A Fork in the E-Reader Road
A European giant enters the U.S. market in a big way.
The path forward toward a digital reading future became a little clearer this week, thanks to Irex, the Dutch company spun out of Phillips Electronics and a leading manufacturer of e-readers in Europe. It introduced a consumer product for the American market, somewhat awkwardly named the DR800SG. The device is a wirelessly enabled (through a partnership with Verizon (VZ), another player eager to get into digital book distribution) 8-inch screen stripped down to minimal controls.
But that’s not the milestone. Inspired by Amazon’s (AMZN) success with the Kindle, Irex has launched a counter-strategy that attempts to parry every move by Amazon with an equal and opposite move. Where Amazon is a closed, iPod-like system, Irex is open. Where Amazon sets prices for its content partners, Irex brags that it won’t dictate terms. And most striking of all, where Amazon wants to own the experience, Irex is inviting developers to create new applications for its Linux-based platform.
Hence, the e-book market now faces a fork in the road. One direction is Amazon’s “vertical” approach where the Web site bolts a device onto its existing sales process. Controlling everything beneath the device, Amazon wants to use its market stature to dictate terms and even control the supply of content. The advantage of the vertical approach is that—good or bad—someone is in charge and making decisions.
The alternative path, a horizontal collection of devices and services each trying to innovate an advantage over its competitors, is a much messier process. The best system emerges, one hopes, from a Darwinian process.
Here’s what’s good about the vertical approach: Last week, when Amazon announced the first day’s sales of Dan Brown’s The Lost Symbol, it revealed that more Kindle editions of the Masonic thriller were sold the first day than hardcovers. Of course, the statistic was meant to promote the Kindle, and this week press reports seemed to establish that e-books accounted for only 5 percent of the 2 million titles sold in the first week (though 5 percent is still a victory for the Kindle).
That impressive achievement comes with a caveat: Amazon was measuring only the sales on day one. If you ordered your copy weeks in advance to make sure it would be at your house on the very first day, you didn’t get counted. With Brown, there were a lot of those preorders, but that doesn’t lessen the importance of that Kindle edition number. Rather, it illustrates Amazon’s strategy in building the Kindle in the first place.
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