Barnes and Noble Nook
Amazon made a stunning announcement Tuesday morning. “In just the first 73 days of this holiday quarter, we’ve already sold millions of our all-new Kindles..”

Kindle owners were the first to get the news, since Amazon quietly posted it online in a forum for Kindle owners. “Thank you, Kindle customers…” the announcement began, adding that “in the last 73 days, readers have purchased more Kindles than we sold during all of 2009.” Their post was just six sentences long, but it seemed bigger in scope — and big on gratitude. Amazon’s Kindle Team said they were “energized” (and grateful) for “the overwhelming customer response,” and the message ended with the words “Thank you for being a Kindle customer.”

It’s fun watching the reactions from skeptical technology sites. “It’s raining Kindles,” wrote The Motley Fool. They’ve complained in the past Amazon never revealed the actual number of Kindles sold, saying it’s “like having a discussion with a kindergartner or a politician. They all tell you what they think you want to hear…but lack the details you really need to know before drawing your own conclusion.”

Even then, Amazon’s announcement Tuesday didn’t completely satisfy the site. “Amazon.com still isn’t coming clean with how many Kindle e-book readers it’s selling, but at least now we know that it will be in the ‘millions’ this holiday quarter alone.” The Motley Fool called Amazon’s sales figure “impressive,” and attributed it to the better deals available. “[I]t really wasn’t until this year’s price war — driving the price of the Kindle to as low as $139 — that it all began coming together. Book lovers that figured it would take several dozens of e-book purchases to cover the cost of the $399 model can now justify the lower break-even point on a $139 reader.”

Information Week supplied some crucial context for Amazon’s announcement. Just last week, Barnes and Noble revealed it was selling its color Nooks at a rate of 18,000 a day. Publisher’s Weekly had declared the company’s CEO as their person of the year, and in a profile, he’d revealed that every four or five days, Barnes and Noble loaded up another 747 aircraft just to fly in more Nooks from China. That would come out to 1,314,000 Nooks if it lasted for 73 days — two Nooks for every three Kindles sold — but the Nook Color has only been available for less than 7 weeks.

It’s been 47 days since its release on October 28, which works out to just 846,000 color Nooks sold so far (assuming their sales rate remained constant). “All this vague one-upmanship, doesn’t answer the question on most analysts’ minds,” complains Information Week, “which is how well the Kindle is selling compared to the Apple iPad.” But at least now we have a number to work with for the number of Kindle owners in the world. We now know that there are at least two million new Kindles firing up out there in the wild.

The devil is in the details, and C|Net found something even more important that I’d missed. Amazon’s CEO is predicting that ebooks won’t start outselling all printed books for a while — saying ebooks won’t even surpass the sales of paperback books until the summer of 2011. And as far as ebooks outselling all printed books, he’s predicting it will finally happen “by 2012.”

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Amazon 3Q stock chart - third quarter of 2010

It’s a special time of year — when major corporations finally reveal the secret numbers about how their companies performed over the previous 13 weeks. Yesterday Amazon released their own quarterly earnings reports, right in the middle of a week of rumors and predictions about tablet-sized reading devices. Amazon reminded investors that the newest generation of Kindles are “the fastest-selling Kindles of all time.” And they’re also the #1 best-selling product on Amazon — both in America and Britain.

“A sour economy failed to slow down Amazon.com,” reported the New York TImes, “as the company’s net sales climbed 39 percent in the third quarter.” But what’s more interesting is what they didn’t say. A financial analyst in San Francisco believes that this year, Amazon will earn a whopping $2.8 billion from their Kindles and ebook purchases, according to Bloomberg news. And within two years, that number could nearly double, to $5.3 billion in 2012!

That’d break down to the equivalent of 15 million Kindles sold in 2010, and 30 million in 2012 — though some of the profits obviously are coming from ebook sales. But what’s even more interesting is the analyst’s second comment. Kindle users “will not only continue buying more e-books, but also subscriptions, accessories, [and] hardware warranties,” he predicted, saying eventually the devices would be used to deliver music and even full-motion video. Will Amazon eventually open up new stores for Kindle music and Kindle video?

And that’s where the first rumor gets a lot more interesting. While Amazon was announcing their quarterly results, C|Net also reported that this Tuesday, Barnes and Noble will reveal a digital reader with a full-color touch-screen — the “Nook Color,” priced at $249. “It’s a big step ahead, instead of chasing Amazon,” their source explained, adding that it’d be based on Google’s popular Android operating system, and would sell for half the price of Apple’s tablet-sized iPad. It’d ship with a 7-inch color screen — which is a magic dimension size that has already been generating some controversy.

“One naturally thinks that a seven-inch screen would offer 70 percent of the benefits of a 10-inch screen,” Apple’s Steve Jobs told analysts Tuesday when announcing their own quarterly earnings. “Unfortunately, this is far from the truth. The screen measurements are diagonal, so that a seven-inch screen is only 45 percent as large as iPad’s 10-inch screen. You heard me right: just 45 percent as large…
The seven-inch tablets are tweeners: too big to compete with a smartphone, and too small to compete with an iPad.”

Jobs insisted that his comments were based on Apple’s “extensive user testing on touch interfaces over many years…we really understand this stuff.” But the truth probably lurks somewhere between the lines. Reading devices have proven to be so popular, that none of these companies want to get left behind. It’s not just that Amazon’s Kindle-related profits are probably already in the billions of dollars. It’s that selling us millions of Kindles means we’ll keep using Amazon’s store for our future purchases — of e-books today, but maybe also for music-and-video purchases in the future. So while I’m casually reading my e-books, major corporations are already fighting the war of tablet-sized reading devices.

And honestly, I’m not sure how I feel about all this speculation. I just worry that someday we’ll look back with a fond nostalgia to the Kindle 1. “It didn’t offer full-motion color video on high-definition screen,” we’ll say.

“But it was really great for reading books.”

It's a Book by Lane Smith
I think this is a milestone. Friday, 79-year-old Regis Philbin discussed the end of the printed book on his morning daytime television talk show.

It began when co-host Kelly Ripa brought out a new children’s picture book titled “It’s a Book.” She read its dialogue between a technology-loving jackass, and a monkey who still loves books. The confused jackass watches him reading for a minute, and then asks “How do you scroll down?”

“I don’t. I turn the page. It’s a book.”

“Do you blog with it?”
“No. It’s a book…”
“Can you make the characters fight?”
“Nope. Book.”
“Can it text.”
“No.”
“Tweet?”
“No.”
“Wi-Fi?
“No.”
“Can it do this? ‘Doot’…”
“No. It’s a book.”

But here’s where it gets interesting. It’s a brand-new book — released just two weeks ago — and the author had delivered a special version to Regis and Kelly. On the book’s inside cover, he’d suggested the book’s characters could be people on their talk show. The book-loving monkey was Regis, while the cute little mouse was Kelly, and the technology-loving donkey was Regis’s producer, a man named Gelman.

It was a special edition of the show — later, Gelman would try to teach 79-year-old Regis how to use a computer. (Regis is a notorious technophobe, possibly because he was born in 1931, back when Herbert Hoover was still President.) And yet in their conversation, Regis seemed to sense that his world had finally reached a turning point.

                        *                        *                        *
REGIS: It’s too bad about books, because just recently Barnes and Noble…

KELLY: Oh, I — they’re going to sell Barnes and Noble.

REGIS: — you know, just can’t do it any more. Isn’t that a shame, those bookstores slowly going out of business?

KELLY: I mean it’s like, to me there’s nothing better, also, than going in a library and smelling all the books and hearing the — the crinkling of the plastic covering on the b- —

REGIS: Yeah, exactly.

KELLY: I mean it’s just, I hope that we haven’t taken it too far.

