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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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We all know that the iPad is the world’s number one tablet, and the Kindle is the world’s number one e-reader. What many do not know is how intense that dominance actually is, with an IDC report showing the iPad virtually is the tablet PC market, and the Amazon Kindle has stretched its legs from the competition.

Nearly nine in 10 tablets is an iPad

The IDC report states that the iPad owned a mind blowing 87.4 per cent of the entire tablet PC market in Q3 of 2010. That’s just shy of nine in every 10 tablets being made being Apple’s.

However, since Q3, there have been many more tablets announced and released, meaning that the market share will inevitably decline. In fact, given that Apple’s Q1 2011 report shows the company moved 7.33 million units, and the number two tablet PC, the Samsung Galaxy Tab, moved close on two million units in the same period, the iPad market share has already begun to drop.

You can’t Kindle this

The counterpart to Apple’s tablet dominance is the Amazon Kindle e-reader, with the IDC report saying Kindle owns 41.5 per cent of the digital reader market. Given that Amazon supposedly sold 8 million of its e-ink devices, that dominance is of no surprise. What is a surprise is the company coming in close second – Pandigital, who make the Novel coloured-screen reader currently only available in the US. Intuition would have told me Sony would be second. Intuition would have been wrong.

2011, the year of the tablet PC

The IDC report also echoes what is widely believed – that 2011 will be the year of the tablet PC. The research firm expects 44.6 million slate PCs sold this year, in comparison to the estimated 17 million sold in 2011.

As for e-readers, the group expects 14.7 million sold in 2011, compared to 10.8 million moved in 2010. Which is mathematically odd, if there were in fact 8 million Amazon Kindle devices sold last year, meaning Amazon should either have closer to 80 per cent market share, or the IDC report needs to adjust overall sales upwards.

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A massive spike in Christmas sales has seen the Amazon Kindle 3 become the online retailers best selling product. And no, not just best-selling product this year, but rather best selling product ever. It’s also given the Amazon team reason to coo as they successfully stave off the threat of tablet devices.

Sorry, Harry

The Amazon Kindle 3 has now overtaken  Harry Potter and The Deathly Hallows book release as the retailers best selling product ever. A big contributor to this massive sale spike is how aggressively the Kindle 3 is currently priced, available at as low a price as £109 here in the UK.

Even though we now know it is Amazon’s best selling product ever, we still don’t have hard sales numbers, though analyst consensus put its number at 8 million Kindles sold across all models just prior to Christmas, so it could have leapt significantly since.

Not Kindle vs iPad, Kindle and iPad

What’s more, Amazon’s team believes that the aggressive pricing of their eBook reader has meant that consumers have realised that they do not have to choose either a tablet PC or an e-reader, with many snapping up both. CEO Jeff Bezos said (via TechRadar): ‘We’re seeing that many of the people who are buying Kindles also own an LCD tablet’ – information he no doubt has access to since Amazon likely sold the tablet to the customer.

He continues, saying that: ‘Customers report using their LCD tablets for games, movies and web browsing and their Kindles for reading sessions.’ It makes sense, since in pure reading stakes, dedicated e-ink eBook readers are considered superior devices.

Kindle platform pushed on

Even with this seeming co-existence between the Amazon Kindle 3 and tablet PCs, the online retailer is not taking any chances by continually proliferating the platform to other devices, including Apple’s popular iPad tablet PC. The long and short of it is this: Kindle is not being killed by anything at the moment, and this is hard evidence that when priced correctly, tablet PCs and eBook readers can co-exist.

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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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With the Amazon Kindle 3 finally retailing in the UK, as well as the many other brilliant tablet PCs joining the market, many people have been asking us whether they should buy an eBook reader. This questionnaire looks to take the mystery out of the purchasing process, with three simple questions to point you in the right direction.

Question 1: Do you read a lot?

