Google Enters the E-Textbook Game

Back-to-school gets a little more digital

Google Enters the E-Textbook Game

While Apple (AAPL) and its iBookstore wait for the DOJ to finalize its punishment in the wake of an e-book price fixing conviction, Google (GOOG) is swooping in to take on the company in the growing e-textbook market.

This fall, Google Play will be joining Amazon (AMZN), Barnes & Noble (BKS) and Apple — along with a bevy of smaller players — in offering college and high school students a digital alternative to those 10 pound paper textbooks.

Google made the official announcement on its Android blog:

“Rolling out this week, you can now rent or purchase digital textbooks from the Books section on Google Play. We have a long list of publishing partners, and we’re launching with a comprehensive selection of higher education titles from science and mathematics to history and English, and everything in between.”

Apple got into the educational book market in a big way last year, with the January 2012 launch of interactive iBooks textbooks and e-text authoring software. Amazon has been in the digital textbook business since 2009, when it launched a pilot program with U.S. universities to offer texts on its (then huge) 9.7-inch Kindle DX e-reader. That early foray might have been pushing it, but with today’s tablets offering better displays, storage and multimedia capabilities — and with Wi-Fi being pretty much ubiquitous on campuses — the hardware limitations have been eliminated.

And tablet ownership is rapidly growing among students. A 2012 survey by the Pearson Foundation found that the number of U.S. college students who owned a tablet had tripled over the previous year, while the number of high school seniors with one had quadrupled. The study also found a preference among the groups for digital textbooks over printed versions — the e-texts are more interactive both through embedded material and instructor/classmate notes that can be shared via social media. They also tend to be cheaper. The students felt digital e-textbooks were destined to replace their heavy, hardcover counterparts altogether within five years.

With its Android operating system now powering 63% of tablets, an existing e-book business and the opportunity to stick it to two rivals (Apple, who keeps trying to banish Google apps from its mobile products, and Amazon, who has the nerve to fork Android and sell tablets locked into its own app store), it’s not a surprise that Google’s wading into the ring.

How much is this market worth? It’s not going to make or break the bank for Google, but then again the company is so big that no single line of business (other than advertising) has a material impact other than to help the company to diversify beyond advertising revenue. Still, there is a fair amount of cash up for grabs.

According to the National Association of College Stores the average price for a new textbook in 2012 was $68 and the revenue generated for U.S. College stores for fiscal 2011/2012 totaled $10.45 billion — most of that from textbook sales or rentals. A Forrester Research study quoted in the New York Times pegs the total textbook market for 2010 (that includes college as well as high school as well) at $8 billion in the U.S. alone, and at that time digital sales had a measly 2.8% share, leaving plenty of room for growth.

Speaking of textbook rentals, Google is getting into that business as well (at least on the digital front). Amazon and B&N also rent digital e-textbooks, but Apple has stayed away from that model so far.

The market is sizable and destined to grow rapidly thanks to increasing college enrollment and by ever-growing tablet ownership rates, which means the technology giants don’t have the market to themselves. Kno is one of the early digital textbook sellers, offering some 200,000 digital textbook titles for a range of hardware platforms, while CourseSmart claims it has the world’s largest selection of e-textbooks.

All of these digital options — from Apple’s iBookstore to Kno and Google Play — have agreements in place with the actual textbook publishers, big companies like McGraw-Hill Education. All that is except for Boundless, an e-textbook seller trying to shake up the market by offering free e-textbook “alternatives” and selling $19.99 interactive versions, both based on royalty-free open source material. Boundless is currently being sued by a who’s who of the textbook publishing world.

Google Play’s e-textbook selection might not be up to the competition this year of operation, but you can bet the company will show its usual relentless determination to improve. Google Play e-textbooks are stored in the cloud and accessible from a huge range of devices — including Apple’s — and naturally, Google search is a featured option. It claims its digital offerings can save students up to 80% off the purchase price of buying a new textbook at their college bookstore.

While Apple, Amazon, B&N and the rest of the e-textbook players will be watching Google warily, the area where the growing transition to digital is likely to be most strongly felt is college bookstores. These retailers will soon need to begin filling their shelves with more sweatshirts, hats, tablets and something other than piles of textbooks.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2013/08/google-enters-the-e-textbook-game/.

©2014 InvestorPlace Media, LLC

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