More re: Apple App Store restrictions

Money quote: “This sudden shift perhaps tells you something about Apple’s understanding of the value of its platform,” said Forrester Research analyst James McQuivey. “Apple started making money with devices. Maybe the new thing that everyone recognizes is the unit of economic value is the platform, not the device.” ...

AppleInsider:

... Analysts were taken aback by Apple's new restrictions, as they represent a shift away from recent attempts to be more collaborative.

Last fall, after receiving criticism for App Store restrictions that were viewed as "anti-competitive," Apple removed its ban on third-party development tools. With the more open licensing terms, Adobe resumed development of its Packager for iPhone tool for porting Flash to iOS.

Rival Google also gained from the changes, as its Google Voice application was accepted into the App Store. After Apple pulled Google Voice-enabled iPhone apps from the App Store, the US FCC launched an investigation of Apple and AT&T. ...

Forrester Predicts One-Third of U.S. Consumers Will Be Tablet Users by 2015

NY Times: "Forrester Research has published a revised forecast for the U.S. consumer tablet market today, noting that its initial predictions from last year were 'too conservative.' ... Indeed, Apple's introduction of the iPad changed the game, so to speak, for tablet adoption, and many people are predicting 2011 - or least CES - to be replete with tablet-related announcements. Forrester has revised its forecast upward to 10.3 million units for 2010 and says that it expects sales to more than double in 2011 to 24.1 million units. Of these sales, most will be iPads, as Forrester predicts Apple's dominance over the tablet market will continue through 2012. ... "

Year of the Tablet Takes Another Stab at It

Joshua Brustein, NY Times: " ... [2010] became the Year of the iPad. This year, manufacturers are promising it will be different, saying that after the success of the iPad, they have learned a lot about what consumers want in a tablet. 'We could have done this a year ago and rushed it out, but it wouldn’t have had the right features,' said Phil Osako, director of product marketing at Toshiba, which is introducing a new tablet at this year’s show, which begins Thursday in Las Vegas. ... " Other players: HP, Motorola, RIM. "Perhaps the most important feature is the ability to watch high-quality video, say industry analysts, pointing to market research showing that, above all, consumers want to use tablets for all kinds of media consumption — watching films, looking at and sharing photographs, playing games. 'Apple competitors’ first instinct was to build a cheaper device and put a cheaper processor in it,' said Sarah Rotman Epps, an analyst with Forrester Research ... 'The problem with that is that it wouldn’t have been as good for the video screens.' ... "

Bezos Discounts Kindle-Tablet Competition

Digits - WSJ:

Some industry watchers like to argue about whether one kind of gadget will kill another. Others insist that–just like TV did not kill radio–most new product categories are simply additive, creating more consumer choices. Jeff Bezos seems firmly in the latter camp.

In trumpeting Amazon’s latest sales successes Monday, the e-tailer’s CEO argued that the much-discussed battle between e-readers and tablet computers is a non-issue, because many shoppers are choosing both. ...

“Customers report using their LCD tablets for games, movies, and Web browsing and their Kindles for reading sessions,” Bezos said in a press release, citing the low weight, long battery life and easy-on-the-eye displays of Amazon’s popular gadget. The current price of the Kindle–which now starts at $139, compared to $499 for the least-expensive iPad–means “people don’t have to choose.”

Forrester analyst James McQuivey says Bezos’s pronouncement isn’t such a stretch. According to the research firm’s surveys, roughly a third of iPad buyers also have or intend to buy a Kindle, he says.

“Kindle prices are so cheap now, that it’s not hard to envision buying both devices,” McQuivey says. The iPad, he says, “is a great multi-purpose device that can also read books but is not optimized to do so, leaving plenty of room for Amazon to sell Kindles to iPad owners.” ...

