E-Book readers: some thoughts and business opportunities

Over the past couple of days I had my annual Chinese New Year holiday. Having some time to relax means for me that I get lots new business ideas. Most related to things I am currently involved in, like games, where I have thought about some ideas for the next frontier in gaming: the combination of mobile gaming and social networking. But also in other fields, for example in the field of e-books. I won’t have time nor the resources to something with this, therefore I post some of my thoughts about e-books here. Maybe it will inspire others to do something with it.

E-book readers have come a long way since they were first introduced a couple of years ago. The new readers do not use a computer screen anymore that constantly refreshes itself and is therefore tiring to look at, but they use electronic ink. This technology is a huge breakthrough in my opinion, but it does not get the attention it deserves. E-ink means that the screen reads like a real book, it only refreshes itself when you turn the page. If you have never seen it, try to find a store where they sell them (still not easy) and ask for a demonstration. The good thing is that the devices are light (same weight as a paperback) and have a huge battery life because the battery is only used when you turn the page (about 7500 pages). Basic memory in the devices is enough for 100-200 books in these devices, but most have expansion slots to even take a thousand books with you if you want.

I have owned an iLiad e-book reader for about 18 months now (I probably have a pre-production model, that was given to a start-up I invested in), but did not use it much. Why? It was too slow, it always had trouble connecting to the internet (especially with firewalls). The software was user-unfriendly and I always had trouble downloading stuff. However, the e-ink technology was great, and from the moment I had the iLiad in my hand I knew this would one day revolutionize the way we read. Too bad the iLiad engineers and marketeers did not manage to put the product into the market, they had a big opportunity on their hands but they blew it. Out of frustration with the iLiad I decided to buy Sony’s latest e-book reader (the PRS-505) a couple of weeks ago. Although it is still not perfect, it was a revelation.

It’s screen is a bit smaller than the iLiad and, does not have wifi or a pen to write, but it just works. I bought several books already in the Sony e-book store and getting them on my reader was just a matter of drag-and-drop. Even my parents could do it. That statement is not meant to make you laugh, but it shows where the iLiad went wrong. A product should be easy to use, also for people who are not technical geeks. And the Sony e-book reader is fast. I don’t need to wait a long time to get to the next page (for the iLiad this took up to 2 seconds sometimes, totally unacceptable), but the moment you press on one of the page turn buttons (there are buttons for left-handed and right-handed people) the next page appears almost immediately. I read two book on my Sony reader so far, and it’s the same or even a better experience than a normal book. You really forget that you are reading an e-book.

As mentioned I think e-books based on e-ink will be the future. But there is still some work to be done, especially on the marketing side but also on the product side. If I evaluate a business idea I try to look at the potential market size. Products that appeal to older people especially have my interest, because they are the ones that have purchasing power. The e-book is such a product. Why? When you get older it gets more and more difficult to read smaller fonts. If the font on an e-book reader is too small you just press ‘zoom’ and the whole book is offered in a bigger font. Press ‘zoom’ twice and you might not even need your reading glasses anymore. This is a feature that marketeers should focus on.

Another great thing is the integration of audio. The Sony reader has this. It does not work flawless yet, but that should be easy to solve. It does not exist yet, as far as I know, but if I would be a publisher I would offer my books in a combination of audio and text (or to start with a print version, plus a free audio and e-book). If you read the book on the e-book reader but are tired you should be able to switch to the audio version right away. Or when you are reading a book at night, you can continue to listen to it while driving to work the next day. Technically very simple, and nobody is doing it.

You might argue that people are not willing to pay for this. Could be, I know the internet business models quite well, and think that books will go the same route as music. Free, free, free. So you need to start thinking about a new business model. I think there is a very attractive one for e-books. You want to get the latest bestsellers on your e-book reader? Either you pay for it, or you get them with advertising embedded. Just like in a magazine. If you don’t like that, you can pay for it. Or if you don’t like the ads, let the e-book reader know what kind of ads you would prefer. It’s easy anyway to target ads at certain groups based on their reading behavior. You can change where the ads are continuously and you can change the content of the ad. Why is it accepted in magazines and papers and you don’t see it in books yet?

