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Amazon, Microsoft Deal is Not Exactly a Marriage, But Could It Lead to a Baby Kindle?

The deal that Amazon struck with Microsoft yesterday was not solemnized in a courtroom, a church, or even in Vegas, but that doesn’t mean we won’t soon see the couple pushing a carriage with a cute and colorful little Kindle tablet model bundled up inside.

Neither party has disclosed the amount of the dowry paid by Amazon to Microsoft, but the deal means that each company now has a legal license to the other company’s portfolio of patents, and Microsoft said specifically, according to Eric Engleman’s report at TechFlash, that “the deal grants Amazon patent-related ‘coverage’ for its use of open-source and proprietary technologies in its Kindle e-reader, and for its use of Linux-based computer servers.”   

Ho hum or big deal?

According to the Microsoft news release, “Microsoft has entered into similar agreements with other leading companies, including Apple Inc., HP, LG Electronics, Nikon Corp., Novell Inc., HOYA CORPORATION PENTAX Imaging Systems Division, Pioneer Corp., Samsung Electronics Co. Ltd. and Fuji Xerox Co. Ltd.”

But that hasn’t quieted the Wall Street buzz about the possibility that there might be a bun in the oven. Eric Savitz at Barrons.com’s Tech Trader Daily reported last night that MKM Partners analyst Tim Boyd sees the imminent launch of a Kindle Pad in this otherwise inscrutable semaphore:

“The press release specifically mentioned that the agreement covers the Kindle – this means the entire Kindle franchise will now be able to leverage MSFT’s IP portfolio,” he writes in a brief e-mail. “We can draw only one conclusion from this: AMZN is going to build a ‘KindlePad.’ While the consensus view is that AMZN has already been working on a touch-screen, color Kindle with a higher level of Web browsing functionality, this announcement suggests that AMZN may go even farther and build a device that approaches the tablet PC level.”

 Boyd has set a price target of $200 for Amazon, which closed yesterday around $118 and has fallen 19% from its all-time high of $145.91 in December.

Are You Listening, Mr. Bezos? Why a Kindle for Kids App Will Trump Academic Pilot Programs in Building a Kindle Future

By Stephen Windwalker
Originally posted February 22, 2010 – © Kindle Nation Daily 2010
Related posts:  
Wonpyo Yun, a reporter for the Daily Princetonian, has the scoop on an official Princeton University announcement of the results from the Kindle DX pilot project on which the Ivy League school partnered with Amazon last semester.
Yun’s report suggests that the New Jersey university’s report will lead with the positive by touting cost savings and the fact that use of the DX “reduced the amount of paper students printed for their respective classes by nearly 50 percent.” But it also makes clear that the Kindle DX pilot project was something less than a love fest.

(Update: here’s a link to the official announcement.) 

(Update: here’s a link to a more comprehensive report on all the Kindle pilot projects, courtesy of my friend Ned Stuckey-French, in Tuesday’s edition of Inside Higher Ed.) 

Out here in the real world, Amazon has generally been very successful in its Kindle marketing by lowering prices several times while promoting the Kindle in a rather understated manner as a dedicated or purpose-built reading device, setting up a delayed “Wow” factor when customers receive their Kindles and discover unexpected features and capacities with the occasional help of a Kindle guide or a Kindle blog. But Yun’s reporting on the comments of students and faculty at Princeton suggests that Amazon may have hurried or overplayed its hand with a $489 DX that is not quite ready for prime time as a replacement for textbooks and courseware. The complaints cited will probably come as no surprise to Kindle Nation Daily readers:

  • difficulties in annotating PDF documents
  • lack of folders or other content management features
  • lack of page numbers for citation, or to help in judging reading progress
  • tiny keyboard size, and other limitations on annotation
“It was great to have the experience of using a Kindle, but I think I’ll stick with books until they work out the kinks,” Cally Robertson ’10 told the Princetonian, and her impatience with the Kindle’s “kinks” seemed to be shared widely among students who have probably been denied very little in the gadgetry arena during their brief lives. 

 “I think [the Kindle]’s one of those pieces of technology that will seem ridiculously anachronistic five years from now,” said another student, aptly named No. 

Are you listening, Mr. Jobs?
It would not surprise me if, having been introduced by Amazon and their instructors to the Kindle, many of these Princeton students end up being perfect customers for Apple’s iPad. The iPad’s initial sticker price of $499 to $699 is not going to be a deal breaker for many of these students whose parents are paying $252,480 for four years of tuition, room, and board, even if the total four-year costs of 3G coverage, warranties, and accessories like the iPad keyboard shown above right bring that price above $2,500. That’s over five times the cost of a Kindle DX, but for now at least, you can’t write a term paper on the DX.

