Apple Was Never An eBook Weakling

In its latest court filing, Apple asserts its right to trial before the anti-trust settlement between the Department of Justice and three of the Big Six publishers goes into effect. Incredibly, Apple argues:

Apple had zero market share and no market power when it negotiated its entry through the challenged agency agreements
Really? Zero market share? No market power?

Let’s just look at the facts.

Fact: iBooks was introduced on January 27, 2010. On that date, Apple already knew it had sold close to forty million iPhones.

Fact: That number already exceeded the sales of all Sony Reader, Amazon Kindle, and other eInk devices combined. In its January 25, 2010 report, it announced it sold 8.7 million iPhones in just the previous quarter.

Fact: That iPhone device population were all potential eBook readers. They were already in use for Kindle books.

Fact: Jobs even bragged Apple was now the top mobile devices company.

Fact: Steve Jobs even listed eBooks in his iPad presentation, something he never mentioned in all past Keynotes.

Fact: Apple had 284 Apple Stores at the time.

Fact: Those Apple Stores had fifty million visitors in the last quarter of 2009.

Fact: Amazon had zero stores at the time — and still has zero.

Fact: Amazon’s mobile device revenues didn’t even rate placement in the list Jobs showed of mobile device revenues.

Fact: Apple was on its way to being a sixty billion dollar a year company.

Is Apple really going to argue that its installed device population wasn’t a factor in getting the Big Six to sign contracts?

Is Apple really going to argue that it had zero market power with those number of stores, those number of visitors, and with those revenues? Does that sound like a powerless company to you?

Really, would any other company that had true zero market share have been able to change the existing wholesale model as Apple did — and then force Amazon to adopt that model too?

And here is something that everyone else has missed:

even today, Apple is a distant third to Amazon and Barnes & Noble.

So Apple is claiming that it has already beat both Kobo and Sony in eBooks?

Both were established in the market well before Apple entered with the iBookstore — especially Sony.

Could any other company with true zero market share have done that, post-Amazon?

Kobo, which was founded in 2009, and had its Kobo eReader on sale in over five hundred Borders stores, was surpassed by Apple’s iBookstore, if Apple is to be believed.

No, on the day that Apple introduced its iBooks software, it already had an existing device population that exceeded the total number of all eInk devices.

Apple was by default already the number one eBook device maker too.

If that doesn’t count for something, then everything is simply wrong with the Department of Justice’s case.

And let me kill one line of argument that Apple is very likely to use in its court defense. I saw this tactic early on and I’ve been waiting for Apple to play this card. It’s that iBooks is not pre-installed on iOS devices.

But if you step into any Apple Store — in fact, any store that has demo iOS devices for trying — you will find iBooks is pre-installed on those demo models.

Microsoft argued that although Internet Explorer was pre-installed with Windows, anyone was free to download any other browser. Well, iBooks is pre-installed on all iOS demo devices and that’s a clear unfair advantage against eBook software from Amazon, Barnes & Noble, Kobo, Bluefire, and others.

No government bought Microsoft’s argument and the Department of Justice should not buy Apple’s argument.

Apple is trying to have its cake and eat it with iBooks. And the Department of Justice had better call them on that.

I’m not even going to bring up — oh wait, I am! All of the iPad ads — on TV and in print — that show iBooks software being used!

Barnes & Noble — which is also against the Department of Justice settlement, siding with Apple — introduced its original Nook eBook device in October of 2009. Why didn’t Barnes & Noble offer the Big Six Agency contracts? Wouldn’t that arrangement have been in their best interest, to preserve the print bookstores they now claim are endangered?

Finally, it’s time for Amazon to show its numbers.

To establish Apple’s pre-existing defacto dominance in the eBook marketplace, Amazon needs to reveal how many eInk Kindles it sold versus the number of Kindle app downloads to the iPhone.

If the iPhone app number exceeds the eInk device number, case closed.

Apple already knows how many iPhones had the Kindle app.

Now we need to compare that to the number of Kindles sold then.

I would bet that there were more Kindles as iPhones out there than there were Kindles.

Apple an eBook weakling?

If sixty billion dollars and forty million devices is being “weak,” then how does anyone define “strength”?

7 Comments on Apple Was Never An eBook Weakling

  1. I’ve always thought it ironic that people constantly harp on Amazon’s “deep pockets” when Apple is the player with the deepest pockets in this game. Small potatoes they ain’t.

  2. Fact: Apple sold $0 in ebooks before the launch of iBooks and the Agency Model.

    THAT is what the definition of market share is, not your odd potential market share based on the total global population that may or may not have access to a device.

    • I have to agree that they did ‘not have market’ share, but Apple did have massive market power.

      All they needed was their own app and instantly would have a huge market share.

      The massive market power gave them a powerful potential market share. I would describe it as the difference between Potential energy and kinetic energy. The big rock at the top pf the cliff has loads of potential energy while the rock falling to the ground has the kinetic energy. Apple was that huge rock glancing down from very high up and all Apple was waiting for was that small nudge (ibooks)

  3. Apple wasn’t lying, they had no market share due to Jobs thinking that ebooks wouldn’t catch on. Having large revenue and a monopolistic marketshare in smart phones does not change that fact. Saying that Apple had potential marketshare is a wash, they have tried to establish a dominance in the ebook market and have failed. Seeing the actualization of their potential we know that they did not have much potential for great marketshare in ebooks.

    • I’m not sure Apple ever really tried to build ebook market share – definitely not with the same effort that Amazon. B&N, or Kobo put into it.

      • Well actually they did by (a) negotiating agency pricing, (b) updating with real page numbers, (c) launching a textbook storefront, and (d) increased advertising of their ibookstore. If they really do launch a smaller sized ipad that would be as big as the other four reasons. I wouldn’t call any of that not trying.

        I think that the idea that Apple could have whatever they want as long as they reach for it is absurd. They have their own history of failures.

  4. “To establish Apple’s pre-existing defacto dominance in the eBook marketplace, Amazon needs to reveal how many eInk Kindles it sold versus the number of Kindle app downloads to the iPhone.

    If the iPhone app number exceeds the eInk device number, case closed.”

    Sorry, this doesn’t make sense. Even if iOS Kindle app downloads exceed Amazon Kindle device sales, Amazon still takes 100% of the profit. Apple doesn’t make a dime, only books purchased from Amazon’s Kindle Store can be read in the Kindle app (excluding free converted books).

    I’m not sure why Kobo, B&N, and Sony are even compared to Amazon. The former are open, the later a walled garden. Amazon’s Kindle Store uses a proprietary format for ebooks that requires a Kindle device or app. If you ever decide to purchase a different e-reader, you loose the ability to read every Kindle book you’ve purchased from Amazon. That’s like buying a car that will only run on special fuel from a single gas station.

    I would never consider Amazon for that reason. I purchase ebooks in ePub format, which can be read on any device I choose. (except on a Kindle of course)

    iBooks fails for this reason as well, since you can’t read iBook purchases on an e-ink device or in another reader app.

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