Zapaterismo

Amazon's venture into ebooks

Amazon.com announced the release of their e-book reader, Kindle, today. 

There's been quite a bit of hullabaloo surrounding the device since Amazon started putting out vibes over a year ago. Sony has seen limited success with its Reader and ebooks have always been a bit controversial.

The last bastion of analog (as Jeff Bezo's puts it) still seems to be fairly impenetrable.

Looking through the product profile, I'm personally underwhelmed. 

Admittedly, the Kindle is a huge step forward from the first Sony Reader (don't remember the name it had then) I owned about 13 years ago.  That one was big and heavy and took disks a bit larger than a 3.5" floppy.  It broke when I let it fall off the couch; I fell asleep reading. Go figure.

The Kindle boasts wireless connectivity and downloads, great search functionality, the ability to store around 200+ books, etc. 

Still, I'm such a bibliophile that reading books on an electronic device, no matter how great, may never appeal to me.

What I see that is interesting about the story are two things.

1.  The business model.  At $400 a pop, Amazon is clearly trying to get a return on its investment by charging a sizable amount for the device itself.  In fact, they are apparently eating losses on many books initially as a way to market the Kindle (claiming lower TCO). As demand (hopefully) increases and other players enter the market, Kindle prices will drop and ebook prices will inevitably creep back up.  This is Amazon's sweet spot anyway, so it makes sense that they would want to make money on the ebooks long-term. 

Still, I see a couple of issues with their approach:

- Users will likely be upset about the shift.  The value proposition will change as the ratio of device:book prices moves, and early adopters are bound to be unhappy.

- They want to have their cake and eat it, too. If you ultimately plan to be a razor and blades business, don't start by charging a lot for the razor on the promise that the blades will be cheap to replace. Really, this is the same as the previous point, just stated differently.

2. The role of web 2.0.  Amazon has long been a leader in providing an online shopping experience that is social and interactive. However, one look at the product's site and you'll see how wikis, customer reviews, and review "analytics" may not be working in their favor this time.  As I write this, the overall rating stands at 2.5 out of 5 stars, with 132 reviews (in one day!) and LOTS of disparaging comments in the forums.  If the product tanks, it would be interesting to know what the role of collaboration tools was in the outcome.

Bookstore Buy or Library Loaner #1 – Open Business Models

This last week I finished Henry Chesbrough's Open Business Models.

The book is a sequel to his better-known work Open Innovation and based upon the same idea that "not all of the smart people work for you" – so it's time to open up your business to outside technologies and intellectual property.

What a classic example of a profoundly "duh" statement. Chesbrough's (let's call him Hank) observation is truly brilliant…and timely. A high-tech, knowledge economy doesn't fully reward those who go it alone or suffer from NIH – "Not Invented Here" – syndrome. Just ask companies like IBM (who learned the hard way) and SAP (who seems to have started the move toward SOA before financial circumstances forced them to do so).

There is also a greater good justification for opening up (which I'm a fan of) as Hank states early in the book.  Patent law was created to foster innovation by creating appropriate incentives (i.e. protections) for inventors. But when corporations patent every significant idea that comes out of R&D as a part of a myopic defensive strategy, without considering whether or not the idea will ever see the light of day, they are robbing society of a wealth of potential new products and technologies.

Ultimately, the trajectory of the book leads Hank into a fascinating discussion of secondary markets in IP (intellectual property) and how to leverage these to ensure that ideas find a business model where they can be more efficiently and effectively brought to market. 

Note that this is an impressive win-win: companies licensing the IP make easy money and licensees execute more quickly and save on product development costs at a time when product lifecycles are shortening.

But perhaps the most memorable part of the book is focused on how IP should be managed differently at the four different stages in the technology life cycle – emerging, dominant design, mature, and declining. Hank puts forward a fascinating example related to the battle for the desktop between Linux and Windows in China and other parts of the developing world.

I'll stop there and hopefully leave you wanting to read – and ACQUIRE – the book for yourself, as this is most definitely a Bookstore Buy.

Introducing the “BB or LL” Series

Since I'm generally terrible at providing consistent content on my blog, I have decided to create a "series" based on something that I actually do VERY regularly – read!

I am a non-fiction junkie that goes through probably 3 books a month, and my specific reading interests seem to change with the lunar cycle.

I've decided to call it the "Bookstore Buy or Library Loaner" series (BB or LL for short) in honor of my dear wife, Sarah. Sarah loves my zeal for reading, but isn't necessarily crazy about the fact that my hunger for great books has made me an Amazon.com preferred customer. As the familiar tune goes, "Why can't you get it from the library?" The answer, CLEARLY, is that some books are just too good to not own.

Unfortunately, I'm not 100% accurate when it comes to making the distinction between a bookstore buy and a library loaner before I actually purchase a book. So my hope is to offer up some thoughts to help you learn from the fortune and mistakes of this humble bibliophile.