On The Certain Economics Of Relegating Paper Books To The Margins Of The Business

A "must read" analysis from James McQuivey | Forrester Blogs: "Time to get my hands a bit dirty. Last week I posted an eBook forecast with a brief explanation of why the book business may complete its digital revolution more quickly than other media businesses have. Turns out this assertion was more difficult to hear than I anticipated and I got some very insistent (and worth reading) comments. The discussion that ensued both on the blog and outside of it was very complex, this is not a simple matter. However, there are parts of it that are very simple that I have to clarify, even though it means rolling up my sleeves a bit. Allow me to draw into this discussion John Thompson of Cambridge University who gave a very worthwhile interview to the Brooklyn Rail this month to discuss his recently published analysis of the book industry, Merchants of Culture. ... "

Ironically, Merchants of Culture seems not to be available as an ebook. At least not from Amazon.

Market Researchers: eReaders Will Hit Sales "Tipping Point" this Holiday Shopping Season

NYTimes.com:

“This is the tipping-point season for e-readers, there’s no question,” said Peter Hildick-Smith, president of the Codex Group, a book market research company. “A lot more books are going to be sold in e-book format. It also means that a lot fewer people are going to be shopping in bookstores.”

Only a small slice of the book-buying public has bought an e-reader. About nine million devices are in circulation in the United States, according to Forrester Research.

That could jump in the coming weeks as consumers begin their holiday shopping, analysts predict. According to Forrester, at least 10.3 million e-readers could be in circulation by the end of the year. ...

Forrester Research: eBook Sales to Hit $1 Billion By Year's End, $3 Billion by 2015

readwrite.web: "With the holiday season just gearing up and sales of eBooks and eBook readers likely to go into overdrive, analyst firm Forrester is predicting that 2010 will finish with just under $1 billion in eBooks sales. According to Forrester's five-year forecast for eBooks in the U.S., 2010 will end with a total of $966 million in eBook sales. Furthermore, the eBook market is ready to triple itself, with $3 billion in sales by 2015. ..."

Stephen King: eReader Screen "Feels Like Home"

USATODAY.com: "Novelist Stephen King, who says he does nearly one-third of his own reading on an iPad or Kindle, sees e-books becoming 50% of the market 'probably by 2013 and maybe by 2012.' ... For now, King, who experimented with writing a digital book, Riding the Bullet, in 2000, when it had to be read on a computer, thinks people are reading more 'because the screen now feels like home to them.' HarperCollins CEO Brian Murray reports 'a sea change in the past few months' among new best-selling books: 'On some books, the e-books are outselling the hardcovers.' It's a transformation, says Peter Osnos, founder of PublicAffairs Books, 'in the same way that people moved from silent pictures to talking pictures to movie theaters to television to television-on-demand. We are adapting to the notion that we can choose where, when and how we read books.' An estimated 4 million U.S. homes have an e-book reader such as Amazon's Kindle or Barnes & Noble's Nook, according to Forrester Research, which predicts sales of more than 29 million devices by 2015. ..."

Good Summary of the Current Scene re: Tech for Color eBooks

NYTimes.com:

BLACK-AND-WHITE movies have their film noir appeal, yet it’s glowing color that rules on most consumer displays these days, with one exception: the pages of e-book readers. There, color is still supplied the old-fashioned way — not by filtered pixels, but by readers’ imaginations."

Now that stronghold of austere black letters is crumbling. “We expect companies to market color e-book readers if not by the holidays, then soon after,” said Sarah Rotman Epps, an analyst specializing in consumer product strategies at Forrester, the market research company. “And some consumers will definitely opt for them.”

... Major e-reader companies like Amazon.com, which sells the Kindle, and Barnes & Noble, seller of the Nook, have not announced that they are offering color versions, or that they are committed to a specific technology for doing so. But some smaller entrants in the market have said they will be using liquid crystal displays, just as the iPad does.

The Literati by the Sharper Image, for example, has a a full-color LCD and will go on sale in October, priced at about $159. And Pandigital has said that the Novel, its full-color e-reader with an LCD touch screen, will be at retailers this month at a suggested price of about $200.

But LCD displays have disadvantages ... They consume a lot of power, he said, because they need backlighting and because much optical energy is lost as light passes through the polarizers, filters and crystals needed to create color. They are also hard to read outdoors ...
 
Other types of displays may also find a foothold with consumers — particularly low-power, reflective technologies that take advantage of ambient light and are easy to read when outside. The EInk Corporation in Cambridge, Mass., uses this reflective technology for its present product — the black-and-white displays in the Kindle, Nook and other e-readers — and will soon introduce a color version of the technology, said Siram Peruvemba, E Ink’s vice president for global sales and marketing. The technology will probably first be used for textbook illustrations and for cartoons.

