MOST SHARED
- Herbalife Vs. Hedge Funds
- Apple Surpasses Nokia as Top Cellphone Maker by Profits
- Gold Heading to $1150: Art Hogan
- Cramer Jeers J&J, Applauds Abbott
- Adobe Cuts 680 Jobs, to Take Charge
- Toll Brothers: More Contracts Signed, but Sales Down
- JPMorgan Chase to Hire 1,200 Mortgage Officers
- US Becomes Top Country Brand Under Obama: Survey
- SingTel Posts Higher Quarterly Profit, Cautious on Growth
- Retail Earnings in Focus Ahead of Shopping Season
- Apple Surpasses Nokia as Top Handset Maker by Profit
- In This Relay-Race Market, Who Gets Baton Next?
- Workers Staying Put at Their Jobs as Jobless Surges
- Three Things the US Can Do To Stop the Dollar's Decline
- Toll Brothers: More Contracts Signed, but Sales Down
- Ponzi Proceeds: Bidding on Madoff's Toys
- Bear Stearn Fund Managers Not Guilty on All Counts
- Commodity ETFs: Returns May Not Match Expectations
Text Size 
The dominance enjoyed by Amazon.com's Kindle faces its first major test this holiday season, but industry experts say only a real technological leap will pose a threat.
 |
Photo By: Brady Amazon Kindle |
Barnes & Noble [BKS
Loading...
()
] is expected to unveil its own branded electronic book reader Tuesday with a hybrid model that incorporates a reading screen similar to the Kindle's white and gray display, with a second touch-screen display that makes browsing easier.
The bookseller's main advantage could be in its physical stores where users will be able to test out the device. A disadvantage may be its as-yet unknown price, which some say will be higher than the Kindle's recently lowered $259.
Barnes & Noble has not confirmed its e-reader plans.
But the market—arguably built by Amazon—is getting crowded, with e-readers in the pipeline from a spin-off of Royal Philips Electronics called iRex Technologies, Taiwan's Asustek, Plastic Logic and a Hearst-backed venture called FirstPaper. They would share the space with Interead's "Cool-er," the Cybook OPUS from Bookeen and others.
"It takes one person to prove this is a very viable business model and as soon as that is proven you have a lot of people ... who jump in," said Mukul Krishna, global director for digital media at consultancy Frost & Sullivan, adding that the best time to enter the market is ahead of the holidays.
"Amazon has done exactly that with the Kindle. They've caught everyone's imagination," Krishna said.
E-reader hype has hit a peak in the past month, as Amazon [AMZN
Loading...
()
] rolled out the Kindle internationally and the world's biggest Web players and publishers began to mobilize.
Google [GOOG
Loading...
()
] unveiled plans for an online e-book store, while News Corp's [NWS
Loading...
()
] Rupert Murdoch visited Japan and South Korea to size up e-reader technology. But Amazon is expected to retain its first-mover advantage.
"Amazon really controls the digital shelves right now," said Mark Coker, founder of e-book publisher Smashwords. He cited the Kindle's locked-in customers, who must buy e-books exclusively from Amazon that can then only be read on their Kindles or on Apple's [AAPL
Loading...
()
] iPhone or iPod Touch.
"I think everyone realizes Amazon got it completely right. They are way ahead of the curve," he said.
Some 3 million e-readers are expected to be sold in the United States this year, with sales doubling in 2010, according to Forrester Research
Amazon does not provide data on Kindle sales, but investors will be eager to learn of its progress when the online retailer releases results on Thursday.
Digitally Sharing
Analysts say the larger—but not unsurmountable—threat to Amazon could come from demand for an open system in which e-books bought from various sources can be shared on multiple devices.
As one recent blog comment on www.gizmodo.com, which posted what it said were photos of the Barnes & Noble device, said:
"The only thing I'm concerned about is the apparent splintering of the potential e-book market into many armed camps, none of whom will play well with another."
Sony Corpand others are pushing for a format called e-Pub that would do away with the digital rights management (DRM) issues found in closed systems like the Kindle's.
The threat to Amazon, according to NPD Group analyst Ross Rubin, "is driven not so much by any particular competitors as it is by having a fractured market or wider interoperability and having those standards take off."
As Coker explained: "That's a potential ticking time bomb for any DRM system tied to a specific device."
"When you're in a near-monopolistic position, it's advantageous to have a closed system," Coker said. "Amazon is in a very powerful position in the industry right now, but monopolies don't last forever."
The market will also see what Frost & Sullivan's Krishna called musical chairs, with rivals jockeying to be the first to add graphically richer displays.
Amazon needs to skillfully balance price and functionality as the Kindle is adopted on a mass scale to embrace new users without alienating its core readers, he said.
"Many who are trying to unseat the most visible incumbent will try to be as creative as possible, especially in pricing, to create a dent in Amazon market share," said Krishna.
Although Amazon should be able to enjoy the fruits of its proprietary system for the foreseeable future, given the still vastly untapped market and its strong relationship with publishers, it is likely to be quick to adapt when required.
"The day that consumers shout loudly enough, I'm sure Amazon will react quickly," said Coker.
- Vote and suggest your own, and remember--there's a fine line between a hero and a zero.
- If you are lucky enough to have money and the time, this is a great time to see America, says CNBC's Jane Wells.
- What’s powering your microwave, fridge and computer? Part of it is fuel from Russian nuclear weapons. The NYT reports.
- One author sees lessons for you in Disney’s recent Makeover of Mickey Mouse: “Nice” doesn’t always win.
- With 123 years of history, slogans and commercials, Coca-Cola is the most recognized brand on earth.
- The opening of a virtual pet store in “World of Warcraft” could prove a cash bonanza for Activision-Blizzard.
Data is a real-time snapshot *Data is delayed at least 15 minutes