics or anything like that either. They are just the only company selling books right now that seems to be good at giving customers what they want.
Let’s think this through a bit. People like to read. Even before the Kindle and Nook started their competition, both companies were selling books. Amazon had the advantage, mostly because they could afford to cut prices more than a company like B&N that had to deal with maintaining a storefront. When the Agency Model was imposed by Apple and the Big Six Publishers, then, surely B&N should have taken off again, right?
This is admittedly an oversimplification of a complex situation, but when you throw in the common and intense criticism that Amazon faces from all quarters these days you have to wonder why nobody else has been able to attract attention as a superior alternative. The Nook Simple Touch eReader is possibly the best hardware out there, for example, so why is the Kindle dominating the space?
The answer is that they know how to give customers what they want. Not just in terms of free shipping, discounts, and other such monetary inducements. Shopping for book on Amazon, Kindle Editions or not, is simply a better experience than anybody else offers. Barnes & Noble provides customers with a site that is comparatively hard to navigate and that seems to openly privilege business agreements over anything else in how it presents potential buyers with suggestions.
Shopping for Nook Books, you get long lists of Bestsellers, anticipated releases, and other such predictable content. It is just like what one would see when walking into a book store. Interesting in some ways, but far from an organic series of recommendations based on what people are really enjoying right now.
In the Kindle Store, Bestsellers and Editors’ Picks are categories that have to be clicked through to. Customers have an extensive list of potential categories for book browsing presented to one side and a completely fluid list of top selling titles on the other. The only product placement is for the Kindle eReader itself. On top of this, once moving into one of the many categories, the first thing you see is a list of books generated based on your own reading habits. All Barnes & Noble gives you is their Booksellers’ picks.
Is Barnes & Noble doing something bad here? Not at all. But they are trying to maintain the sort of model used in their physical stores. They are trying to act as gatekeepers and mediators, telling customers what they should want rather than presenting customers with something they may want. This, more than anything, is what gives the Kindle user the superior overall experience. If somebody is able to provide a similar sort of service, helping their customers rather than advertising at them, it will be the biggest blow Amazon has taken in eReading since they stepped into the field. So far, it doesn’t seem like anybody has caught on.
Android has seized a greater share of the tablet market than ever before in the last year, with fourth quarter usage of Android tablets up to 39% of the total (up from 29% the previous year). A great deal of this improvement comes as a result of Amazon’s Kindle Fire tablet. With the whole tablet market seeing huge growth (including Apple’s sales numbers we saw around 150% growth and a total of over 25 million tablets sold) it is no small feat for something as new as the Kindle Fire to already be edging ahead of more established competition.
These numbers deal specifically with device usage as reported by analytics firm Flurry, based on app sessions. Given the importance of content sales compared to hardware profits, this is probably a significantly better estimate of consumer preference than simple sales or activations. Thanks to this data, we can tell that the Kindle Fire’s approach to content is making a pretty big difference to the user.
The alternative method of analyzing the success of the Kindle Fire would be along the lines of what Google has been doing when describing Android as building up momentum compared to the competition. That would be looking at device activations. While this is not misleading, necessarily, it does focus entirely on numbers that fail to directly equate to post-purchase satisfaction. Even using this method, the Kindle Fire is doing amazingly. Approximately 10.5 million android tablets were sold in Q4 2011. While Amazon is not releasing sales numbers, we can say with a fair degree of certainty that around 5-6 million of those were Kindle Fires. The numbers are favorable, to say the least.
While there is not any indication that this is having a negative effect on iPad sales, there is also little to support the notion that Amazon had any intention of making a direct attack on Apple with this first tablet. It is likely, given how much the two companies overlap in their digital media sales markets that there will be some more direct Kindle vs iPad competition down the road, but a 7″ $200 tablet that clearly lacks the potential to replace even the functionality of a netbook is not something you could take seriously if they were heading for a confrontation with the iPad 2 right away.
The biggest impact of all this is probably going to be on Google. Since Amazon is running such a heavily forked version of Android, and since it lacks easy access to Google’s app marketplace, the success of the Kindle Fire will tend to draw people away from Google services despite technically relying on their original concept. This has the added effect of drawing developers away from the more general marketplace.
While Amazon’s Appstore has not been a favorite destination for many developers thus far due to the heavy oversight and lengthy screening process for even minor updates, the most important thing will always be going where the customers are. Right now, for better or worse, it is looking very much like that is the Kindle Fire if you’re talking Android tablets.
The December numbers are in for Amazon’s rather controversial Kindle Owners‘ Lending Library (KOLL) and for some people they turned out to be quite good. Right around 295,000 rentals were made of the approximately 70,000 titles available to be checked out in December alone. Given the $500,000 fund allotted to compensate KDP exclusive authors for these rentals, that means approximately $1.70 per lent copy was handed out. Things went over so well, in fact, that Amazon is throwing another $200,000 into the pool for January’s authors. This will bring the total to be divided up to $700,000, though of course it will also quite possibly be divided among even more authors this time around.
