Friday, June 10, 2011

E-readers are not tablets—yet

This semester, three of my SJSU honors students studied the tablet and e-reader market. Swapnil Lall, Michael Edmonson and Joshua Hawley came up to speed on an emerging and turbulent market segment. Since their presentation last month, there have also been some important announcements in this market.

They did 20 interviews, 57 intercept surveys and 133 online surveys of owners and non-owners of these products.

Not surprisingly, they found that the iPad dominates mindshare as the iPhone did four years ago. Most respondents want an iPad, even if few are willing to pay the $500 price. As various analysts have noted, there is no tablet market — just an iPad market.

However, there is an e-reader market, and the separation of specialized e-readers from general-purpose tablets seems only temporary. Today there are significant differences in price and screen technology, but major overlaps in usage — as well as one product (the nookColor) that straddles both categories.

It is clear that the tablet market is growing, as awareness and usage grow. For owners, the products clearly compete with laptops, smartphones and physical books.

The most popular usage categories that our students found were (in order):

  • news
  • books
  • social networks
Two-thirds of the respondents say that e-reading is a primary reason for using the device. The web is important, but for most e-mail is less important than people thought it would be. Having a web-connected tablet provides the value of serendipitous discovery, as when one respondent uses it with IMDB to research actors in the current TV movie.

For now, the market has two distinct segments: the $100-150 black & white (E-ink) e-reader without Internet capabilities, and the $200-800 color web tablet with WiFi and possibly 3G. Even if the two categories will eventually merge, the entry level devices are spurring adoption, attempting to lock-in e-book formats and hastening the demise of physical books.

NYT columnist David Pogue evaluated the new Nook (aka “Simple Touch Reader”) and Kobo (“eReader Touch”) in his Thursday column. He laments the current limitations, like the lame “lend” features (one time only) and restricted availability (no Harry Potter).

Still, these 6" touchscreen E-ink tablets improve on the market-leading Kindle in terms of convenience and size, with the Nook nosing out its rival:
The All-New model, for this nanosecond in marketing time, offers the best combination of size, shape, battery life and features on the market; it’s a superb reading machine. But remember that buying an e-reader means locking yourself into that company’s bookstore. Idiotic, incompatible copy-protection schemes mean that you can’t read a Kindle book on a Nook, or a Nook book on a Kobo, or a Sony book on an iPad.
With a 2-week battery and a size that fits in my back pants pocket (when standing), the new Nook seems close to my ideal.

Amazon will presumably introduce an improved B&W device in the next few months, and is expected to offer a color tablet in time for Christmas. While all the press has been focused on Android tablets, it appears that (outside the iPad) all the action has been on the low-end e-readers that are permeating the public consciousness and changing behaviors. If I were doing a startup now, I’d be interested in developing enterprise software (or cloud services) for high school and college students who will quickly abandon physical books for e-readers.

Meanwhile, there will be a bloodbath in the 7" and 10" tablet segments as company after company loses their shirt. I don’t know who will eventually be left standing, but it’s clear there’s a lot of money to be lost trying to peddle $500+ products to consumers who don’t really need them and would rather buy an iPad anyway.

One thing I haven’t seen mentioned is the gender effect for tablet size. At least in the US, most women carry a purse that could easily hold a 6" e-reader or 7" tablet, while for men, it’s either a pocket smartphone or a 9-13" tablet or laptop. Is the 6-7" device a “tween” device, or will it find a permanent home?

While I like the size (and price) of the new (6") Nook, compared to my 7" nookColor the screen seems a little small for reading PDFs of letter-sized documents — and I’m not going to carry two devices for PDFs and e-books. Still, a $150, 8 oz. e-reader that reads books and PDFs would find a place in my briefcase alongside my laptop, both to provide better battery life and also provide a second screen while writing reports or emails.

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