This first question may sound snarky, but really, it’s important. With good eBooks readers costing north of £100, you better be reading a considerable volume of content to offset the price tag. Do the maths real quick – a best-seller costs in around £15, meaning for the price of the e-reader alone you could have bought 7 books. Now add the price of each digital title, you realise that it’s only cost conscious if you actually pour through a lot of books annually. If you do, buying an e-reader is not only more cost conscious, it’s also practical since they’re so much easier to carry around.

Question 2: Have you considered a tablet computer?

The great tablet vs. e-reader debate is in full swing, with advocates of both slugging it out, while those of us who know the benefits of each simply purchase both and enjoy what they’re good at. At present, pound for pound, an Amazon Kindle, as well as the myriad of other e-readers, is notably better than the iPad for reading content. But, the iPad can do so much more. And that price discrepancy is favourable if you’re on a budget, but if you can afford Apple’s device, the decision becomes so much more challenging.

For our money, reading on a tablet PC isn’t as pleasurable as it is on an e-reader, and if readings all you’re going to be doing, buying an e-reader makes so much more sense.

Question 3: Do you travel a lot?

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E-readers are particularly brilliant for those of us who enjoy reading, but are rarely home due to an occupation that keeps us on the road. If you’re one of these people, carrying five books on a round-a-bout trip is impractical. An e-reader, mercifully, solves this problem. What’s particularly brilliant about eBooks readers is their impossibly long battery life – lasting close to a month with no need for a charge. This way, not only do you negate the carriage problem by buying an e-reader, you also don’t have the concern of needing to constantly recharge your device – unlike a tablet PC (see question 2).

Do it, or don’t

In this case, if you answered affirmatively to question 1 and question 2, an e-reader may be a wise purchase. If you also answered affirmatively to question 3, an e-reader is a must. However, and this is critical, if you answered no to question one, regardless of what you answered to questions 2 and 3, we recommend you steer clear of the eBook readers, since your money will be better spent elsewhere.

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Nintendo versus Sega. Betamax versus VHS. Pixar versus Dreamworks. The technology industry is built on rivalries, but there’s a chance none are nearly as peculiar as the iPad vs. Kindle rivalry that has recently developed. Spoiler: we don’t think it’s much of a rivalry because this goes beyond just eBook reading. We explain why below.

Round 1: The devices, pricing and capabilities

The entry-level iPad is priced at $499 (£325) in the US whereas the cheapest Kindle is priced at $139 (£90). While the iPad is a full-colour, touchscreen device, with access to the web as well as Apple’s 200,000 plus app store, the Kindle is a dedicated eBook reader with a dull E-ink screen.

Winner: iPad. At four times the price for more than four times the device, the Apple tablet PC is the winner here. But not by a landslide – round 2 explains why.

Round 2: eBook reading

Where the Amazon Kindle and the iPad are in direct competition is in eBook reading, an area where the Kindle is currently the hands down winner. The iPad’s heft makes for an uncomfortable, painful reading experience next to the breeze-light Kindle. Furthermore reading on a backlit LCD screen is a less fun.

Photo: Apple

Winner: Kindle. This is easy street for the Amazon Kindle. If reading a text-based book is what you’re looking to do, the Kindle runs rings around the iPad for comfort in your hands, comfort on the eyes and battery life, too.
We’ve argued that the Apple tablet PC could try harder with magazines and the like, but for pure eBook reading, this is the Kindle’s playground.

Verdict

And herein is the reason we want to stress that this is not actually an, erm, apples versus apples comparison. There’s a large cross section of consumers who, budget permitting, we’d recommend get both the Kindle and the Apple tablet PC. If you’re a book lover on a budget, Amazon Kindle without a doubt. However, if you want a device that could very well define the future of computing, the Apple tablet is a must-do.

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In a fascinating interview with the Cnet Crave blog, Ian Freed, a vice president over at Amazon, claimed Amazon held 70-80 per cent of the eBooks market, as well as revealing a host of other tidbits on the Kindle business.

