On New Year’s Eve, I was having dinner with some friends when the subject of e-book readers came up. There was the typical banter that ranged from “what’s and e-book reader” to “I love the feel of a book too much to ever use one of those”. However, the one question I keep coming back to is “what do you think will end up happening to these devices”?
One of my dinner companions suggested that they will not last very long because people will not be happy with a single function device, and to a certain degree I agree with her. However, there is a parallel here to a product life cycle. What it takes to launch a device, grow a device, and sustain a device in the market is very different at each strategy.
When trying to understand the success of individuals, Gladwell (2008) points out that circumstance has a huge role in the level of success that any of us can achieve. Yes, if you work hard, and think carefully about positioning yourself strategically, you are more likely to be successful. However, what will work as a strategy at any given point in time is highly dependent on environmental variables, and there are often far more variables at play than an individual can account for or control. The same hold true for products.
When I think about convergence I keep thinking about the original Palm Pilot. Prior to the release of the Palm Pilot there was a lot of buzz in the market about the concept of a personal digital assistant (PDA). The problem was the market did not yet have a definition of what one would look like, what features would be important, and why anyone would bother.
Of course, many futurists in the press were portraying a device with the potential of seamlessly keep our busy lives on track. In their vision these devices would somehow know everything about us and gently prod us along to outrageous levels of efficiency and success. The problem with the vision was that it did not account for the target market and it severely oversold the capabilities of the time. This lead to many devices that made ham-handed attempts at delivering on the promise, and to devices that required advanced degrees in computer science to operate. Worse there was a lack of general understand of the value of such devices in the market. The net result was that sales volumes in the market did not take off until the introduction of the Palm Pilot.
Palm’s approach was to develop a relatively inexpensive device limited to a key set of simple yet important features – calendar, address book, todo list, and notes – yet one that had the ability to add additional applications. Among the most important feature of the Palm Pilot was it was simple to learn how to use, it functioned well on the key applications, and it delivered real utility. This helped the device develop a mass appeal that lasted an extremely long time in for a personal electronic device.
Just like in the PDA market, the e-book market lacks a good definition of what the market is and what will be required for success. Like the PDA market, there are many futurists who would like to see feature rich devices that will handle a wide variety of tasks. I question this logic. As this market market initially develops it will searche for a purpose, utility, and reason to exist. If the markets lacks focus the purpose, utility, and reason to exist will not be apparent to a broad set of the potential customers. In addition, a personal electronic device is at odds with Moore’s Law and price elasticity. In the initial stages the cost of developing feature rich devices is extremely expensive. This often pushes the price of the product beyond the tipping point where it might have a broad appeal (another reason that the Palm Pilot outperformed its competitors).
Over time the PDA market have morphed in to the smart phone market of today. Devices like the cell phone, the PDA, and MP3 player have slowly begun to converge in a single device. However, it has not always been clear when it has been appropriate, from both a price and utility perspective. In order to maintain utility it often makes more sense to have devices designed to service a specific purpose. Consider the Swiss Army knife, it has many functions but is not particularly good at any of them – with the exception of being a knife. My Kindel DX can play audio books but it is not nearly as good, nor as convenient, as an iPod in doing so.
My dinner companion argued that e-book readers will like morph in to full functioned tablets, because the current e-book readers are underpowered and cannot handle very many functions. She believed that this lack of functionality will frustrate users and they will demand far more performance. This of course is an interesting point and one that would seem to be supported by conventional logic – however, it is countered by actual market trends. A close look at the netbook verses laptop markets would seem to contradict this soundly.
Netbooks are small inexpensive portable computers that are very low powered. However, they provide adequate utility when it comes to basic functions like checking email or surfing the web, and they fit a market niche between smart phones and laptops. In the past few years they have become very popular – in direct conflict to the predictions of many industry analysts who envisioned them as just low function laptops.
Bottom-line:
One cannot ignore the personal electronic market has been somewhat price sensitive over the past couple of years due to obvious reasons. Products that do not have established markets, or do not have a compelling purpose, will have a difficult time establishing mindshare and market share. Therefore, it is critical that products have a focus.
I do believe that e-book readers are on the verge of a market explosion. The top two readers (the Kindel and the Nook) provide the key features of good read ability, note taking, and mobile access to a large volume of content. Currently the price is a little high for mass appeal – however, price will likely drop dramatically over the next could of years if there is a focus on staying close to the original purpose of the device. As the market hits the growth stage of the product life cycle, the market will stratify, and it is likely that e-book readers will come in wide variety of styles and feature sets (one might consider the history of the laptop, netbook, and smart phone market when envisioning the future in this market). In order to sustain the market past the growth stage there will be low cost e-book appliances, and feature rich / expensive premium readers.
Eventually the like the PDA the e-book will run its course. It will likely be absorbed into some other personal device. However, it is not likely to happen for some time, and not without some changes in available technology. More importantly, I do not see the e-book completely replacing the book for some time. E-books are great for utility reading and will have a dramatically change the marketing and distribution of books. But why it will not replace the book might be an entire other blog post.
(Also posted at http://www.tomcoughlan.com)
Yesterday there was intrigued by an article in the New York Times asking the simple question – does our language shape our thoughts (Deutscher, 2010)? In the article Deutscher discussed how our native language will assign different constructs, such as of gender to inanimate objects, which in subtle ways frame how we include these objects in our thoughts. These gender attributions may also affect how we interact with people based on gender.