While Amazon has been around for 15 years, its Kindle business is still very much a start-up, and for that business Amazon faces a dizzying array of choices about how to invest its capital, its people, and its many marketplace advantages for the future. Kindle DX sales seem currently to make up only about 10 percent of overall Kindle sales, and Amazon may well decide not to engage Apple in what might become a hubris-driven battle for the highest-end convergence-devices-that-might-also-serve-as-ereaders market. 
But eschewing a market composed of the children of millionaires is not the same as eschewing a market composed of children, and that’s where Amazon’s smartest future-oriented strategic moves could soon come. I’ve been saying for months that it is time for a Kindle for Kids, and although my predictions along those lines have come to naught, the fact that I’ve been wrong about the timing doesn’t make the entire notion wrong. Whatever Amazon decides to do in the short term with regard to the DX and textbooks, I’m convinced that the company could do much more to build a long-term future for the Kindle and the Kindle Store by putting a full-court press on the possibility of creating a Kindle App for the Fisher-Price iXL Learning System (shown at right), scheduled to ship in July 2010 for $79.95 with Story Book, Game Player, Note Book, Art Studio, Music Player and Photo Album applications, an SD card slot for expanded memory, USB connectivity, PC and Mac compatibility, a software management CD enabling users to add their own songs and pictures, and onboard storage for additional software titles, songs, and pictures (and, I would assume, ebooks). Calling it a Learning System, of course, is a marketing masterstroke that guarantees heavy activity involving grandparents.
But what part of all that would a kid not love? What part of all that wouldn’t lead a fair number of Dads to try to negotiate some user time with their five-year-olds? Most parents are already familiar with the experience of taking their kids to a restaurant and secretly wishing that they too could order the crusty mac and cheese with the $3 price tag from the Kids’ Menu. 
And most manufacturers and marketers are already familiar with the way in which many kids’ eating preferences are dominated for years by the culinary themes and motifs of those same Kids’ Menus. 
For Amazon, it’s got to be obvious that getting Fisher-Price to link the iXL Learning System to a beefed-up Kids’ Korner of the Kindle Store would — far more than any academic pilot project — virtually guarantee the development of millions of little Kindle Kids and future Kindle Adults.
Hell yes, I’m serious. Or, given the subject matter and the need for this particular App to come with parental controls, “Heck yes.”
Are you listening, Mr. Bezos?

Amazon Provides Official Confirmation of Coming Kindle for iPad App

Today’s Amazon news release on the launch of its Kindle for Blackberry App provides the first direct and official confirmation that the company will also soon launch a Kindle for iPad App. Here’s the second sentence from the lead paragraph of today’s release:

Amazon’s Whispersync technology saves and synchronizes a customer’s bookmarks across their Kindle, Kindle DX, iPhone, iPod touch, PC, BlackBerry and soon, Mac and iPad, so customers always have their reading material with them and never lose their place.

While it was previously evident for anyone who wanted to connect the dots, the specific statement that a Kindle App is coming soon for the iPad (along with the Mac App that has been “coming soon” since 1974, or at least since November) is a clear indication of something we should not forget: Amazon and Apple may be adversaries or competitors, but they are also business partners on what is or will eventually be a multi-billion dollar level.

The Kindle for iPhone App and Amazon’s Stanza app are already two of the top three reading Apps in Apple’s Apps Store for the iPhone and iPod Touch, and there is little reason to doubt their capacity to sustain high market share among iPad users. The Kindle Store currently accounts for upwards of 90 percent of all ebook sales, according to widely published reports from unnamed publishing industry sources.

But Mommy! It’s like your Kindle and Daddy’s iPhone had a baby! I want it! Now!

Is this the latest Kindle Killer?

Probably not, but it’s easy to see why the $79.95 Fisher-Price iXL is creating plenty of pre-release buzz among those market analysts who follow the likes and dislikes of the pre-school set.

It’s already being called a Kindle for Kids, a Tablet for Toddlers, or an iPad for Rugrats. Slap a Kindle App on that hardware and it could sell more copies of Goodnight Moon and Green Eggs and Ham than all the children’s bookstores in the brick-and-mortar world.

It comes with a color touch screen, a writing stylus, an MP3 player, an animated storybook app that will download additional titles from an online store, pre-loaded games, and a bunch of other software apps. Engadget has a pretty cool gallery of hands-on photographs here.

