Eight reasons e-readers could fail

The Nook e-reader will debut on November 30 at Barnes & Noble Inc. stores, joining several new electronic reading devices hitting the market soon.

iRex Technologies recently launched the iRex DR800SG, adding to recently announced Amazon Kindle devices and newer Sony Readers. Plastic Logic Ltd. will unveil the QUE in early January with a focus on business professionals. And, Spring Design Inc. has announced the Alex.

With this profusion of dedicated e-reader devices, analysis firm iSuppli Corp. predicts that 13 million e-readers will be sold next year, up from about 5 million in 2009.

Some projections for 2010 are less than half that of iSuppli's, however. Analysis firm MediaIdeas projects that only 5 million devices will be sold, despite the 40 different dedicated devices that will be available.

But some analysts says it is simply too early into the development of e-readers to know what could happen with sales. Gartner Inc.'s Allen Weiner said smartphones or tablet computers could become an effective alternative to e-readers, with Apple Inc. possibly stealing all the attention with a tablet-sized device that functions as an e-reader.

"The market for single-purpose e-readers might never take," Weiner told Computerworld. "We really have no idea whether people will decide to read books on smartphones [instead of e-readers] and no idea what Apple will do."

But he said that, despite rumors of a tablet-type Apple device early in 2010, "There's still a good chance Apple will do nothing."

Weiner believes Apple is planning something that can rival e-readers, since Apple is talking to book publishers, but that is not any guarantee of a product in early 2010.

"Either the e-reader is going to take off like a rocket, or go into the technology Hall of Fame," Weiner said. "There is a thirst and a market for e-books and a thirst and market for dedicated e-book readers, but it is not clear how large yet."

Various analysts have named at least eight potential obstacles to the wide adoption of e-readers, even though it is obvious that large companies like Amazon, Google Inc., Barnes & Noble and others have invested millions of dollars in researching technology for displaying digital text clearly through e-ink technology, and probably have conducted extensive market research as well.

All the major U.S. telecom carriers are also involved, offering wireless connections to users who download e-books with the wireless cost included in the price of the book. Sprint Nextel Inc. was the first, working with Kindle devices.

Despite those investments, here are the eight main concerns about the future of e-readers:

1. Price of devices

The lowest prices for e-readers are hovering at $200 for the coming holiday season, but Weiner and others see the $100 price tag as the magic number that is needed to attract a significant number of buyers by Christmas in 2010.

The Nook sells for $259 (currently on pre-order) and is being marketed as a direct competitor with the Kindle 2. Meanwhile, the Sony E-reader sells for $200, with some offers including a $30 gift certificate to buyers, to be used for purchases at a computer store.

MediaIdeas's Nick Hampshire recently forecast that e-readers will drop to $50 by 2015, which along with color displays and even flexible displays (that can be rolled up or folded), will boost sales to 446 million in 2016, up from 115 million in 2013. (Hampshire is the same analyst who estimates that only 5 million will be sold in 2010.)

2. Price of e-books

Many first-release e-books cost about $10, but some promotional hardcover editions can be purchased in stores for less. In some markets, Walmart promotes hardcover copies of Sarah Palin's "Going Rogue: An American Life" on sale for less than $9 to get customers into the stores, down from its $29 retail price, Weiner said.

Meanwhile, Amazon offered both $9 for the hardcover on its Web site and for its Kindle version, even though most of its bestseller and first-release books in digital form sell for $9.99.

"Selling the new Sarah Palin book for $7.99 at Wal-Mart doesn't help matters with e-books," Weiner said. "They are really undercutting book prices to get you into the store."

3. Smartphones

It is possible that display technology really could improve to satisfy enough users who don't see a need to buy a dedicated e-reader.

Barnes & Noble seems to be taking the approach that both form factors -- smaller smartphones and larger e-readers --will be purchased for reading digital books, newspapers and magazines, especially as a person moves from one device to another while on a trip, for example. Barnes & Noble's e-bookstore, BN.com, allows users of BlackBerry, iPhone, laptops and desktops to read its e-books, with support for Android smartphones coming. At the CTIA show in October, Barnes & Noble showed the e-reader software running on the recently launched Motorola Cliq.

The iPhone, with a screen of 3.5 inches diagonally and 480 x 320 resolution, is much smaller than the Nook's main screen for displaying text, which at 6 inches diagonally takes up much of the device's size at at 7.7 x 4.9 x .5 inches. (It weighs 11.2 ounces.) But Verizon's recently launched Droid smartphone offers a 3.7-inch screen with a resolution of 854 x 480.

The QUE, which has not been formally introduced, will boast an even larger display on a device that will be 8.5 x 11 and nearly 1/3 inch thick. (The actual screen size has not been announced.) Barnes & Noble is also planning to sell the QUE, which is marketed as a tool for busy business professionals to read business and professional newspapers, periodicals and books.

Several analysts believe that nobody will ever expect to fully enjoy reading textbooks, magazines and newspapers for many hours at a time on a small smartphone display. In fact, part of the reason that iSuppli's Vinita Jakhanwal predicts 13 million dedicated e-readers will be sold in 2010 is because there will be devices that don't try to offer reading of all kinds of materials. She said that next year there will be "many content-specific readers like those targeted purely at textbook."

