MYTH: The eBook Market Will be Won on Hardware
Bite the Book is usually a good read, and this post ostensibly covered the current Australian ebook market, major players, and why they’re winning. Amazon is believed to have a 60% or larger share,with Apple, Kobo, and Google trailing as distant runner’s up.
Unfortunately, the analysis is flawed due to a mistaken assumption that ereader hardware is still the deciding factor in controlling the ebook market. I’m not sure why that belief is sticking around, but I do know that I’ve encountered it twice in recent weeks. Here’s how Bite the Book phrased it:
Amazon, Apple and Kobo are winning the battle for eBook market share through their devices.
While any eBook retailer can sell onto tablets and smartphones, as well as Kobo eReaders, the majority of users purchase from the default eBook provider on their device (iBooks, Kobo, Amazon).
The eBook market is essentially a device war: Kindle vs iPad vs Kobo (and to a lesser extent Android).
And they are wrong.
If that were true then Apple would have a majority share of the ebook market by now. They have sold a bajillion more iThings than Amazon has sold Kindles and Kindle Fires (seriously, the ratio is 10:1 or higher). If hardware sales determined ebook market share then why does Apple have only 10% to 20% of the global ebook market?
Even if we limit the discussion to Australia, Apple has sold an estimated 4.3 million iPhones in that market. I can’t find stats on the number of iPads sold in Australia, but an Australian market analyst said that 15% of the population had a tablet in September 2012. Most of those tablets were likely iPads, so why doesn’t Apple dominate the ebook market there?
That’s obvious. It’s because iThing owners are using apps from other ebookstores on their iDevices.
Folks, the ebook market shifted from being hardware centric to being ebook centric a while ago. I can’t pinpoint the exact date but it happened at a point in time after Amazon and Barnes & Noble got into an ereader price war in 2010.
In June 2010 Barnes & Noble announced a new Wifi-only Nook for $149 and they dropped the price of the original Nook to $199. About 8 hours later Amazon responded by dropping the price of the K2 to $189, and about a month later they released the K3 (Wifi and 3G) at the same $139/$189 price points.
And yes, that US-centric price competition did affect the rest of the world. It changed how Amazon priced their hardware but it also changed how Amazon developed their apps. It was only after the Kindle dropped in price that Amazon decided to stop limiting the features of the Kindle apps. Why do you suppose Amazon waited until 2011 to start giving the Kindle apps features like email addresses?
My guess is that so long as Amazon was making money off of hardware sales they kept the features limited of the Kindle apps so the hardware would always be the better option.
And do you know what happened once they stopped treating the app users as second class customers? That’s when Amazon started aggressively trying to sell ebooks on smartphones, tablets, and PCs – other people’s hardware.
Apple has put something upwards of 500 million iPads and iPhones into the hands of consumers. If this were a straight up hardware fight then don’t you think Apple would have won by now?
Maybe, just maybe, Amazon is doing a better job of selling ebooks on Apple’s devices than Apple is. And who knows, maybe the fact that Amazon is selling ebooks on Android, Windows, OSX, and other platforms that Apple is not could also explain why Amazon is still winning.
Gadgetry is cool and all, and I really love seeing new stuff unveiled, but when it comes to content sales (gaming consoles excepted) the real market is on other company’s hardware. That has been true ever since the dawn of the PC age, and the brief period that ereader hardware dominated content is best looked at as an exception, not the norm.
image by Robert Couse-Baker