E-reader War Heats Up. How Can You Profit?

The big players are already jockeying for position in advance of what promises to be a bumper holiday season for e-reader, tablet, and e-book sales.

All the major manufacturers are expected to release new e-readers and tablets including Sony, Apple, Amazon, and Barnes & Noble. In addition, there are expected to be a range of devices from a selection of manufacturers tied to the Google platform.

While users of one device aren’t necessarily chained to the retailer’s e-bookstore, customers will tend to do most of their shopping there because it’s just easier. The one major exception to that trend was Apple.

Their uninspiring iBookstore never had the design chops (or popularity) of something like iTunes. In fact, it was never a priority for the company – the app wasn’t even shipped with the first batches of iPads and iPhones. When that app became the most downloaded of summer 2010, Apple relented and included it with all future shipments.

But they never moved many books. There was big fanfare in March 2011 when they announced they had “sold” 100 million books. This figure, of course, included free downloads. And when you factor in that they have sold over 100 million iPhones worldwide and 25 million iPads, this figure becomes a little less impressive.

In fact, by the time the WWDC rolled around in June, Apple again announced that they had “sold” 100 million books. Not much movement there.

Two recent developments should change all that. First, the iBookstore was integrated properly into iTunes, and the huge delay in uploaded books propagating to iTunes itself was dramatically cut from months to a matter of days.

Second, and much more importantly, Apple belatedly followed through on their earlier threat to bar in-app purchases.

There is some confusion out there regarding what this means, and what effect it will have. But this is big news, and I’ll explain why.

Up until now, iPhone, iPad, and iPod touch owners were able to download the Kindle, Barnes & Noble, Google, or Kobo apps and purchase books through them. In effect, they will no longer be able to do so.

Instead, they will have to go through the relatively laborious process of opening their web browser, navigating to the site of the e-bookstore in question, searching for the book they want, signing into their account, then purchasing it.

You might not think this is a big deal. However, having worked for a major tech company, and conducted and participated in several usability studies, I can tell you that the more steps you add to a potential purchase, for every extra click a customer has to make before their payment is processed, the number of sales falls dramatically.

People are lazy. Especially online. They expect to be able to click once or twice and get what they want easily. If they can’t they will go somewhere else where they can.

All those iPad, iPhone, and iPod touch owners who read e-books will start using the iBookstore in their droves.

Amazon will lose market share. Apple will gain market share. I would imagine that Google, Barnes & Noble, and Kobo will also see a slight drop-off.

That’s what will happen in the short term. In the long-term, it could affect the sales of Apple devices. I understand the logic of Apple’s move. No-one was using their bookstore. However, Apple usually try and compete by producing the very best product, and charging a premium for it – which customers are happy to pay.

This time, they are forcing customers to use a vastly inferior product. There may be a backlash. Personally, I was trying to decide between an iPad, an iPhone, and a Kindle. This may have made the decision for me. I try and avoid generalizations based solely on my own feelings, but I would imagine that, given some of the feedback on various tech sites, I am not alone.

This is just one battleground in a fiercely competitive war that’s taking place all over the US and, indeed, the world.

Toys-R-Us have announced that they will start carrying the Kindle from Sunday, joining Walmart, Staples, Target, and BestBuy. OfficeMax and Fred Meyer Stores will start stocking the Nook from tomorrow, joining Walmart, Staples, and BestBuy, as well as all the Barnes & Noble stores.

Apple have their own network of swish retail stores, but their tablet can also be purchased at Target, Walmart, and BestBuy.

Kobo, meanwhile, have a bit of an image problem, in the US at least. Tied in customers minds to the liquidating Borders organization, they have been plagued with requests for discounts from bargain-hunting customers, assuming that they are being liquidated too.

They aren’t, but that notion won’t help US sales.

As for the rest, the amount of high-traffic outlets stocking e-readers keeps on increasing. More people will come into contact with new e-readers every day. More people will be living in a town with no bookstore, but with several retailers stocking all kinds of different e-readers.

And then, in September and October, all the new devices will be released: an Amazon tablet (and possibly a phone), a new iPhone, maybe a new iPad too, a new Nook reader, and lots and lots more.

The new devices will have attractive price tags, and the older models will be slashed. Amazon are widely expected to drop the ad-supported Kindle below the $100 psychological price point. Their competitors will follow suit, and some will even undercut them.

All of these new products will be launched with wall-to-wall promo, both online and offline, both in all the above-mentioned outlets, and in the media.

If you are skeptical about what kind of numbers these devices will sell in, you should note that only 12% of the US population own an e-reader, and only 8% own a tablet. E-reader ownership doubled in the six months from November 2010 to May 2011, while tablet ownership only increased marginally.

Amazon are said to be producing 15 million Kindles, and they, historically, tend to be conservative in their production numbers.

All of these new device owners will want something to read, which is why the device manufacturers are all keen to tie their readers to their stores.

From last November right through to February this year, there was a huge surge in e-book sales as people loaded up their devices. In fact, in February, e-books were the #1 selling format (they are currently #2 for 2011 so far).

I expect a similar surge this year.

If you are a writer, and you are wondering what all this means for you, or how you can best position yourself to take advantage of all these changes, I would suggest two things.

First, if you are not in the iBookstore, either by uploading direct, or through Smashword’s Premium Catalogue, make that a priority for all your existing titles.

Second, if you are spending a lot of time promoting and not so much writing, you might want to reconsider. This is traditionally a slow time of year for book sales (and e-books seem to be following that pattern).

So instead of busting a gut on promo in a slow market, perhaps you should be focusing on getting more books up in time for the holiday season.

Then you can promote.