Apple Bites Off a Juicy Chunk of E-Book Market

Lately it seems that every idea Apple has returns piles of cash to the company's coffers. So, it should not be surprising that Apple is experiencing quick success in the e-book marketplace.

More than more than 5 million e-books have been downloaded to Apple iPads in the roughly two and a half months since the device was released, according to Apple CEO Steve Jobs.

Jobs cited this figure while giving an update on Apple's line of mobile communications devices -- which includes the iPhone and the iPad tablet-style PC -- during the company's Worldwide Developers Conference on Monday in San Francisco.

Apple's iBooks application allows iPad users to download e-books from a group of publishers -- Penguin, Harper Collins, Simon & Schuster, Macmillan and Hachette -- that have signed distribution deals with Apple.

There will soon be a version of iBooks for iPhone 4, Jobs said, which is slated for release in late June. Upgrades for the iBooks application will allow users to make notes and place bookmarks in e-books, as well as read them in PDF format.

Significant Force

The publishers Apple is working with recently reported that roughly 22 percent of their current e-book sales Best Fit CRM Analysis - Learn which 3 CRM solutions would best fit your business. Click here. are to iPad users, Jobs said.

It's difficult to determine what percentage of total e-book sales that represents, since Random House, the world's largest book publisher, has yet to sign a distribution deal with Apple. Still, Apple's early performance in this market is impressive.

"It's a pretty significant number," Michael Gartenberg, a partner with Altimeter Group, said of Apple's 22 percent share among its publishing partners. "It indicates that in a very short time, on one device, Apple has become a significant force in this industry."

Some of Apple's early success in the e-book market should be attributed to the iPad itself, Gartenberg suggested.

"The iPad is an attractive device because it does multiple things," he told MacNewsWorld. "It's a productivity device as well as a content consumption tool -- and it does e-books very well."

While the iPad is driving some of Apple's e-book success, there are other contributing factors, noted Mike Shatzkin, founder and CEO of Idea Logical.

Too Early to Draw Conclusions

"I think we're dealing with a lot of people who have never had an e-book reader who are exploring the novelty of being able to buy books instantly at lower-than-store prices," Shatzkin told MacNewsWorld. "The iPad screen is beautiful, making reading on it more appealing than on a phone or even on an [Amazon] Kindle. "But we'll have to wait awhile to see what a person who already owns a Kindle, and then buys an iPhone, will want to use as a reading device."

Apple's early momentum in the e-book space should be a warning to Amazon (Nasdaq: AMZN), Sony (NYSE: SNE) and other companies that make devices for reading e-books, Harry Wang, director of mobile products research with Parks Associates, told MacNewsWorld.

Noting that both the Amazon Kindle and Sony Digital Reader lack color screens and multimedia functionality, Wang said it might make sense for these companies to address those shortcomings in future versions of their products.

New Competitors

On the other hand, "companies like Amazon should be focusing on their platform," recommended Gartenberg, "putting their application on the iPhone and the iPad and offering the value proposition of making content available across multiple screens. That's a way for them to win, rather than trying to compete solely on the strength of a device."

Even if companies like Amazon and Sony stop developing e-book readers, Apple would not be free of competition in that area. New players already are entering the market.

In late May, Pandigital, which has specialized in digital photo frames, introduced a device that offers a color screen for reading books, as well capabilities for listening to music and watching videos.

"Time will tell whether Apple will dominate the e-book space the way it has with music," Wang concluded. "My hunch is Apple will be a big player in this market, but it won't be dominant."

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