Monday, February 9, 2009

Kindle: 2 no greater than 1

Amazon has announced the Kindle 2,(due Feb. 24) which features the sort of technical improvements that you would expect from any consumer electronics device. It’s thinner, has a minimalist keyboard but is still over $300. It’s still sending data traffic to Sprint’s underutilized EVDO network.

A few IP lawyers are in a huff because the device has the ability to create derivative works:

Some publishers and agents expressed concern over a new, experimental feature that reads text aloud with a computer-generated voice.

"They don't have the right to read a book out loud," said Paul Aiken, executive director of the Authors Guild. "That's an audio right, which is derivative under copyright law."
What was interesting is what Amazon didn’t announce.

They didn’t announce open content to sell book readers for other platforms, like the iPhone. Google still hopes to rule the world with its own proprietary format, as the NY Times reported
“Our vision is every book, ever printed, in any language, all available in less than 60 seconds,” said Jeffrey P. Bezos, Amazon’s founder and chief executive.
although Amazon is passing on the manufacturing and distribution cost savings (of not killing trees) to the readers, over the objections of the publishers:
Amazon generally charges $9.99 for the digital versions of best sellers, although many publishers still sell the digital content to Amazon for the same price that they sell physical books. That means that for now, Amazon is taking a loss or making a small margin on the sale of some e-books.

“We do not agree with their pricing strategy,” said Carolyn K. Reidy, chief executive of Simon & Schuster. “I don’t believe that a new book by an author should ipso facto be less expensive electronically than it is in paper format.”

Mr. Bezos disagreed. “E-books should be cheaper than physical books. Readers are going to demand that, and they are right because there are so many supply chain efficiencies relative to printing a paper book,” he said.
Amazon also did not announce any sales figures, so everyone is using the speculation of 500,000 units. How do we know how big the market is or how much impact the reader had without sales figures?'

Speaking of speculation, we do have speculation that the shortage was not due to Kindle’s contract manufacturer, but due to Amazon being overly cautious in ordering a key component. As the WSJ reported this morning:
The $359 Kindle, which allows people to read books in an electronic format, has been out of stock on Amazon's Web site since November, which meant it was unavailable over the crucial holiday shopping season. Now clues from the contract-manufacturing industry in China and Taiwan suggest the Seattle company may have been blindsided by demand for the book-size device and that it has since been ramping up production for the launch of its new Kindle.

The maker of the Kindle's special screens, Taiwanese manufacturer Prime View International, says the Kindle shortages came from Amazon's conservative sales forecast for the device. Prime View adds that Amazon is now trying to avoid repeating the current shortage by asking it to pump out more screens, which it is now doing in case orders increase suddenly.

"It wasn't about delivery delay," says a Prime View spokeswoman. "The sales were just faster than expected," The company says the new version of the Kindle is set to have a slightly bigger screen than the first-generation model.
So the data suggests that the Kindle is a modest success so far, and that the new model is slightly enhanced but is ignoring (or forestalling) the Innovator’s Dilemma.

As I recall, the iPod started out as a modest success, and (as they say) the rest was history. The Newton also started as a modest success, but never crossed the chasm to the mass market.

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