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After rumours it may happen began swirling around this week, it is now official: Random House is bringing its deep catalogue of books to the Apple iBooks platform. This represents a major coup for iBooks in its stand off with the Amazon Kindle store, as RH is the biggest English-language publisher in the world, with best-selling titles like The Da Vinci Code in its catalogue.

Why is this important?

The first thing to note about Apple getting RH onto its store is the number of ‘new’ titles will be available on the platform as the result. Random House brings with it 17,000 titles to the Apple iBooks platform, absolutely exploding the number of titles available on the platform.

It also means the content gap between what is offered on the Amazon Kindle store and iBooks has been shrunken significantly. This, in turn, could be a compelling reason for iPad owners to use their tablet PC as a reading device, though they’ve long been able to if you factor in Kindle is available for iPad.

Major win for ebooks

Publishers have been anxious about the ebooks revolution. While they were always going to overtake paperbacks, just like downloaded music was always going to supplant CDs, book publishers didn’t want to find themselves in the same situation record labels find themselves in due to iTunes.

By this, we mean that the content owners did not want to be beholden to the platform owner, due to the strength of said platform. While the Amazon Kindle store is undoubtedly the kingpin in all things ebooks related, publishers find themselves in a comfortable position where there are two big players in the space, and not just an all-conquering monopoly, like what iTunes virtually is.

Major win for readers and e-readers

The knock-on effect of that is that future releases may all be paperback and digital simultaneously, creating an even bigger market for ebooks and ebook readers. While it may seem like Random House coming to the Apple iBooks platform is beneficial only to Apple – that would be the myopic view. Everybody stands to win off of this development, where the old guard is conceding it needs to change and adapt to the times.

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The Amazon Kindle e-reader – and the whole e-reader market – is about to get a dramatic sales boost when the device goes on sale in AT&T stores around the US. The e-reader, which is by far the bestselling device in its category on the planet, is continuing its slow march into physical stores after initially building its user base on its own store online.

Rollout from next Monday

Starting next week Monday, 6 March 2011, all 2,200 AT&T retail stores in the US will be carrying the Amazon Kindle 3G. Nothing changes here – it costs the exact same $189 (about £116) it costs online and in other physical stores, and it will be identical to the other models currently on sale.

Who benefits how?

Amazon’s major benefit is that it has yet another outlet to reach its customer base, adding AT&T to Best Buy, Target and Staples as the other physical retail stores the devices are carried in. As if the insane exposure it has from its online platform alone isn’t sufficient, now retail stores all across the US will have the company’s devices on show.

AT&T benefits mostly because Amazon will pay the company for the data transfer used when Kindle users purchase books over their 3G connections. This is the primary reason why AT&T will not carry the non-3G Kindle e-reader. With a Business Week report suggesting AT&T’s windfall could be up to $4 monthly for each Amazon Kindle 3G on its network, the company would do well to sell these devices hard.

The e-reader marches on

The Amazon Kindle 3G and its non-3G counterpart remains the shining light in the e-reader marketplace. The device continues to perform exceptionally well, even after people speculated tablet PCs would erode their sales. As Amazon puts the digital reader in more people’s faces, other e-readers can only benefit, too.

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Outside of impacting sales of physical books, how else do you think the e-reader market is affecting traditional book publishers? In a strange way, it is making them obsolete. Perhaps that is hyperbole, but the story of an under thirty self-published author who is selling over 100,000 books per month has to be scaring the old guard just a little.

Meet Amanda Hockling

Amanda Hockling is a 26-year-old author who has never had a major publishing deal. Self-publishing her books onto the Amazon Kindle store allows her to pocket 70 per cent of all sales she makes, while Amazon keeps 30. With her reportedly selling 100,000 copies of her published books monthly, she is raking in a reported $2 million (about £1.2 million) per annum.

How does Hockling do it?

Having never read any of her novels, I cannot speak to Hockling’s quality as an author. What is undoubted is her marketing skill, with her ability to reach that many people on the platform. She reportedly sells each of her novellas and novels in prices ranging from $0.99 to $2.99, with new content being published with great frequency so she can keep her turnover as high as possible.

