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TechMan: Could this be the year that the e-reader takes off?
Sunday, November 01, 2009

TechMan remembers a number of years ago when he was first able to check out an electronic book reader from the public library.

The units were large and clunky, didn't have many books, never caught on and soon disappeared.

But this year is shaping up to be the year of the e-reader. Will electronic books and readers finally catch on? Will they put the book publishing industry in the same fix that the newspaper industry finds itself in?

Several holiday gift lists have predicted that e-readers would be a hot electronic gift this year. And with a spate of devices hitting the market and the beginning of price competition, Santa could be bringing an e-reader to set beside the kindling in front of the fireplace.

The biggest player is Amazon's Kindle ($259 retail), an e-reader made popular by its vast selection of books and the ability to download them at any time.

The Sony Reader (starting at $199) has been the Kindle's only competition until now.

The most intriguing new player in the market is the Nook ($259), retail bookselling giant Barnes and Noble's entry, coming out this month. It has a traditional black-and-white reading screen, but also a second smaller color screen at the bottom that can display book covers and other information.

You can download books over the 3G wireless connection, as per Kindle, but it also is equipped with Wi-Fi, making it possible for Barnes and Noble to do such things as push coupons to your reader when you enter a store.

Spring Design's Alex, Plastic Logic's Que, Ectaco's jetBook ($349), iRex's eReader ($399) and eight or more others also are on the market or soon will be. But the 800 pound gorilla at the door is the persistent rumor that Apple will bring out a tablet PC that also functions as an e-reader.

Does this mean widespread adoption of the e-reader? Estimates are that 1 million e-readers will be sold over the holiday season and 6 million total in 2010. Sales so far have been estimated at less than 2 million. Comparing this with the fact that Apple sold more than 10 million iPods and 5 million iPhones in the third quarter of this year, and e-readers can hardly claim total market penetration.

Even if e-readers become mainstream, will their advent threaten the book publishing industry as the Web has threatened newspapers and magazines? Maybe, but it will be much slower.

The rapid decline of newspapers is the result of a "perfect storm" of blows to the industry. The Web has eaten away at circulation numbers and siphoned off ad revenue (classified advertising was a huge profit center for newspapers), while the economic downturn has further hurt. In addition, changes in the retail market (Wal-Mart, the nation's largest retailer, does little newspaper advertising) have reduced display advertising.

It's different for the book industry. It only has to worry about readers buying its products. And unlike newspapers, book publishers do not offer their content free on the Internet.

When Amazon sells the Kindle version of a hardback best seller for $9.99, does that mean that the publisher makes a great deal less profit? Not necessarily, because the publisher no longer has the huge cost of printing and distributing the book. And there are no unsold returns.

Of course publishers could dictate higher prices. Scribner announced a few days ago that when the digital version of Stephen King's new 1,000-plus page novel, "Under the Dome," comes out, it will cost $35, the same as the hardcover.

In fact there is some feeling that e-readers have actually helped the publishing industry. Amazon claims that Kindle owners buy 3.1 times as many books as they did before purchasing the device. And TechMan knows, as a Kindle owner, that the instant gratification of buying and receiving a book in a minute at a lower price is powerful.

So I say go ahead and buy that e-reader for the bibliophile on your holiday list. Or buy a book. Just like newspapers, they're going to be around for a while.




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First published on November 1, 2009 at 12:00 am