Among the more notable success stories, we know that the top ten most popular KOLL authors put together nabbed over $70,000 from these rentals alone. That is around a 30% increase over other monthly income from the same works. The top earner was Carolyn McCray, author of a number of paranormal romance and mystery/thriller titles, who is quoted in the Amazon Press Release as saying that “KDP Select truly is a career altering program”. Romance writer Amber Scott, 16yr old children’s author Rachel Yu, and the puzzle book producing Grabarchuk family made up the rest of the highlighted triumphs, with over $6,000 in KOLL related income apiece.
In these cases, obviously there has been no significant downside to the program. The fact that participation in it requires exclusively making one’s work available exclusively to Kindle owners may have more of an effect on many others, however. What the press release numbers do not tell us is the average income that an author managed to pick up this month, aside from the fact that it was a measurable percentage increase over participating authors’ usual monthly income from Kindle Store proceeds. It would be interesting, if pretty much impossible, to compare how many authors saw a jump in profits compared to the number who actually lost income due to exclusivity. It seems safe to assume that this was the case for at least some people.
As with anything related to self publishing, however, most of the success will have to come through some form of author driven advertising. Random hits by interested browsers are nice, but word of mouth is frequently not enough to drive sales on its own even for a skilled and prolific writer. The lending community opens the door to new readers, but so far is not arranged in such a way as to point readers toward any particular title.
Overall this success is a plus for any fan of the Kindle. Owning one gains some ongoing perks in the form of book rentals, success stories among authors will surely lead to even more participants, and Amazon has immediately shown themselves likely to increase the compensation pool. We’ll be watching the program here in months to come as the situation stabilizes. You can’t really assume that holiday Kindle sales are having anything but a positive effect on everything related to the eReading line, so it might be the end of first quarter before we can say anything definitive about ongoing positive trends. Still, off to a good note.
It’s undeniable that the release of the Kindle Fire, and along with it the competing Nook Tablet, has shaken up the Tablet PC market. Since launch Amazon has already firmly taken second place next to the Apple iPad, selling as many as 5 million units in the 4th quarter of 2011 alone. Barnes & Noble is also doing pretty well, having moved more than a million of their own tablet in the same time period. The way things are going with these two, there has even been some speculation that there is no room for dedicated hardware manufacturers with this kind of competition.
Both Amazon and Barnes & Noble are selling their tablets at near, or possibly even below, the cost of production. The goal is to get people hooked into the platform and make ongoing profits based on media sales. Effectively, the hardware has become secondary now that it can be treated as a conduit for consumption rather than an end in and of itself. Amazon is doing a better job on this side of things than Barnes & Noble so far.
The Nook Tablet has the technically superior hardware, with double the RAM and double the storage space among other things, but doesn’t make very good use of it. The storage is restricted and the interface doesn’t seem to run significantly smoother than the Kindle Fire‘s. There is an SD slot to expand the available memory of the device, but to get a sufficiently large one to make a difference you can expect to add a significant percentage onto the already comparatively more expensive price. None of this means that it is a bad tablet, it’s actually quite excellent and highly recommended, but it is worth noting that B&N has a way to go before they are really making the best use out of their device’s potential.
The Kindle Fire, on the other hand, lacks some of the power of the Nook. What it does have is a deeper integration with Amazon.com’s storefront and content. Unlike B&N, Amazon has their own source of video and music for customers to take advantage of, as well as a robust cloud storage service that makes up for a lot of the seeming shortcomings of the hardware. The lower price certainly doesn’t hurt sales numbers either, especially given the inevitable comparison of both products to each other and the iPad.
We can expect sales for both tablets to be improving even more through the next year. The Kindle line, and the Kindle Fire in particular, is one of Amazon’s biggest marketing priorities, while the Nook line is pretty much the only thing B&N has going for it right now in terms of profitability. What remains to be seen is what effect the next iteration of the Kindle tablet line brings. A larger tablet could cement Amazon’s place on top of tablets for the foreseeable future, second only to Apple, but it could also severely damage the company’s reputation if something goes wrong and open the door to a big push by Barnes & Noble.
Either way we have good products to work with, but both Kindle Fire and Nook Tablet are built for content consumption and that means active ongoing support. The more popular each one becomes, the more incentive the associated company has to expand the platform, and the more valuable the tablet in question becomes for owners. It will be interesting to see the back and forth as the competition heats up in months to come.
So, clearly the Kindle Fire was destined to be a big thing from the moment it was announced. In addition to being a part of the bestselling Kindle line, the pricing alone would have been sufficient to make people sit up and take notice. Not many people expected anything less than $250 before the press conference, especially not a full 20% less. It seems that even Amazon wasn’t expecting how much attention their new tablet would get them, though.
