If 2011 is the year of the tablet PC, what does that mean for the tablet’s technological cousin, the e-reader?
Wall Street analysts were ready to declare the e-reader dead last year, and it was hard to argue with them. But Amazon.com (NASDAQ:AMZN) proved this past Chrsitmas that e-readers were more viable than expected. The third-generation WiFi-only Kindle released last summer was Amazon’s bestselling product ever, with Wall Street estimating that 8 millions Kindles were sold last year, with strong momentum heading into 2011.
Barnes & Noble’s (NYSE:BKS) Nook stayed strong as well. Exact sales numbers weren’t announced but the company did say that new products and services like the Nook Color and Nook Kids helped push the device’s sales up 9.7% over the previous holiday.
It’s more than the influx of tablets that will determine the fate of e-readers this year. Device manufacturers are facing a fast-changing electronics books market as well as new technology.
Here are three companies that will define the e-reader business this year:
Apple
The bestselling Kindle book during the holiday 2010 season was Steig Larson’s The Girl With the Dragon Tattoo, published by Random House imprint Vintage Books. It was a telling victory for Amazon since Apple (NASDAQ:AAPL) iPad and iPhone users bought the book using the Kindle App rather than books sold in Apple’s iBookstore, because Apple still doesn’t offer Random House titles. That kind of exclusivity may not help Amazon going forward, though. New restrictions made by Apple may shackle Amazon and other e-book sellers from continuing to host apps that work as separate digital storefronts. If this happens, Amazon and Barnes & Noble’s e-bookstores may become shackled to their devoted devices.
Sony
Sony’s (NYSE:SNE) Sony Reader e-bookstore app was recently blocked from Apple’s App Store due to Apple’s new stringent policies on not allowing “in-app” purchases of content that aren’t also offered through the App Store. But Sony seems unconcerned. While the company refreshed its whole line of e-readers in July 2010, the company’s new strategy is to make its e-books available across all portable devices. New phones from Sony Ericsson, the new Portable PlayStation codenamed NGP, and S1 tablet all support Sony’s multimedia Qriocity service that incorporates its e-book business. Though the company may be spreading itself thin, a multiplatform approach to the e-book business may be the only way e-reader brands survive going forward.
The Google (NASDAQ:GOOG) eBookstore — formerly known as Google Editions — opened for business on Dec. 6. The company’s open platform policies are reflected in the storefront’s business model — rather than be tied to specific software on ever platform, Google eBookstore stores purchases on a user’s Google account. They can they access those books via any web browser, whether on an Android phone, an iPad, or even a Kindle. It’s unclear how successful the store’s been in the two months since it’s been opened. Anecdotal evidence isn’t promising. E-book publisher Fred Zimmerman said at the end of January that of his 95 titles in the Google eBookstore, only one copy has sold. The key to its success may be branding. Amazon has gone a long way toward making Kindle and e-book connected concepts in the west. Both that company and Barnes & Noble may end up finding success with Google’s business model in the future.
