The Demise of e-readers is no surprise….but it’s bad for booksellers and for reading

Jan 15 2013

Interesting data from iSuppli has highlighted the rapid decline in sales of e-readers. It says that shipments of ebook readers by year-end will fall to 14.9 million units, down a steep 36% from the 23.2 million units in 2011 that now appears to have been the peak of the ebook reader market.

“Another drastic 27 percent contraction will occur next year when ebook reader shipments decline to 10.9 million units. By 2016, the ebook reader space will amount to just 7.1 million units—equivalent to a loss of more than two-thirds of its peak volume in 2011.
“The rapid growth—followed by the immediate collapse—of the ebook market is virtually unheard of, even in the notoriously short life cycle of products inhabiting the volatile consumer electronics space,” according to iSupply.

The success of e-readers was no illusion. The product sold well because it was relatively low cost , and functionality allowed for the easy download and storage of a number of titles, and extended use in between battery re-charges.
The idea behind the e-reader was simple and the best ideas are very often simple. On top of it’s simple and attractive proposition, the products were made and pushed by (e)book retailers, who have a vested interest in selling more books to customers and extending lifetime customer value by locking them in via a specific device. Witness Amazon’s ‘Kindle’ , Barnes and Noble’s ‘Nook’ and WH Smiths ‘Kobe’.
This desire for vertical integration, is a strategy beloved across many business sectors from Brewing ( make the beer and own the pubs) to Retailers ( commission/make own branded goods and sell in store) . This strategy allows control over the whole business stream, from creation to consumption and cuts out the irritating and time consuming involvement of other parties.
But, e-readers only do one thing and the whole dynamic of the digital age, in terms of hardware, is providing converged/integrated devices that do lots of things  – easily and well.
Products that only do one thing are ‘feeling the heat’ – watches, calculators, traditional telephones,cameras etc… These are amazing human inventions that are becoming scarcer by the day. A watch is of my favourite examples – my children scoff at the idea of wearing a watch – even one with multi functionality – simply because it is limited in what it can do.
So where have all the e-reader buyers gone? In two directions it would seem. One of the major beneficiaries is the tablet sector. The success of the ‘e-reader sized’ iPad mini, which has exceeded it initial sales target by 100%, will have exerted additional pressure on sales of e-readers.
A slight upside – E-readers are cheaper to produce than tablets and therefore the angle for e-readers, will increasingly be around price – but a commodotised market is not one that delivers a great deal of margin. Amazon is best placed to push the Kindle due to it’s vast size and profits from other areas, but even it will see greater advantage in pushing through the ‘Fire’.
Of course the other key players in the book sector – the publishers, have not had the size to take an active part in the e-reader market; but for them the added challenge from tablets, is that there is now another, powerful, set of intermediaries who control access to the book buying public
Very few people (no-one?) in the publishing industry thinks Amazon is a good neighbour. This from Futurebook’s article ‘We need to speak about Amazon’…. ‘ No-one has a good word to say about the e-tailer, even though some admit that as a business it is peerless. Amazon doesn’t just want to eat our lunch, is the theory, it also wants to cook it and deliver it to us piping hot for a cost that is less than it would be if we did it ourselves.’
The publishing industry has struggled to achieve the retail price points in the ebook sector that it enjoys off-line and this is due to it having much less control over the online point of sale.
But here’s another thought – is this development bad for ‘reading’ itself? This is just a personal perspective – but reading on a tablet is a very different experience from reading on an e-reader or even reading a book. Because a tablet does lots of things, the temptation is to flick from one function to another.
So if one is working through a worthy but somewhat weighty tome, there is the tendency to flick across to check on latest emails or scan one’s twitter feed. The isolated and immersed book reading experience of yore is on the way out – and that can’t be good for the traditional reading ‘experience’
Despite this, It could be said that reading certain types of content on a tablet can augment the reading experience. I am reading Hilary Mantel’s Bring up the Bodies. Although an excellent and engaging piece of historical fiction (faction) , with this genre you never know how much the narrative is straying from fact. A swipe through to wikipedia provides helpful supporting information and illumination around the story being told.
Of course networked devices can add engaging multi-media experiences that are radically changing the way now ‘read’ – the children’s book sector is a good example of this.
The second beneficiary, from the decline of e-readers, is none other than Johannes Gutenberg’s finest invention – the printed book. According to recent research from the Pew Research Center and covered in this WSJ article ( the book is making a comeback.
 The Pew report shows that the percentage of adults who have read an e-book rose modestly over the past year, from 16% to 23%. But it also revealed that fully 89% of regular book readers said that they had read at least one printed book during the preceding 12 months. Only 30% reported reading even a single e-book in the past year .
Interestingly it appears that people are reading different genres on different devices. E-readers have done especially well for Fiction – witness the storming success of Christian Grey in Anastasia Steele’s novellas.
Books however fare much better across more serious genres such as literary fiction and narrative non-fiction. For this reason there is a crossover between reading devices – according to Pew, nearly 90% of e-book readers continue to read physical volumes. The two formats seem to serve different purposes and the chances of analogue and digital reading tools co-existing in the future, seems pretty good.
The old adage was that ‘content is king’, but this is not true any more. What is ‘king’ is the combination of good content, imaginatively delivered on tools that are easy and enjoyable to use – which in digital terms increasingly means tablets.
However, as a result of this, the influence of book sellers and publishers will decline further as may the traditional experience of reading. The upside is, that the resurgence of the book may perhaps save the day for the ‘good old traditional read’

Nick Hammond, founder at The Digital Filter, @the digitalfilter

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