Why publishers should be frightened

The reason publishers should be terrified of tales about runaway successes like this one is that they dramatically negate the age-old publisher’s sales pitch. Before digital platforms like the Amazon Kindle Store (and before the internet matured, one must add) only the traditional guys could promise sufficient exposure that you would see sales totaling tens of thousands over the course of your books lifetime, let alone hundreds of thousands of sales monthly. Digital platforms have proven this theory wrong.

E-readers are working

Incidentally, these dramatic sales numbers of Hockling’s books also indicate that the Amazon Kindle store and the e-reader that accompanies it are selling well. While it may have been cool to write about whether e-readers and ebooks were here to stay in late 2009 and early 2010, at the beginning of 2011, who still doubts them?

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As if the world needed any more proof that eBooks were here to stay, Amazon has announced that its Kindle eBooks have now become the most popular format on the site, overtaking even paperbacks.

Surely this is the tipping point

This, however, is not the first time digital books sales on Amazon have outstripped that of physical books, considering the online retailer last year announced it sold 143 Kindle books for every 100 hard cover sold. Now, though, seeing 115 Kindle books sold to each 100 paperbacks – which are comparably much cheaper than hard covers – is certainly something worth celebrating and even boasting about.

Incidentally, the gap between hardcovers and Amazon Kindle eBooks has only been increasing, with three eBooks being sold to every hardcover on Amazon.com.

You were wrong, Mr. Bezos!

One thing about the Kindle eBooks sales that has not gone to Amazon’s plans is when this physical to digital divide would be crossed. Amazon’s CEO, Jeff Bezos, predicted that this would only happen in Q2 of this year, and he’s off by a full two months. Strangely, I don’t think the man minds too much that this is so, given how big a piece of the eBook pie Amazon owns.

Riding the wave

Amazon is currently riding the eBook reader wave all the way to the bank, with the company dominating the digital reader sector in much the same way Apple’s iPad is dominating the tablet PC market.

In fact, we bring up the iPad deliberately because many said that it would eat the Amazon Kindle e-reader for breakfast. On all indications, this has not happened, with Amazon selling a rumoured 8 million Kindles prior to Christmas last year, and with the online retailer announcing the Kindle was its best selling product on Amazon. Ever.

Furthermore, though it’s easy to think other eBook readers are struggling to survive due to Amazon’s dominance, there’s equal argument that the market for digital books wouldn’t be as advanced as it is if it weren’t for Amazon. That in itself is reason enough to be quite optimistic about eBooks and the whole eBook readers market.

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It’s no secret that Apple and Amazon are squaring off in a heated battle for eBook dominance. Amazon, who had the head with its Amazon Kindle platform, continues to plough on with its strategy of selling hardware, as well as developing apps for other devices – Apple’s iPad included. Apple, with its iBooks platform for iOS devices, is looking to leverage the success of its own hardware, completing the ‘virtuous’ content-hardware circle it started with iTunes and the iPod.

The Christmas day battle

As such, when tech sites worldwide took stock of Christmas day US App store charts to see which applications were major successes, a particularly interesting sub-story was the respective placings of Apple’s own iBooks app for iPad and the Amazon Kindle app for iPad eBook apps.

Since both apps were free, and they were both from high profile companies, it was no surprise to see them both charting in the top ten. The difference was still 8 slots, though, with iBooks coming it at #1 and Amazon Kindle for iPad ranking #9.

What the chart ranking does not tell

Since Christmas is a day when many new owners of iOS devices flood the app store, it’s telling what the initial sales spikes are as an indication of mindshare.

What the respective chart ranking of iBooks and the Amazon Kindle for iPad app does not tell us is what the actual disparity in downloads was. Theoretically, the apps download numbers could differ by as little as 10 downloads, and while that is unlikely the case, it is sufficient for being ranked first and ninth.

Furthermore, isolated downloads of the eBook apps on an iPad are useless if users do not then purchase eBooks. So, again theoretically, the Amazon Kindle for iPad app could have generated twice the sales numbers of actual eBooks when compared to iBooks sales, giving the financial victory to Amazon, again.

Regardless of the tale behind the rankings, The Apple iBooks team will no doubt be pleased to win the eBook apps battle against Amazon. Granted, this is only on the Apple tablet PC, and there are Amazon Kindle apps for various platforms, yet it is telling, nevertheless.