Should Steve Jobs be worried? Maybe he can make some calls to childrens book publishers and get them to raise prices!

Anne Rice to Bundle Text and Multimedia "Vook" Story for iPhone, iPad, and Other Devices … Including the Kindle "Multi"?

Well, well, well.

Just when we were thinking that Anne Rice, author of the Vampire Chronicles and other bestselling novels, might be seriously considering bringing out her next book as a Kindle exclusive, she’s thrown us a bit of a curveball with the announcement by her literary agency that she’ll be releasing, through Vook, a multimedia edition of “The Master of Rampling Gate,” a vampire story published in Redbook magazine in 1984 and set in an England mansion in the 19th century.

Back on December 13, Rice went on an Amazon customer forum and asked:     

What do you think? If regular publishing is having a very hard time marketing and distributing books effectively, should major authors think about making Kindle (if possible) their primary publisher? Kindle would then be the one to introduce and advertise the book, and Kindle could license limited hard cover editions for those addicted to the “real book.” Would this be good for authors? Would it be good for readers? Would Kindle do it?

She may still be exploring the Kindle idea, of course.

But Vook has been producing video books for Simon & Schuster and the HarperCollins imprint HarperStudio and also making works out of public domain texts. At least for the short term, it’s more likely that we’ll see Vook productions on the iPhone, iPod Touch, or iPad than on a Kindle. But for further down the road — perhaps in 2010 — it appears that Amazon is also working on a more expensive Kindle “Multi” model that would be available side-by-side with the popular, current-generation 6-inch Kindle “Uno.” (“Uno” and “Multi” are my placeholder names for the two products, aimed at expressing more simply what they would be all about, but more on that in a later post.)

The Kindle “Multi,” with a color touch screen and faster screen refresh, could accomodate Vook offerings by Anne Rice and other authors, and like th iPad it is bound to generate serious buzz and love.

But it all raises serious questions for me:

  • It’s one thing to change the way we read from words on paper to words on an electronic e-Ink display that emulates paper, but is it really likely that the activity, processes, pleasures and utility of reading are going to transformed from words to words and video and audio for a critical mass of readers?
  • Does the bundling of multimedia with the text of a story or a book add so much value that readers or audience are likely to want to spend significantly more either for the bundled content or for devices on which to play the bundled content?
  • Are authors in any significant numbers likely to transform their own creative processes so that they begin and proceed with the intention to create vooks rather than books?

Don’t get me wrong. I believe there will be cool vooks, and I will occasionally pay to download them. I expect Vook will be a very successful company that will grow dramatically and change in many ways over the next couple of years. I’m convinced that both Amazon and Apple will find ways to deliver vook content on a wide range of different devices, including PCs and Macs.

But I am also skeptical that this will be a mass market any time soon. Of course, that’s basically what Steve Jobs said about the Kindle and ereaders back in January 2008, right?

Three-Year Cost Comparison Before You Buy a Single Book: Kindle $359, Kindle DX $639, Apple iPad $1959

Has the entire Internet been hijacked by close relatives of Steve Jobs?

Don’t get me wrong. I am pretty jazzed about the Apple iPad, and I plan to get one if I can keep myself convinced that I will be able to use its features, apps, and hardware functionality in ways that actually allow me to save money on other gadgets and services. 

But I have to say that it’s a little surprising, as I read various posts about Apple’s new iPad, some at otherwise responsible websites, how confused many people seem to be about the real cost comparisons between the Kindle and the iPad. Anyone who tells you that the two products are relatively close in price is not telling you the whole story.

I will grant that it was a pretty good initial PR coup for Apple to announce that the iPad starts at $499, but let’s get real here. Given the fact that the iPad will be all about mobility and will provide a very cool environment for downloading and viewing, reading, or listening to various kinds of high-bandwidth media content (including ebooks), it simply does not make sense to analyze the iPad’s price without unlimited 3G wireless or without at least 32 GB of storage. To equip the iPad with less than the 3G and 32 GB options seems rather like buying a Maserati with a speed governor and using it to delivery the mail in your town, or in this case, the email. And we are talking about a Maserati here.

