The battle for the e-reader market: Amazon vs. Apple
E-books are more popular than ever, following the release of Amazon’s updated Kindle and Apple’s iPad.
Recent analysis from Benedict Evans at Enders Analysis claims that ebooks are set to hit 10% of the US consumer book market this year, “with the UK following close behind”.
Amazon has sold around three to five million Kindles in 33 months, whereas Apple has sold three million iPads in 3 months – as Evans points out, “Amazon might look as though it is on the back foot”.
Yet, with the release of the new £109 Kindle, “the game isn’t over yet”.
E-books are selling more than ever, and in July, Amazon released figures that showed e-books were outselling hardcover books for the first time. In the three months to July, Amazon sold 143 Kindle books for every 100 hard cover books sold.
However, it should be noted that the comparison was only between hard cover books and e-books, and did not include paperbacks.
Amazon also said that it had sold three times more e-books in the first half of 2010 than in the first half of 2009.
But, as the Enders Analysis report points out, “Amazon is not necessarily representative of the overall book market”. The Association of American Publishers estimated in May that hardcover book sales in the US were 20% of the market by value, compared to e-books’ 5%.
As Evans puts it, e-book numbers are generally “very sketchy”, with neither Amazon not Apple releasing systematic statistics.
However, he also believes it is clear that “e-book sales are growing very fast – probably tripling from Q1 2009 to Q1 2010”, and they were “perhaps 3% of the US market in 2009 and are probably closing in on 10% now, and so could be worth $2.4 billion”.
Although the e-book market is clearly increasing in size, Evans said that growth is expected to be “lumpy” – meaning that “the earliest and strongest adoption [is likely] to be in genres and demographics where the specific characteristics of e-books are an advantage”.
For example, one of the major selling points for e-books is the ability to acquire immediate and instant access to new releases, therefore hardback books are likely to be disproportionately affected by e-books.
In terms of the e-readers themselves, Evans believes that “the screen is of course the key to all digital reading”. He points out that, until recently, the focus was on devices using ‘e-ink’. These aim to reproduce the paper-on-ink experience, as well as using very little power (so lasting longer) and being easier to read than computer screens.
But in the last six months, Apple has introduced something new to the mix. The iPad has an LCD screen, but a 10 hour battery, removing the battery-life advantage from ‘e-ink’ devices. Also, the iPhone 4 has a very high quality screen (326 pixels per inch), making it easier to read than a device using ‘e-ink’.
As the Enders Analysis report points out, Apple is “matching the ‘e-ink’ advantages (battery life, clarity) while also offering everything it lacks (colour, web browser, video etc). Amazon are working on a colour version of ‘e-ink’, but it is not yet ready to sell to customers.
The chart below shows how Amazon reacted to Apple’s launch of colour-enabled devices with significant price cuts:
Indeed, Amazon appears to be winning the price wars, with its latest Kindle on sale in the UK for only £109. By comparison, the iPad costs start at around £429.
Evans points out one scenario, in which the iPad is an expensive luxury – “$500 for a device that does little your computer cannot do already”.
However, he also says that it is possible to view the iPad as simply an addition to a laptop or computer, but actually as a replacement.
This is one advantage the iPad has over the Kindle, which is a “wireless reader” as opposed to a “tablet computer”.
And, by this logic, the iPad “looks cheap” compared to the average selling price (ASP) of other devices: