— One big question about Amazon.com's new Kindle DX, unveiled May 6, is how it will change people's reading habits, affecting the fate of textbooks, mass-market books and newspapers.
More than either of the device's two previous versions, the $489 DX is being discussed as an alternative to those print publications. It's the first model to include built-in support for the popular PDF format, a larger screen (though still not color) and autorotation of the display to suit the documents’ orientation.
Those technical improvements are one reason for the current flurry of excitement over the Kindle. But at least as important are the arrangements Seattle-based Amazon has made with publishers. Those relationships have some observers predicting the Kindle will make a gigantic cultural impact on how we read in the future.
"The most important thing about the new Kindle is its existence in an ecosystem that Amazon is creating," said Adrian Sannier, technology officer at Arizona State University, one of the six universities launching pilot programs with the Kindle DX. "It's all the elements coming together that makes this attempt so different."
He compared the Kindle to Apple's iPod and all other electronic readers to Microsoft's Zune.
"If you can find some music to put on the Zune, good for you," Sannier said. "The iPod is a music delivery system, with excellent software for finding and downloading and arranging your music, as well as a good player for the music."
Getting college students accustomed to the Kindle is important because they will likely retain that reading habit after graduating. College is the perfect training ground for a new way of relating to reading material.
E-readers still scarce
Whatever impact Kindle makes won't be immediate, because it and other electronic readers, sometimes called e-readers, are still scarce.
Citigroup Global Markets recently estimated that Amazon sold about 500,000 Kindles — launched in late 2007 — last year. That sounds like a lot, but think about it: how many people have you seen carrying around a Kindle? Citigroup's estimate puts ownership at just over 1/10 of 1 percent of the U.S. population.
But Kindle uptake is poised to increase. In anticipation, Apple is said to be preparing a Kindle competitor of its own, and Sony is reportedly working on a successor to its electronic reader. Other upstarts, such as Mountain View, Calif.-based Plastic Logic, have products on tap, too.
The five other schools launching DX trials this fall — Case Western Reserve University, Pace University, Princeton University, Reed College, and Darden School of Business at the University of Virginia — said they plan to offer the Kindle edition of selected texts from three publishers: Cengage Learning, Pearson Education and Wiley, together representing more than 60 percent of the U.S. higher-education textbook market.
Pace said it will get Kindles at a 50 percent discount from Amazon for the 50 students in its pilot program, and then provide them to the students at no charge.
"Eventually, the prices will come down, obviously," said Geoff Brackett, Pace University provost.
One big appeal of electronic texts is their lower cost. A 2005 Government Accountability Office report put the average cost of textbooks at $900 per year for students at four-year public colleges. (The textbook industry noted that the figure includes supplies and estimated that books alone cost about $625 per year.)
Kindle editions will likely be far less expensive than that. In fact, if they follow Amazon's typical pricing, Kindle editions will sell for half the price of printed copies, said Arizona State's Sannier.
"Paying over $100 for a textbook now is standard operating procedure," he said. "It's high time for another way."
Amazon declined to comment on how the Kindle texts will be priced.
Though the DX's $489 price tag is higher than that of its predecessors, Barclays Capital analyst Doug Anmuth wrote recently that the payback period will probably be less than three years.
Schools doing the Kindle pilots are excited about the prospect. Brackett called the move to digital texts "inexorable."
"I see a time when printed texts are niche,” he said. “We're at the tipping point. There are issues to be addressed: the profitable arrangement text publishers have with the universities, the profits made by university bookstores on texts. But I'm sure those will be worked out."
Big impact in mass market
Mass-market books are another area where the Kindle seems certain to make a large impact. The publishing industry says e-books now account for less than 1 percent of book sales. But Amazon says its Kindle Store has more than 280,000 titles, and in a dramatic moment during the DX launch, founder and chief executive Jeff Bezos said Kindle editions are selling at 35 percent of the level of their print equivalents, up from 13 percent in February.
Citigroup analyst Mark Mahaney estimates Amazon sold nearly 4 million Kindle editions in the year's first quarter. That's roughly 10 percent of all the books sold in the United States. He says Amazon is on track to generate $1.2 billion in Kindle-related revenue by 2010, equivalent to 4 percent of its total sales.
But can it save newspapers?
It's far less clear whether the Kindle will assist the deeply troubled newspaper industry. At the DX's introduction, The New York Times, Boston Globe and Washington Post said they'll offer the DX at a reduced price this summer where home delivery of those papers isn't available if buyers also take a long-term subscription to the Kindle edition of the papers. Those papers didn't return calls seeking details.
The three papers, plus 34 others, are already available in Kindle editions, which sell for a monthly fee of between $5.99 (Investor's Business Daily and others) and $14.99 (Le Monde and others). All include 14-day free trials.
New York Times executive editor Bill Keller in January said the paper "currently makes a modest amount of money" selling the paper's Kindle edition and another dedicated device called the Times Reader. Certainly an e-reader-based edition appeals to publishers, because it could offer a more predictable revenue stream than Web-based versions of the news. But many think e-readers won't help newspapers.
For one thing, Kindle editions don't currently contain ads, which irks some readers. Also, Kindle editions aren’t updated — they’re simply digital versions of a printed newspaper, and don’t refresh as the news changes. And the publications cost money, unlike the papers’ frequently updated online versions, which are available free even on the DX's basic built-in Web browser.
"Instead of trying to persuade consumers to adapt to an expensive, awkward and idiosyncratic gizmo like the wide-body Kindle, newspapers would be wiser to spend their time and resources optimizing their existing offerings for the interactive formats already in popular use," says Alan Mutter, a former cable Internet service provider executive who now writes about media and technology.
Regardless of the types of publications it displays, not everyone sees a brilliant future for the Kindle. Paul Starr, a professor of sociology and public affairs at Princeton, is among them. The doubts center on the fact that, though the Kindle is a good e-reader, that's all it is.
"For one thing, Amazon has been trying to develop a system that's walled off from everyone else's, except for the PDF capabilities," Starr said. "For another, as it develops, how multifunctional will be it? More like a dedicated word processor, which only does one thing, or more like a computer, for which applications are written by the thousands? The more versatile it is, the better it will compete."