So, let’s do a three-year price comparison of the current 6-inch Kindle, the Kindle DX, and the 32 GB iPad 3G, before a customer buys a single book:

  • The latest-generation 6-inch Kindle costs $259 up front, another $75 to $100 for accessories and an extended warranty, and never another dime = $334-$359
  • The latest-generation Kindle DX costs $489 up front, another $100 to $150 for accessories and an extended warranty, and never another dime = $589-639
  • The iPad with unlimited 3G (i.e., enough bandwidth to do anything more than email and a few ebooks) and 32 GB storage capacity costs $729 up front, another $100 to $150 for accessories and an extended warranty, and $30 a month x 36 months = $1909-$1959

But like I said, the iPad is a Maserati. For people who are looking for a highly mobile, highly portable convergence device, and for whom money is no object, this may (soon) be the closest thing yet on the market. Although the iPad has been roundly criticized for some specific limitations like the fact that it will not play well with Adobe Flash, the fact remains that it will be able to do so much that it is unfair, in one sense, to compare it to the Kindle. But in another sense, unless you truly value all that the iPad can do, it’s reasonable to compare it with your other options — like the Kindle that you probably already own if you are reading this post — for doing very specific things. And for many of us, there will be several ways in which the iPad comes up short in comparison with the Kindle when it come to very specific reading-related issues such as its weight and its backlit screen.

Perhaps it just comes down to the fact that we do not, as consumers, live in a one-size-fits-all world. The iPad is an exciting product to me and to many other people who already perceive the need for higher levels of tricked out mobility. It will definitely achieve at least moderate success, but there are some  issues that would concern me if I were an Apple investor:

  • For the iPad to become a mass audience product Apple will have to create the perception of a need for millions of affluent customers who do not yet perceive the need. (Apple’s done it before, so I wouldn’t bet against them doing it again.)
  • When people buy the iPad they will be buying it for very different reasons than those for which they buy the Kindle, so the iPad is not well-positioned to ride the wave of the Kindle revolution, and trying to stand on Amazon’s shoulders, to use Steve Jobs’ phrase, may be a precarious perch indeed.
  • The weight of the iPad is wonderful if you are comparing it to a tablet or a netbook, but it’s going to be a dealbreaker for many potential customers when it comes to serious reading. In our current Kindle Nation Citizen Survey 52% of respondents so far say that the fact that a device weighed 24 ounces would have a negative influence on whether they would buy it or continue to use it.
  • Of all the products that might lose sales to the iPad, the first would seem to be the iPod Touch, and there may also be some low-level cannibalism between the iPad and the iPhone, particularly among those who figure out that you can run Skype on the iPad.

Meanwhile, there are three ways in which the iPad could actually be helpful to the Kindle:

  • If it gains a foothold as the primary ereading alternative to the Kindle, it could discourage investment in other ereader devices and platforms.
  • Its impressive bells and whistles are bound to inspire Amazon to add new features and sex appeal to the Kindle sooner than might otherwise occur.
  • By all accounts to date, the iPad like the iPhone, the iPod Touch, and soon the Mac will allow access to Kindle content through various Kindle for X apps.

Collins Stewart Hosts Your Humble Reporter in Conference Call on The Kindle Revolution: Recent Trends in the eBooks Market

By Stephen Windwalker
Originally posted February 7, 2010 at Kindle Nation Daily – © Kindle Nation Daily 2010

Tomorrow morning, at 11:30 am EST Monday February 8, I have been invited by the independent financial advisory group Collins Stewart to be its guest speaker on a conference call to discuss Recent Trends in the eBooks Market, and interested citizens of Kindle Nation are invited to listen in along with a wide array of institutional investors, business news media, and company representatives. Here’s a link to the Collins Stewart news feed on the conference call.

Here are the topics that have been suggested to me by Collins Stewart senior analyst Sandeep Aggarwal, who will host the call:

  • 1. How big can be the eBook market in the next 2-3 years i.e. can eBook achieve 25% penetration in next 3 years?  
  • 2. What are some examples of buyers’ behavior for eBooks that are encouraging and/or unique?  
  • 3. Are publishers excited or threatened by the traction of eBooks?  
  • 4. Which eBook readers are likely to win? Is iPad a compelling threat to Kindle?  
  • 5. Which eBook publishing platforms are likely to win and why?  
  • 6. How do the economics for publishers’ vary on Kindle vs. traditional book sales at Amazon.com?  
  • 7. Where do you think the economics for publishers are heading in next couple of years?

I’ll also be sharing some fascinating early returns from the Winter 2010 Kindle Nation Citizen Survey, which has had over 1,000 respondents since it went live at 1:30 pm yesterday.

If you would like to listen in, just dial in a moment or two before the call, which is supposed to run at most from 11:30 am EST to 12:30 pm EST:

Toll-Free: 800-446-1671
International Access: 847-413-3362
Confirmation Number 26349150

There will also be a Replay available for the next two months, and I will share that number here later if I make it through the call without excessive stuttering or other embarrassment.