The E Ink color displays, which have had many prototypes in the last two years, have not yet found favor with Kindle. “We’ve seen E Ink color displays in the lab and they aren’t ready,” Stephanie Mantello, a senior public relations manager for Kindle at Amazon.com, wrote in an e-mail.

Ken Werner of Nutmeg Consultants in Norwalk, Conn., and a specialist in the display industry, says that he has viewed the E Ink prototypes and that their reflective color technology is worthwhile.

“If you are expecting these reflective color panels to look like an LCD TV or an iPad, you’ll be disappointed,” he said. “They are not going to have that depth and range of color.” But, he said, the displays are valuable because of their low power consumption, thinness and light weight.

E Ink will ship its color displays to device makers in late fall, Mr. Peruvemba said. Hanvon Technology, in Beijing, a maker of e-book readers, will be one of the first customers, he said.

The color filters used in the displays block some of the light, but the loss is offset by an improved ink formulation that yields higher contrast, he said; the color display consumes no more power than previous monochromatic displays.

Reflective color displays from Qualcomm will also be on the market soon, said Jim Cathey, vice president for business development at the Taiwan office of Qualcomm MEMS Technologies, based in San Diego. The company’s color technology, called mirasol, will be shipped to device makers this quarter, and should be available to consumers in the first quarter of next year, he said.

Mirasol dispenses with color filters, as its name suggests — it combines the Spanish words “mira,” for look, and “sol,” for sun, into a play on the English word “mirrors.” The pixels in the display use tiny, mirrorlike elements in optical cavities to selectively reflect ambient red, green or blue light — much as sunlight bounces off a bird’s feathers. The pixels switch fast enough to run video, he said.

Ms. Epps of Forrester also thinks sales of e-book readers, whether in color or black-and-white, will withstand competition from the iPad and others. “We see the market bifurcating into two separate arenas with two different price ranges,” she said — with one group opting for multifunctional slates like the iPad, and the other for e-book readers.

Color is not likely to be the most important lure for those bookish buyers. “When you ask e-book consumers what are the features they care about, it’s not color,” she said. “Market expectations are driving that innovation. Readers care more about features like durability.”

Amazon Responds - Kindle (with 3G) for $189

The latest in today's price cuts. Late this afternoon, Amazon brought the price of a Kindle down to $189. The cut is obviously a response to Barnes & Noble's news of earlier today. From The New York Times:

“It was obvious that the price of standalone e-readers had to come down,” said James McQuivey, an analyst at Forrester Research, citing the threat by Apple and other tablet makers. “We just never thought it was going to happen this rapidly.”

Analysts had expected the prices of e-readers would gradually fall because of the natural decline in component costs and the increased profitability of e-books themselves.

Until this spring, e-book sellers like Amazon and Barnes & Noble sold many bestselling e-books at a loss, in order to entice customers. But then five of the six major American publishers agreed with Apple to change to a so-called “agency” sales model. Under the new agreement, booksellers were required to raise prices on many digital books and got to keep a 30 percent commission on the sales, which now allows them to sacrifice some profit on their hardware.

The price cuts should add further momentum to what, despite incursions by the iPad, has been a growing market for dedicated e-reading devices. Amazon and rivals are on pace to sell 6.6 million e-reading devices this year, up from 3.1 million in 2009, according to Forrester.

But even as the market grows, several smaller players have encountered problems. iRex Technologies, based in the Netherlands, recently sought protection from creditors in Dutch bankruptcy court, citing problems with its division in the United States. Earlier this month, the Skiff e-reading platform, developed by Hearst, was acquired by News Corp., casting doubts about the planned introduction of a Skiff reading device.

“I don’t see more than two, or maybe three dedicated reading companies in the market for selling e-books,” said William J. Lynch, chief executive of Barnes & Noble, in an interview. “I think you are starting to see a shakeout now.”

Mr. Lynch also predicted that within 12 months, e-reading devices “that people will actually want to buy” could be available for under $100.