Apple's iTablet will Erase the Dedicated Book Readers

Several companies, recognizing the potential interest in electronic books, are attempting to get out ahead of the long-awaited Apple iTablet. Examples are the Amazon Kindle, the Sony Reader, and the Barnes & Noble Nook. However, soon after Apple ships its own competing product, these early efforts will become just a memory.

The thinking by Amazon, Sony and B&N is that if they can get out ahead, self-finance growth, establish a customer base, carve out the book market before Apple can crush them, then they'll survive, indeed flourish. But that plan, by itself, is insufficient and will fail.

Recall that Apple wasn't the first company to come out with a pocket MP3 music player, but the company certainly came to understand the inadequacies of the products offered in 2000-1. Waiting just a little bit was wise. Similarly, with mainframe computers, IBM held back advanced technology for decades, realizing that sometimes it's wise to cautiously size up the market rather than jump in with an innovative product that becomes a market failure.

Apple has things going for it that other companies don't.

  • Apple has an enormous amount of cash and prestige. They can pour development resources into a product that Barnes & Noble cannot and then capture the public's imagination. Maybe Sony can, but Sony has a poor track record when it comes to product design and user interface.
  • Apple recognizes that a few people will pay several hundred dollars for a dedicated book reader, but that many more will buy an all-purpose device that lets the customer also watch movies, listen to music, make phone calls, read e-mail an so on. We always return to that question: how many devices do we want to cary around? Which of the competing book readers should one invest in?
  • Apple has a way of generating astounding unit sales that leverage off its other products -- a visible reality in its retail stores. As a result, even if the current book readers have agreements for content, when the iTablet ships, and competitors look at the sales numbers, they'll gasp in disbelief. Then they'll grudgingly ask themselves the key question: "Are we in the hardware business or the content selling business."
  • Apple has the financial resources to buy flash memory and other commodity computer parts at the most favorable rates and get to the front of the line. As a result, any dedicated book reader with relatively low volume sales is going to look like a poor investment compared to what one gets with an Apple iTablet.
  • Apple has the data center expertise, thanks to iTunes, to provide a better buying experience than most competitors. Apple's competitors will go into this effort half-hearted, hoping that an early lead will relieve them of having to spend hundreds of millions of dollars on infrastructure. They'll hope that an early sales lead will finance growth rather than be forced into an initial, big, risky capital investment.

In subtle ways, without being able to enumerate the list above, customer awareness of the various book readers will naturally focus on limitations, price, conflicting standards, interoperability with existing devices and practicality.

I fully expect that a year from now, Sony and Barnes & Noble will throw in the towel and jump on the iTablet bandwagon, hoping to make money selling content rather than dabbling in hardware. The Kindle will linger on a bit longer, thanks to corporate hubris, but it too will fade into the sunset as Apple does for the personal slate reader what it did for the pocket MP3 player and the smartphone.