Kindle 3 or Bust

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The Kindle 3 will be a make or break product for Amazon says the Yankee Group, now that Apple has rocked the eReader market, winning 5 million eBook downloads to feed its iPad in only two months.

How should Amazon fight back against that 22 percent market share in eBooks Apple announced Monday?

And is the game over for Sony and Barnes & Noble as The Motley Fool taunts— “If you’re Barnes & Noble or Sony throwing in the digital towel doesn’t seem like such a crazy idea at this point.”

The Yankee Group says “Kindle 3”, most likely due later this year (but unconfirmed by Amazon) will be critical to Amazon’s success, however the early signs are that the device won’t be revolutionary. It’s likely to have a larger screen that will also be a touch screen but its expected lack of a color screen is a strike against it, said analyst Dmitriy Mochanov. “It’s pretty surprising for me. I’ve always believed that color will be pretty important…the book of the future isn’t just going to be a piece of text it will have embedded video, music, podcasts; it will automatically update to reflect current world data. The first ingredient you need for that is color. Frankly, I’m disappointed that Amazon isn’t doing everything it can to get color up and running.”

Of course, Amazon could go in the other direction and offer a super low cost device, suggests author Seth Godin. He challenges Amazon to field a $50 “paper back” eReader—one so small it could fit in your pocket, and so cheap it could be given away along with a purchase of 8 books. “The only way to get authors and publishers to embrace this device is to sell 20,000,000 of them. You either become the best and only platform for consuming books worth buying or you fail. And the only way to create that footprint in the face of an iPad is to make it so cheap to buy and use it’s irresistible,” says Godin.

For everyone but Apple, “The whole eReader industry is moving a little more slowly than what I expected, I still expect sales of 6 million units this year in North America,” says Molchanov. But don’t totally blame the iPad, because the device is also bringing in new converts. It’s getting people who are not yet comfortable with digital content or digital books to buy a digital device, he adds.

“Even with Amazon’s 90 percent market share last year, there weren’t many people buying eBooks.” So Apple is expanding the pond for everyone, but Amazon’s share in books, both print and digital is at stake and it’s doing all it can to catch up, says Molchanov, adding, “The Kindle 3 will be a make or break product for the company.”

Sources: Seth Godin, The Motley Fool,

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1 Comment

  1. I do not see the Kindle 3 having to go color. These are eBooks. It is not a computer… it is a digital reading device. Paperback books are on black ink on white paper. Unless you love looking at covers for hours on end… where does COLOR fit into eBook reading?

    I also do not see the iPad as an eBook Reading device. At two pounds and huge size, and quite expensive… it is more of a computer. How many will carry an iPad around to read a book with 8-10 hours of battery charge life?

    EBook Readers do need to be creative and there is a challenge here. I just do not see color as the answer or lugging an iPad around as conducive to reading.

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