But there is more. Most people do not read book anymore, which is a pity. I just came across the statistic that 44% of all Americans did not read one book in the past year. Apple’s Steve Jobs remarked last month that e-book readers will never become big because people do not read anymore. Because of that he said Apple will not make an e-book reader. But do they not read anything at all? Some of them surely fall into the category that just watched TV or surfs the internet. But there is also a big group that reads magazines and newspapers. And that is an even bigger opportunity for publishers. Make all your publications available in an e-book format! I want to subscribe to the New York Times and to the Dutch NRC Handelsblad. But I am not doing it because I would get the paper with one or more days delay. However, if I can get it automatically on my reader I would be willing to do it. Same for magazines. And it’s good for nature as well, imagine how many trees would be saved if people would not read paper newspapers anymore! Now I realize that paper versions will likely not disappear soon, but with better e-ink readers it could go faster than you imagine.

I actually do not trust Steve Jobs with his statement. Remember when the iPod video came out? A few months before that he said that people don’t watch video’s on a small screen. For the iPhone he also denied that Apple would make one. Well, I won’t be surprised if he is fooling the competition once again, and Apple will introduce an e-book reader in the near future as well. Steve is a very smart guy, and I think he also sees these opportunities. Apple could make the perfect device, the best design with the best features. When the iPod was introduced Steve said that you can now bring your whole music collection with you wherever you go. With the iBook (They already own the name, but use it for a different product) you could do the same for your book and magazine collection.

But in case Steve Jobs will not do this, I hope at least one start-up company will do it – and do it better. Get a better searc
h functionality, make sure the device has wifi and 3G, and make sure the design is great. Amazon made the worst looking product of the year with its Kindle e-book reader; but they still manage to be sold out! Make sure advertising can be integrated, and do a good job on marketing. People don’t even know what e-ink is. Wherever I go people ask me about it, even though the technology is several years old. Integration in a mobile phone could also be an idea (this company is already doing that), to make it even more portable. And don’t forget to make deals with newspaper and magazine publishers (something the folks at iLiad also did not manage). The company that does this right will be a winner.

Note: If someone from iLiad reads this, and feels I am not giving their product enough credit, please feel free to contact me (marcvanderchijs (at) gmail (dot) com). If you can provide me with the latest model I will test it for at least a few weeks and let you know my experience and blog about it.

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  1. dear Marc,
    this is great post about ebook readers. I just presented the Kindle to a group of german executives in the publishing industry during a trend-tour in Seoul.
    The reactions where really different from “I want to have it”, “it is so ugly – who would ever buy it”, to “this will not be important”.

    I think it is the future and it will take 3 to 5 years to reach a critical market. A major Asian publishing company predicted that it will reach a significant market by 2013 and will even support full color at 2015.

    We have done a big trendreport in 2007 directly on this topic. Best,

  2. Hi Monty,

    Good to see you agree that this will be big. It certainly will take a few years, it also depends on when good content becomes available. If most major newspapers and newspapers can be automatically downloaded it can go very guick.

    I was happy that a big company like Amazon launched the Kindle, although they did a terrible job on the design. Let’s wait and see, if Apple jumps in it can go very quick. In the mean time I can finally buy most books I want in China (through my reader), without having to order the physical product online and wait for weeks to arrive.

  3. Great post. I enjoyed reading your perspective and your experience. My friends worry that the ebook readers will put book stores out of business, but I just don’t see that happening any time soon. I agree, though, that ebook readers are the way of the future. I’ll be watching for Steve Jobs’ model; we’ll see if you’re right about that (I don’t doubt it for a minute). And remember, regarding the “ugly” Kindle, beauty is more than skin deep!

  4. I totally agree with you Marc. I’ve been following E-ink since it was first announced by Philips a few years ago and I can’t wait for it to become a bit more financially interesting, i.e. cheaper to own one.
    Hope to see more of these readers very soon.

  5. Mark,
    Great article on ebook readers. I have been looking for the Sony reader as well. I am in Japan at the moment and guess what, you can’t buy it in Japan!!.
    So wonder where you got yours?
    groeten, Gerrit

  6. @sanjana Thanks for the link, I will check out Spill Group is also active in India with, so because of that I am even more interested.

  7. @Gerrit Kremer You cannot buy the Sony eBook reader in Japan? That surprises me, I thought that was the first country where it was launched. I bought mine on the internet on the Chinese site Several sellers offer the product there (import from the US). Not sure where you are located, but if you are in China that’s the easiest way. Outside China you might want to check out eBay.

  8. @Marc, I am located in Shanghai, I was just for business in Japan and thought I could pick it up there. I learned that the ebook reader is only available outside Japan. I went to Yodabashi in Tokyo and they had no idea what I was talking about.I will try Taibao,com as you suggested.
    Will try to get it on my next trip to USA.