Sarah-Rotman-Epps [Posted by Sarah Rotman Epps]

This morning Amazon announced its new, textbook-optimized Kindle DX,
launched in partnership with six universities and three textbook publishers. My colleague James
McQuivey and I have been covering the eReader space, and I'm about to
publish a new report on the future of the eReader market.

Here's my take on the Amazon announcement:

  • Amazon is smart to go after the textbook market. According to
    Forrester's data, there are only about 5 million gadget-loving frequent book
    buyers who are the primary US market for book eReaders like the Kindle2 and
    Sony Reader Digital Book. But there are 13 million college students and 50
    million grade school students in the US–that's a big juicy market.
    Textbooks are a killer app for eReaders–the content's expensive and helps
    justify the cost of the device; they're heavy; and kids today just love their
    screens.
  • Amazon feels the heat of competitors' advance. Why is Amazon launching a
    new product so soon after the Kindle2? It's trying to shore up its current
    position as a US market leader before the competition heats up later this
    year–not just from Sony, but from new players like Plastic Logic and the
    Hearst-backed FirstPaper (yes, we've spoken with them, and yes, they're real).
  • This game's still in early innings. Amazon wants to do for publishing
    what Apple did for music, but publishers aren't willing to play a passive role
    here–their survival depends on it. Other retailers, device-makers, and mobile
    operators are vying for a piece of the action too. In the next year we'll see
    competitors attack Amazon's weak spots by launching new features,expanding
    access to content, dominating markets outside the US, and improving relationships
    with publishers.
  • The textbook tipping-point is still a few years away… There still
    isn't much eReader content for textbooks out there, even on Amazon–although the partnership Amazon announced today with Pearson, Cengage, and Wiley will supposedly put 60% of textbooks in the Kindle store. Textbook
    publishers look at the eReader market with apprehension: On the one hand,
    they’ll have the opportunity to cut print production and delivery costs; on the
    other, a major portion of their revenue evaporates and piracy becomes a
    significant threat (music executives will sympathize).
  • …and it will come from China.
    Demand for eReaders is already growing quickly in China (Jinke Electronics' HanLin
    eBook, which retails for US$299 and comes with 600 free books, is the market
    leader there). Universities in developing markets like India, Brazil, and
    especially China will use technology to leapfrog ahead of Western
    counterparts. If the Chinese decide to do something, it gets done (witness the
    maglev train in Shanghai, built in 2 years, while we have, ahem, Amtrak).

I have more to say about newspapers, but that's a separate post…

If you want to read more, stay tuned for my upcoming report–you can sign up here to get an alert when the report goes live.