Recent analyst estimates have indicated that since pre-orders began on the Kindle Fire, currently scheduled to begin shipping by November 15th, as many as 50,000 units per day have been sold. On the first day alone, as many as 95,000 pre-sales are believed to have occured. In light of this, Amazon CEO Jeff Bezos has announced that he has dramatically increased the number of units ordered for this year’s production. Even he apparently wasn’t quite ready for the splash being made.
In addition to the fact that the Kindle Fire is priced so impressively competitively, seeming to have single-handedly caused a drastic drop in Android tablet prices over the past few weeks, the company has brought a lot to bear on the new product to make it appealing for customers, new and old alike. While the obvious connection to the other Kindles exists, this is not primarily intended to serve as an eReading device. The Kindle App still works well, and the color screen will allow for a large variety of content that has as yet been unable to join in on the eReader fun, but there is a lot more going on.
Amazon Instant Video, for example, will probably serve as the greatest draw for most people. While the new tablet will only have 8GB of storage space onboard, the Android operating system included has been highly customized to allow the greatest possible integration with Amazon’s web services. This means that if you have a wireless network handy, Amazon will be able to bring you any video content you have access to at a moment’s notice. They’ll even save your stopping point for later if you set something down for whatever reason. This service has been undergoing fairly constant expansion in recent months with tens of thousands of new titles being added as deals come together with new providers. A fair percentage of this video content is even freely available with Amazon Prime subscription, a free month of which will accompany every device.
Given how appealing the media consumption angle is likely to be for customers, it is not at all surprising to see how hard Amazon is pushing the Kindle Fire. While some analysts are convinced that they are losing as much as $10 on every tablet sold, creating the sort of long lasting customer relationship that this has the potential to form can only be good in the long term. It might not be poised to overthrow the iPad any time soon, but the justifiable excitement over the newest Kindle is hard to ignore.
Kindle Fire seems to have had a very successful launch. According to screenshots leaked by Amazon.com employee to Cult Of Andoid website, 254,074 devices has been preordered from Amazon.com. This means that rougly 2,100 Kindle Fire devices have been ordered every hour on average. This translates to Kindle Fire being ordered slightly more often than every other second.
This is substantially more than 95,000 units estimated by eDataSource research firm. eDataSource estimate is based on aggregated analysis of almost 1 million email accounts that it monitors for sales receipts. Historically eDataSource estimates tended to be on the lower end compared to actual sales numbers revealed by companies themselves or estimates provided by other research firms.
While I personally doubt that Kindle Fire will outsell and replace iPad, I’m impressed with the good start that it got.
While the focus of Amazon’s new content duplication policy for the Kindle Store is clearly an effort to eliminate the Kindle spam that has become an ongoing problem for customers, it has a couple less obvious effects that work to the advantage of both the company and the customers. Much of the speculation regarding how the Kindle Store could be cleared of worthlessly repetitive content revolved around the most efficient and advantageous methods that they might have available and clearly an interesting one was found.
The most obvious change, though not entirely new, is to the out of copyright publication. Perhaps the biggest problem that these have posed many consumers is their variety. Now, normally variety is always a good thing. When you know that the content you are acquiring is going to be the same no matter where you get it, however, having ten, twenty, or even fifty versions of the same thing to choose from is simply not helpful. The in-text annotation and added content that one expects with the many different print editions available to choose from do not translate well to the Kindle experience just yet. Amazon has done quite well in the past few months at reducing the clutter among these titles, but with the apparent automation of the duplicate-checking that they now have in place it will be that much easier and more reliable.
They have also done a great job of ensuring the most up to date content library available for Kindle customers. While it would be illegal and quite definitely against all policy to post a stolen work to the Kindle Store, it has not been an unknown occurrence. Since I started publishing through them, I have personally had three books stolen and attributed to other authors and I know that I am far from the worst affected. Now, so long as I am the first one to upload my work, there is no need to worry about it. Not only does this do an excellent job of protecting authors and simplifying the review process for Amazon, since they no longer have to worry about nearly as many theft complaints, it gives further incentive for all self-publishing authors to head to the Kindle Direct Publishing first.
If only to save on the headache of dealing with verifications and lost sales due to delays, authors will likely now feel that much more inclined to give the Kindle priority. After all, once it is up on the Kindle Store, nobody else should be able to post that content unless the original posting is removed first. Why risk having to go through the trouble of eliminating an illegal copy made by somebody who downloaded the work elsewhere?
Overall, while I can see specific situations where taking the review process out of human hands could result in over-enforcement, this will do a lot to improve the shopping experience for Kindle owners. It will do even more to protect authors. When you take those two groups and keep them happy, it makes life easier for Amazon and makes it even more likely that people new to publishing will choose the KDP. This would seem to be wins all around.