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Issue Date: November 2007

AnalystWatch: Amazon rekindles the e-book

November 2007
Steven Hartley, senior analyst at Ovum

The day before yesterday, Amazon launched its electronic book reader, the Kindle, through its US online store. Retailing at $399 (272 pounds) it is capable of storing up to 200 books, but can be expanded with an SD card. Amazon will also sell access to over 88 000 books; US, French, German, and Irish newspapers; and over 250 blogs.

Analyst view
It is very easy to be disparaging about yet another electronic book reader, and we will certainly come to that. However, one aspect of yesterday's announcement piqued our interest.
The Amazon device enables users to download content wirelessly over Sprint's national EVDO network without the need to sync with a PC. But for Kindle users there will be no need to sign up for Sprint. Amazon promises to take care of it. The wireless connection can be used to download purchased content or browse Wikipedia for free.
Taking care of the device's connectivity on behalf of users is particularly welcome. The idea that the essential plumbing is handled by the device manufacturer means that consumers simply pay the price on the box. This certainly makes the consumer proposition far simpler, although the scenario of the operator becoming merely the bitpipe is brought a step closer.
However, it is at this point that we must turn to the negative.
E-mails from the device will cost $0,10 per message and users will be charged for blog access (free online). Not a totally out-of-the-box model then.
In addition, naysayers will argue that Amazon can afford to provide connectivity, because uptake will follow the same path as previous ebooks, ie, low. According to the Association of American Publishers, fewer than 1% of sales by US publishers in 2005 were e-books, suggesting that the Kindle faces an uphill struggle.
Certainly Amazon is pushing content hard with bestsellers retailing for $9,99 or less (compared to the hard back average of $25), but Amazon's e-books can not be shared like a printed edition.
We also think that the device itself has limitations that will not help its cause: It is big (467 cc); heavy (292 g); expensive ($100 more than the Sony Reader); and has a black and white display (albeit from E-Ink, manufacturer of the Sony Reader display).
Surely users could take a paperback and a mobile Internet-enabled device to get the same or greater experience (certainly lighter) for less? At least online editions of newspapers will be in colour and, after all, who reads 200 books at the same time?
Therefore, we do not see the Kindle igniting the e-book market in the near future. However, we do like the idea of taking care of the end-to-end user experience. Hopefully, potentially larger scale initiatives will follow.
Ovum is part of the Datamonitor Group.
Source: Computergram

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