Now that both the Kindle and the iPhone are out, it’s interesting to look at the very similar business strategy behind the two products.
I think most of the E-Ink ebook readers in the market are doomed to failure. They don’t do enough, and what they do, they do poorly. The world gave up on monochrome screens some ten to fifteen years ago; even the New Yorker and the Wall Street Journal started printing color pages about then. E-Ink displays are kind of like dancing bears — it’s not great dancing, but it’s remarkable that it dances at all. Amazon’s Kindle is an interesting exception, because it’s not really about reading. It has several features which distinguish it:
- An always-on no-subscription-fee Sprint EVDO connection. This means that it’s always connected (or at least tries to be that way), and that connection is part of the sale price, not something extra to sign up for. No WiFi hotspots to hunt for, pay for, and sign on to. How much is Amazon paying for this? I’m told that access to Sprint’s EVDO network for unlimited data transfers is on the order of $50/month — surely Amazon has negotiated a deal here…
- But still — how do they pay for that EVDO? Perhaps with the fact that the Kindle serves as an always-connected consumer-carried sell-me-something terminal for Amazon. Think of this: the consumer carries around with them a sales terminal which only connects to your store, and makes buying something very very easy. What’s more, it’s big enough that it preempts any other retailer’s similar store-in-your-pocket. They sell one big flat-screen TV and they’ve recovered the cost of the Kindle. Do they give a cut to the EVDO provider?
- Amazon has moved agressively into the book market, both with paper books and then with ebooks, buying both Mobipocket and Audible.com, the big seller in the spoken book market. And any of these can be purchased from the Kindle (and then “read” on the Kindle). Book purchases are not an important factor for Amazon here, but the fact that it’s a book reader is. This gives the consumer an excuse to carry it around, a critical factor for success as a impulse-purchase terminal.
- The Kindle has an “experimental” web browser, email support, a keyboard so that you can type into it. In fact, it’s sort of like a butterflied laptop with a bad screen — looks a lot like those old Alan Kay DynaBook mock-ups. So Amazon is pushing into the “Internet tablet” space; this isn’t really just an ebook reader. The apps are not great, and the keyboard is pretty stiff, but at least they are there.
In short, I think the Kindle may have a future, despite its technical shortcomings, because it directly supports Amazon’s very agressive selling (books and otherwise) business plan. I expect the Kindle to evolve as technology does, perhaps a bright color OLED screen, possibly with a touch surface, coming eventually. This seems to be an example of a perceptive and forward-looking business strategy, perhaps somewhat hampered by relative inexperience in consumer product design.
Note the similarities to the iPhone: always on, point-of-sale terminal for iTunes music and movies, agressive moves into the music and movies businesses, Internet tablet apps. Different design points, to be sure; Apple had to go with bright color to sell movies, and “it’s a phone” is the excuse for the consumer to carry it. I wonder if the bright color screen, plus the woeful state of current battery technology, dictated a pocket-sized phone rather than a larger tablet — would a big screen wear out a small battery too quickly? MacBook Air and iPhone 3G reviews suggest as much. Or was the “phone” necessary as the excuse for the consumer to carry it?
The competition isn’t exactly head-to-head here; one can’t buy soap or basketballs from Apple (yet). However, as a point-of-sale terminal, the iPhone has a number of differences from the Kindle, most of which seem to be advantages:
- Both products have high-dot-pitch screens (163 dpi for the iPhone, 167 dpi for the Kindle), which gives a crisp sharp detail to the edges of text. However, the Kindle screen is limited to 8 (4?) shades of gray, and relatively slow to update (to save on battery life), while the iPhone appears to be 32-bit color, and updates quickly enough to play movies and games. In addition, the iPhone screen includes a backlight, so it can be read in the dark without additional lighting. Perhaps most importantly for a retail device, the iPhone can display mouthwatering full-color alpha-blended photos of products for sale, while the Kindle has to settle for that 2- or 3-bit grayscale. The iPhone’s screen is a fair bit smaller, 320×480 (3.5 inch diagonal) versus 600×800 (6 inch diagonal) for the Kindle.
- The “excuse” of buying a phone, rather than buying a dedicated ebook reader, is much more palatable for many many people. As I explained elsewhere, a dedicated ebook reader competes with much cheaper and more durable book technology, while buying a cell phone has become a standard practice for many people, and is subsidized by the phone companies. What’s more, Apple has reversed the income flow for connectivity that Amazon must be paying; the consumer pays Apple (indirectly through the phone company) for connectivity, rather than the other way around! Beautifully done, Apple.
- The iPhone fits in a pocket; for most pockets, the Kindle doesn’t.
- The iPhone is designed as a communication device; the Kindle isn’t. This seems to me to be a huge advantage for the iPhone; human beings are natural communicators, and they flock to anything that gives them cheaper/better/different ways of talking with each other.
- A consumer can “watch TV” on the iPhone (which should speak for itself).
- The iTunes App Store opens up the iPhone to other uses, and to other retailers. Fictionwise has already released an app to sell books in eReader format from their bookstore. Stanza connects a reader to a huge free backlist of out-of-copyright (or open source) books, stories, and articles. A variety of free applications connect readers to news stories and RSS feeds, and the full-color standards-compliant Web browser is there for other sites. You can even shop Amazon from your iPhone. Where’s the Kindle equivalent of this?
- What’s more, the App Store creates an incentive for developers to imagine and then create new uses for the iPhone. This makes it more useful to consumers, thereby increasing sales. Nice market penetration strategy. Apple keeps 30% of the sales price for their efforts, and sends the other 70% off to the developer.
- The iPhone handles HTML, PDF, Word, and Powerpoint formats. The Kindle supports HTML, PDF, and Word through its mail-us-your-document conversion service, which installs the document in Amazon’s proprietary AZF format, but this is a problem — corporate clients would like to be able to convert their reports and presentations in-house, or better yet not convert at all. The iPhone now supports that mode of operation. Neither device has a good strategy for managing collections of documents or syncing documents.
- The Kindle has a hardware keyboard; the iPhone doesn’t. This seems an advantage for the Kindle.
- The Kindle supports an SD memory card; the iPhone doesn’t. The iPhone has a camera (which supports communication); the Kindle doesn’t.
(Looking at these differences, I’m very tempted to assign Myers-Briggs personality profiles to each device. But I’ll leave that up to our readers; what do you think the personality of each is? :-).
Overall, I’d say that the iPhone 2.0 firmware release, and the iTunes App Store, has raised the bar a good deal in this competition for the pocket of the consumer. I expect to see a competitive release from Amazon in the near future, but I wonder how they’ll compensate for the shortcomings of the E-Ink screen?