The market share truths and lies

The very first thing Ian Freed revealed is Amazon’s ‘double triple’. The first of which is ‘the number of e-books sold in the first quarter of 2009 versus the first quarter of 2010’ which saw the latter period’s volume triple over the former. Amazing. He added that ‘the other is after we dropped the price of the Kindle to $189, we saw a tripling of the growth rate year over year [of the device itself].’ Remarkable what a price drop does for an eBooks reader, or any product, huh?

Freed also spoke about market share, wherein he said Amazon owned 70-80 per cent of the market, even though Barnes & Noble claimed to own 20 per cent and Apple 20 per cent. Coyly Freed offers that ‘something doesn’t add up’ and that he encourages the interviewer ‘to do some research’ on the matter. We’ve done our own research in the past, and can attest to at least one of those Amazon competitors duking the stats.

User distribution

Ian Freed also went into details about what percentage of Kindle store users are actually Amazon Kindle owners. From Amazon’s findings, ‘80 percent of Kindle books we sell are sold to Kindle owners’, therefore 20 per cent do not own a Kindle device. They’re purchasing Kindle books from other apps hosted on smartphones, PCs, and tablet computers. This, explains Freed, in indicative of ‘…the health of both businesses. The device business continues to grow with a device [the second-generation Kindle] that’s over a year old, and then the content is growing both with the device sales and independently with the apps’.

iPad denial, and market share fabrications

The interrogators interviewers over at Crave asked Mr. Freed the inevitable iPad question, which he then roundly dismissed. Similar to Amazon’s strategy in the past, he simply calls it a different kind of device, which Amazon loves because people purchase goods off of the digital retailer using it. He then goes on to discuss why it’s an inferior reading device to the Kindle. It’s almost as if Amazon’s strategy is to ignore it, hoping it will go away.

What we make of this

Outside the very slight iPad deflection, this interview is riveting stuff if you care about this eBook readers space.

This Crave interview is commendable for getting Freed to speak so freely about the Kindle business. Granted when you’re winning, it’s easy being open and candid, but this interview is ‘child locked in the candy store’ stuff for stats junkies and eBooks lovers both. It’s well worth a complete read to get further insights into the future of the Amazon Kindle business and the eBook readers business in general.

Photo: Barnes & Noble

If, for whatever reason, you still didn’t think eBooks and e-readers were here to stay, here’s a shock to your system: Barnes & Noble Inc., the US’s biggest books retail chain, has just put itself up for sale. The real kicker is the growing sales of digital books are partly to blame.

For sale sign erected

After continued pressure from shareholder activists Barnes & Noble Inc. has put itself up for sale, as reported by the Wall Street Journal. The company announced that a continuously falling stock priced forced the group to think through all alternatives, ‘Including a potential sale’.

The primary reason for the somewhat unexpected yet not-altogether-surprising sale is the meteoric rise of digital books and their respective e-readers as a viable platform, as well as more and more book lovers ordering their titles online. This meant that foot traffic to the stores declined steadily, putting revenue pressure on the group in step. Effectively, as has been evident for years but has only really come to fore recently, Amazon has wrecked their business.

Potential buyers

With Barnes & Noble Inc. having 720 stores across the United States, 637 stores on college campuses and a grand brand name, the company is attractive to various suitors. Leonard Riggio, the group’s founder and chairman, may be forming a group of investors to purchase the company, and a multitude of private equity firms are expected to be in the running, too.

What’s the benefit?

What do potential suitors stand to gain? A fair amount, actually. The aforementioned brand pull and reach of the group is a great motivator, as is the promising Barnes & Noble Nook e-reader platform. Sure, Amazon has trail blazed ahead and has put some distance between itself and competitors, but the Barnes & Noble Nook (and the iPad) have confirmed that Amazon is not the de facto e-reader yet.
What matters in this story is that eBooks and e-readers are big, big business. Big enough, in fact, to force the hand of America’s biggest books chain.