Steve Jobs Gets Pwned

Apple fumbled hugely by allowing the Kindle to dominate the rapidly growing eBook device market.
Steve Jobs is probably one of the best and most visionary CEOs in the world, and a national treasure. He's also been sick lately, and I wish him a full and speedy recovery, followed by a return to Apple as full-time CEO. But even visionaries have blind spots. Jobs was totally wrong about the market for eBooks.

In January of last year, Jobs told a New York Times reporter that the Amazon Kindle eBook reader would fail in the market because "people don't read anymore."

I'm sure everyone chuckled when they read that.

Amazon.com this week made several announcements around their Amazon Kindle eBook reader that lays bare Jobs' failure to recognize the eBook reader opportunity.

The company announced a big-screen version of the Kindle, called the Kindle DX. But two other announcements matter more.

First, Amazon announced that a whopping 35% of book sales by the company are Kindle versions — at least among books that have a Kindle version.

Apple was probably not surprised by such a figure. Electronic books are the dominant category of iTunes App Store downloads for the iPhone. Not only do people still read, they increasingly read eBooks and desperately want to do so on Apple hardware.

The second announcement involves partnerships with universities. Amazon.com announced partnerships with six schools — Princeton, Pace, Case Western Reserve, Arizona State, Reed and the University of Virginia — to supply Kindle DX hardware, which will replace physical paper textbooks for some students. Not just textbooks, but syllabi and other course materials, which will save both schools and students millions of dollars. (Last year Princeton alone printed about 50 million sheets of paper at a cost of some $5 million. How many Kindles will that buy?)

Remember the 1980s and 1990s when Apple dominated the education market? The new opportunity for selling to schools will be eBook readers like the Kindle DX.

Where's Apple?

There’s something horribly wrong with the world when Apple is absent from a consumer electronics category that’s fast growing, involves downloadable media, and primarily serves students and other people smarter and richer than average. Also, a model that Apple mainstreamed with the iPod and perfected with the iPhone (high-margin, low-volume hardware sales followed by low-margin, high-volume content sales) is being stolen by an online book store. Something’s missing here.

What’s missing is an Apple tablet that works like an iPhone – multi-touch, gestures and the like – and an eBook store on iTunes, which would ideally be a front end to Amazon.com itself. The device should run the iPhone OS and support App Store software. Apple selling Amazon Kindle-branded books could resemble Apple’s current practice of audio books “presented by Audible.com.” (Note that Audible.com is owned by none other than Amazon.com!)

I think Apple would be crazy not to release such a device this year. And I don’t think Apple is crazy. If Apple did release a tablet, and a sweet eBook application that supported the Kindle file format and sales from Amazon.com, I think Apple could quickly take over the eBook market. (Heck, toss in an optional wireless keyboard and it could grab the netbook market as well.)

Steve Jobs was horribly wrong about people not reading anymore. Amazon’s success – and the success of eBooks on iTunes -- has got to embarrass Jobs about his ill-timed proclamation.

But Jobs might be right in the end about Kindle failing. Apple has probably missed the boat on controlling the file format and branding for eBook sales, and possibly because Steve Jobs didn’t believe in books. But by supporting the Kindle format and store, Apple could take over the hardware end of the business.

And here’s the surprising part. I think Amazon would be very happy with that outcome. I don’t think Amazon.com launched the Kindle so it could design, make and sell gadgets. With that business comes carrier hassles, tech support headaches, supply management and all the rest. I think they launched Kindle in order to jumpstart the market and establish control of the format, sales and publisher relationships.

Thanks to Amazon’s aggressive faith in eBooks, and Apple’s embarrassing lack of faith, Amazon has now established itself firmly in control of eBook content, standing at the lucrative nexus between book, magazine and newspaper publishers and a world of voracious readers.

An Amazon/Apple partnership would benefit everyone. Especially those millions of readers that, according to Steve Jobs, don’t exist.




Tags: software, wireless, iPhone, Kindle, ebooks


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