In the history of consumer electronics, one would be hard-pressed to find more written about a product, pre-release, than was written about the iPad in the two months prior to April 3, 2010. Strangely, much less has been written about its primary competitor in the e-reader market, the Amazon Kindle.
The Kindle has had a remarkable rise. Before the Kindle, e-readers ranked somewhere below dial-up Internet and above the buggy-whip on the list of technologies with a future. A long trail of battered companies had tried and failed to get consumers to ditch paper and read on tablets: remember the Cybook, the eBookMan and the iLiad? Me neither (that’s the point).
Then, in November 2007, Kindle burst onto the scene. The first release sold out in five and half hours and, since then, Amazon has sold over three million Kindles, accounting for 90% of the e-reader market.
Kudos to Amazon for successfully altering consumer behavior after so many had failed but, alas, the Kindle will die as quickly as it sprung to life. In the wonderful state of nature that is the free market, a more effective predator, the iPad, has arisen that will drive the Kindle to extinction. (Note to the Sony Reader and Barnes and Noble Nook: give up now. The demise of the Kindle will take a few years, yours will take a few months.)
Credit Suisse believes that the iPad will reduce Kindle’s market share to 35%. I believe it will reduce it closer to 0%, for three basic reasons.
Reason 1: Company DNA
Over time, Amazon will not be able to iterate the Kindle quickly and effectively enough to keep up with the iPad’s development.
Apple makes (and markets) electronic devices better than anyone else in the world, an institutional skill developed at great cost over decades. Apple develops cutting-edge devices wrapped in simplicity, elegance and style: think Macbook, iPod and iPhone. Amazon makes…nothing. Nothing except the Kindle, that is.
At its core, Amazon is Walmart, i.e., a hyper-efficient retailer of other peoples’ products. Do you see Walmart making electronic devices? No. That’s not its business and, at the end of the day, it’s not Amazon’s, either. (The highly-successful Amazon Web Services doesn’t change the analysis: Amazon is an etailer.)
Reason 2: The Kindle
If you need evidence to support Reason #1, compare Kindle 1.0 (or 2.0) to iPad 1.0. My Kindle already feels like an antique: it has a small screen, it’s black and white and it has no backlight for reading at night. In addition, although the Kindle’s navigation is intuitive, the device moves in a slow and clumsy manner.
Perhaps the Kindle’s largest problem, however, is its lack of texture. I know that’s a strange word to use in the context of an electronic device but it fits. Content on the Kindle has no character.
By contrast, the iPad has texture. The look and feel, the character of the content – magazines, newspapers, books, whatever – comes through. On the Kindle, it doesn’t. As my 86 year-old great aunt said, the Kindle is completely “impersonal”. Consumers won’t tolerate this, especially given the option of owning an iPad.
Of course, Amazon will make changes and, yes, the iPad has faults. Apple will fix them quickly, however, and in a competition of product iteration between Amazon and Apple, refer to #1, above.
Reason #3: Device Singularity
Ultimately, this is not about e-readers but about the next generation of computing devices or, rather, the next-generation computer device.
I am tired of carrying around a Macbook, a Kindle and an iPhone. If a single device would allow me to replace my paper reading material, access apps, make and receive phone calls (Bluetooth headset), build spreadsheets, consume, capture and broadcast content, SMS, etc., I would snap it up and junk my other devices immediately.
The first generation of that device has arrived: it’s called the iPad. Within a year or two, I will have scrapped my e-reader, my phone, my laptop – perhaps my entire briefcase – and be carrying around a 1.5 pound tablet built by Apple.
That’s the root of the all the hype and the hype is justified: all other devices – laptops, phones, netbooks, content players and, yes, e-readers – will be subsumed by this device. A device from Amazon will not displace it, nor one from Google, Microsoft, HP, et al.
So, goodbye to the Kindle and to a whole lot of other instant antiques. The iPad has arrived.
* This guest post was contributed by Ted Rogers, a technology investor and entrepreneur with a background in venture capital, private equity and investment banking. Ted writes a blog about Venture Capital opportunities and investments in Brazil.