Weiner said there is not enough market research on who is willing to read e-text and for how long on a smartphone. "If the smartphone becomes more of a Swiss Army knife and a good venue for reading books, newspapers an magazines, then it could undercut dedicated devices, but that's a big if," Weiner said.

At least for the next year, consumers will be weighing whether they are willing to pay $200 for a better reading experience on a dedicated e-reader, or if they would prefer to use a smartphone they maybe already own, and do their e-reading just for the price of the e-book.

Dedicated e-book devices could win out with fuller experiences than a smartphone offers, including Web browsing. For example, the Nook boasts a separate smaller screen that can be used to shop for Barnes & Noble e-books, although it is not a full Web browseryet. Alex also offers a dual screen, which could be used as an Internet browser to supplement a textbook on the main reading screen with such things as a professor's streaming video on a Web site.

Several new development platforms could influence what form factors become successful e-readers, too. Adobe's Air platform offers a promising way for developers to build a wide variety of audio, video and social networking experiences into different devices. Adobe Air is used in The New York Times' Times Reader, but so far the iPhone doesn't support Adobe Air. Android devices being launched next year may support Adobe Air, Weiner said.

Enabling a smartphone to connect to an e-book catalog might not always be as easy as using the Kindle to connect to the Sprint network, which presumably gives dedicated e-readers an advantage over smarpthones. But Weiner said that capability is not a tough obstacle for smarpthone makers to overcome.

Already, the Apple App Store provides books to download, including all of Shakespeares works for free. Flurry.com is tracking a surging interest in purchasing e-books from app stores, noting in a recent study that e-books were more frequently used by customers per week than downloaded games.

4. Apple's rumored tablet computer

Depending on what Apple eventually does next year with a tablet computer, such a device could become a smash hit that combines a true tablet computer with a good e-reader that would function for reading even detailed textbooks, newspapers and magazines, possibly in color.

It probably wouldnt be pocket-sized, but that might not matter to such groups as students and nurses who might be glad to have a lightweight tablet replace pounds of heavy textbooks, as long as the reading experience is good.

Weiner said that Apple is interested in using Adobe Air on "more and more devices." That interest could bode well for a sleek, Web browsing, e-text reading Apple tablet -- should it ever materialize.

5. Popular authors aren't sure about e-books

Even though it might be easy to discount some authors in the digital reading universe when compared with powerful publishers and device makers, a few are powerful. Both John Grisham and J.K. Rowling have not permitted their works to be made into e-books, although Dan Brown has had success with the e-book version of "The Lost Symbol," analysts have noted.

If early adopters of e-reader technology who are clearly in tune with technology fads can't gain access to all the popular books, e-books could be held back. Weiner believes Grisham and Rowling will watch how the market evolves over the next two years, and what they do could really matter to some of their fans.

6. Digital rights

This is one area where Google Inc.'s influence will matter, as it has progressively added more library books to a massive digital library that could easily be accessed by any number of devices, including those using Android devices and fostered by Google. (The Nook will run Android 1.5.)

In a move seen as a concession to authors, Google revised its position last week on a lawsuit to give other companies a means to license Google's catalog of copyrighted, out-of-print books.

Google's filing could show its willingness to bend, partly recognizing that the market is eventually going to grow in ways that will ultimately help Google and others.

How fast the market grows for e-books, and therefore e-readers and other devices, is an open question. Barnes & Noble CEO William Lynch recently said that e-books were only a fraction of all the books being sold, but over many years will grow more and more important.

7. Open publishing standards, or not?

Some have hailed Barnes & Noble for endorsing the ePub reading format, making it more open than the proprietary approach used by Amazon. But some have complained that even Barnes & Noble will not all be Digital Rights Management-free, restricting some access to some books. And while Barnes & Noble is offering buyers of books with the Nook the ability to lend them to a friend for two weeks, some are already complaining that the number of chances to lend will be limited.

In response to such concerns, a spokeswoman at Barnes & Noble confirmed that one two-week lending period per book title will be allowed with the Nook, although any number of different titles can be lent. She also said whether a book is DRM protected will depend on the copyright holder or publisher.

One small company, LibreDigital Inc., recently previewed its AllAcess content delivery platform and said its e-books can be sold by publishers over any variety of devices. While its approach is open, it will still be limited to what publishers use the AllAccess platform. So far, that includes a group of publishers that includes HarperCollins Publishers, Simon & Schuster and some textbook and newspapers publishers.

Given the sheer number of publishers in the world and the vagaries of copyright laws and e-publishing formats, it is obvious that a person who expects technology and e-book readers to be a suitable replacement for a physical library will have a long wait.

8. Librarians and small bookstores

While some groups, including the New York Public Library and the Texas Book Festival, have semi-endorsed e-readers as a way to encourage reading and lessen illiteracy, it appears that many librarians are mostly remaining quiet about the technology and perceive it as a possible threat to what they offer.

While libraries going all-digital is a rarity, others already digitize books and offer them to remote borrowers who have been downloading them to desktop computers for years. But their scanning process costs money that could never be recovered if larger e-book stores operated by profit-seeking companies gain the market's eye. And many library's e-books aren't easily readable on handhelds.

Weiner said he recently gave a talk on e-books attended by librarians and others and there was plenty of angst to go around, even if it remains mannerly and quiet.

When it comes to e-readers, "people in the library community are really torn,' Weiner said.

This story, "Eight reasons e-readers could fail" was originally published by Computerworld .

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