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Fewer high profile gadgets are clouded in more secrecy than the Amazon Kindle e-reader. We know Amazon is happy with the sales, with the company recently revealing sales were in the millions in the early period of this holiday season, but hard numbers prove difficult to come by, while the Kindle team remains coy. If a Bloomberg report is to be believed, however, the Kindle is on course to sell 8 million units this year, exceeding analyst expectations by a dramatic 60 per cent.

Analysts’ expectations roundly beaten

A person familiar with Amazon revealed the company had sold 2.4 million of its Kindle eBook reader in 2009. Off this basis, and using other signals, average analyst expectations had pegged the Kindle at 5 million units, with Goldman expecting in the range of 4 to 5 million, Caris & Co expecting 4.8 million, and Citigroup and others predicting 5 million units sold.

Eight million of the eBook reader sold, however, is dramatically above even the most optimistic analyst’s expectations.

It’s all about the platform

What’s fascinating about the Kindle’s continued expansion is that it is one part a brilliant stand-alone business, while one part a brilliant Trojan horse for proliferating the Amazon Kindle platform. Even though Amazon’s desire to remain the top-selling digital reader in the world is undoubted, the company realises that with the number of players joining the game, coupled with a fast proliferation of tablet PCs, it cannot have a lion’s share of the hardware sold.

As such the Amazon Kindle platform has been put onto other devices through specialised applications, allowing people who may not necessarily have Amazon’s own Kindle e-reader, to read from their smartphones, PCs and tablets.

E-reading growing

The Amazon Kindle platform and the dedicated e-reader are absolutely critical to the continued fortunes of the entire digital reading market. As the tide rises for Jeff Bezos and crew, it too will rise for other eBook reader makers, leading to industry wide swell and growth, which is a very good thing.

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The world knows now that the ebooks market, and the hardware that supports the nascent reading platform, is big business. Such big business, in fact, that analysts have pegged it as a billion dollar business come the end of 2010. There is, however, a giant gaping hole in the overall volume sales of ebook readers: the Amazon Kindle platform team’s insistence on being coy about how many Kindle devices they have sold.

Millions sold

Well, this coyness isn’t due to stop any time soon, but Amazon has at least given some signal as to how successful its e-reader business is, saying it has sold ‘millions’ of Kindle devices over the first 73 days of this holiday quarter. The note issued to customers goes on to read that: ‘In fact, in the last 73 days, readers have purchased more Kindles than we sold during all of 2009. We’re grateful for and energized by the overwhelming customer response.’ Very, very, impressive.

Software still the focus

For Amazon, however, it is the proliferation of the Amazon Kindle platform that matters far more than the sale of the physical devices. With increasing competition from devices like Apple’s iPad, other e-readers, the Barnes & Noble Nook, and even smartphone reading, insofar as customers keep buying their ebooks from Amazon, then Jeff Bezos and company will be happy.

Industry-wide growth

The best part about the continued sales of the Amazon Kindle platform and hardware is the tide-rising effect it has for the rest of the ebook reader market. Competitor e-readers have become significantly better in recent months, and it is likely the quality gap between them and the Kindle will only shrink as time passes. The advantages of owning an e-reader are so varied that, at the very least, you should give them a serious look.

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Rumours have begun swirling that Google’s ebooks marketplace, supposedly named Google Editions, will finally launch this year in the US, with a full scale international rollout scheduled for 2011. Amazon vs. Apple vs. Google round 100 start!

Legal issues aside, let’s go!

Google executives had planned to launch this venture in the third quarter of this year already, but with intense regulatory scrutiny and legal hurdles, as well as technical hiccups, the service’s arrival has been continually delayed. Now the search giant is looking to launch its ebooks storefront this year in the US, with the rest of the world following next year, according to Scott Dougall, a product management director over at Google.

Supporting the independents

Strategically, Google’s approach to retailing ebooks is notably different from both the Kindle and iBooks approach. Whereas Amazon Kindle wants to be the de facto retail platform across multiple devices, and iBooks wants to dominate on iOS devices, Google is engaging independent booksellers in a move to position Google Editions as an open platform. And word has it several of these retailers have begun exchanging files with the search giant, indicating launch may be very close, according to publishers.

Oh, it’s on

The e-reader and ebooks space is heating up really fast, with a recent report indicating that it has become a billion dollar industry. As such the competition for retail dominance, as well as e-reader hardware dominance, has become fierce, and it’s simply too early to call a winner.

Both iBooks and Amazon Kindle have considerable head starts over Google Editions, which may make it hard for the search giant to catch up. Then again, many people thought Android would have a hard time usurping the incumbents and we all know how that’s going.

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Prior to the iPad launching, it was well documented that Apple executives were working around the clock behind the scenes to court book publishers to support what would become its iBooks platform. Back then already many said that the Apple tablet PC was the biggest threat to Amazon’s then unchallenged dominance at the top of the eReader mountain. While early on it seemed like Apple would get some share, with Amazon continuing to dominate, the market place has changed a little with Apple’s tablet gaining fast.

iPad doubles share of e-reader market

A recently released survey conducted by ChangeWave has found that the iPad has doubled its e-reader market share since August, to now be within 15 percentage points of the Amazon Kindle market share.

The US survey had 2,800 respondents, of which 32 per cent used the Apple tablet PC as their e-reader, while 47 per cent used their Amazon Kindle. This is a dramatic shift when compared to the last time ChangeWave conducted this survey back in August – back then 62 per cent of respondents said they were using their Kindle, while only 16 per cent were using the iPad as their e-reader.

Interestingly, the two companies’ collective US e-reader share was at 79 per cent during the August survey and 78 per cent in this survey, suggesting that Apple took all that market share directly from Amazon. Battle on!

This is not all bad news for Amazon

What this survey, however, is not fully able to appreciate is the number of people who are reading Amazon Kindle ebooks on their iPads by using the Kindle app. While Amazon would no doubt prefer readership on their Actual Kindle device wasn’t declining, if the platform is still proliferating on other devices, the online retailer still has a net gain, and will find itself in the enviable position of being a platform holder, and not just a manufacturer.

And, in many ways, it would be funny to see a key function Apple tablet PC somewhat beholden to another device.

What’s next?

The survey also interviewed folks who intended on purchasing an e-reader within the next three months, of which 42 per cent said they wanted the Apple tablet PC, while a mere 33 per cent indicated they’d go for the Kindle.

Nevertheless, what matters most is that between these two devices the overall ebooks and ebooks reader market will only further expand, benefiting the entire industry, as well as smaller players in the space.

Photo: Amazon

The fourth in our series of seven posts chronicling the hopes and challenges of the world’s tech giants sees us tackle Amazon. A company that is very good at metamorphosis, Amazon has gone from being the world’s biggest online books retailer, to the biggest online retailer of anything, to a server provision company to the gatekeepers of the fast-growing e-reader market.

More so than any other company in this guide, it’s difficult to predict what Amazon 2011 will do, though we can no doubt pontificate.

The problem – core business is threatened

Amazon’s core business is where the company makes its money. Shipping products more efficiently and more cost effectively than others has always given Amazon a competitive advantage. The economics of shipping, which Amazon virtually rewrote, have been adopted by many other comparatively boutique retailers, making investors jittery about Amazon’s growth prospects in its core business. Amazon 2011 certainly hopes this doesn’t become a problem, and if it does, the company needs to quickly figure out how to push back.

The frontlines – the Kindle

The Amazon Kindle and the Kindle platform are Jeff Bezos and Co.’s big play. If digital is the future of reading – which all signs are pointing towards – Amazon will be right at the centre of that revolution. While the Amazon Kindle e-reader is by far the best-selling dedicated eBooks reader on the planet, the platform is also the most used eBooks platform in the world, being available on the iPhone, iPod Touch, iPad, Google Android, Mac, PC and soon-to-be Windows Phone 7.

The fact that what you buy is tied to one account no matter what device you use is genius business, and locks customers into your platform. Amazon 2011 hopes to continue this proliferation.

The breach-and-clear

The second area Amazon is looking to dominate in 2011 is the web services space. When Amazon’s web service launched, it sideswiped everybody, from Microsoft to Intel to old enterprise giants like Oracle. Nobody was expecting it. But the pricing in the on-demand server space was so competitive that startups and large organisations battling with scale flocked to Amazon en masse.

Amazon 2011 will likely look to use this stealthy attack as a platform to launch even more web tools as the company goes through a transition phase. Amazon is no longer just the largest book retailer in the world. It’s one of the most important companies on the web. Period. And this puts it in both a perilous and promising position, depending on how the company plays its cards.

The big thing to watch for, in our opinion, is the Amazon Kindle platform. Its growth will likely affect consumers more than anything else Amazon does next year.