REGIS: Our kids missed the big internet age when they were small, you know, and it was still books. And boy, I’ll never forget when we brought the girls here to New York, how Joanna loved these bookstores. And it was a thrill for her. I was taking — “Wanna go see a movie or something?”

“No, I wanna go to this book store.” Barnes and Noble on 5th Avenue, and all those stores.

KELLY: Now she’s an author. Now she writes.

REGIS: And now she’s an author. Yeah.

KELLY: It’s funny. My son just got his, well, not just, but over the summer, his seventh grade reading list. And it’s still books! So I’m happy to say that they’re still using books.

REGIS: Yeah. I guess there’s room for both internet and books, you know. But unfortunately…

                        *                        *                        *

Ironically, Regis Philbin has written two autobiographies — neither of which is available on the Kindle!

But click here to buy “It’s a Book!”

Barnes and Noble store with Nook department

As the Kindle soars in popularity, at least one bookstore is already in trouble. Barnes and Noble put itself up for sale, and New York Magazine just ran a touching profile of the company’s founder,
69-year-old Leonard Riggio.


“I still like books,” he said, though it didn’t really need saying. All around him, in a conference room that evoked an elegant old library, were shelves lined with hardbound classics. Books had made Riggio a fortune… Books had been very good to him, and now they were dissolving into the ether…

Riggio wanted to say something, but he couldn’t quite find the words, so he burst out of his chair and charged over to one wall. “I don’t know how you can intellectualize this,” he said, “but a book is …” To continue his thought, he pulled down a copy of ‘The Count of Monte Cristo’, shook it, felt its substance. “This bound volume of Dumas is content. We have to understand people want to own this content. They want this. It’s very important.”


The magazine’s reporter visited the million-square-foot warehouse in New Jersey where Barnes and Nobles has its East coast distribution hub. (It’s “long enough to fit the Empire State Building sideways,” and stocks at least two copies of every single title that’s in print.) The article makes an interesting point: that bookstores earn more money on book sales than the publishers do. (Though Riggio once argued that “People in the world of literature tend to look down on people who make a profit.”)

Yet today, the hardware-based Kindle is Amazon’s best-selling product, and the Nook is also Barnes and Nobles’ best-selling product. “As [their new CEO] sees it, the superstores can serve as platforms for marketing their own replacement technology,” the magazine notes. “Walk into any Barnes & Noble, and the first thing you’ll see is what Lynch calls the ‘shrine’ — a counter where salespeople introduce the Nook. ”

But at the middle of this historic change is a 69-year-old man who founded a chain of bookstores. Now he’s left with a tablet-sized piece of electronics in his hand, and New York Magazine seems to
catch him showing some ambivalence.


“You know, I’m going through a thing — the record shows how old I am,” he said. “I’m going through, you know, like, ‘Oh my God, do I need this? At this period in time, to be as busy as I am…?'”

“If this was a Nook,” Riggio said as he flipped through the pages of The Count of Monte Cristo, “I just look at is as, well, here are the pages, and we magically erase the pages and another book appears.” As a business strategy, he was wagering that this convenience would inspire readers to spend more. But personally, Riggio remains unswayed. He doesn’t use his own Nook. “I like to hold the book instead of the device,” he said. “I would rather own multiple books than a single book that carries everything.”

And there you have it: The head of the company that sells the Nook doesn’t actually want to use a Nook. As New York Magazine puts it, “for all his newfound enthusiasm, he still can’t imagine a world in which the bookstore — or what he likes to call the ‘cultural piazza’ — is replicated by a piece of plastic…”

Thanks to Mike Cane for the link.

And click here to get The Count of Monte Cristo as a free Kindle ebook!

Pinocchio is lying - when he lies his nose grows
Last week the Wall Street Journal ran a controversial opinion piece about ebooks. A former book editor and a business professor argued that publishers needed to sell advertisements in ebooks in order to offset their shrinking profit margins. “[A] digital book is far less profitable than its hardcover cousin priced at $25,” their article argued. But according to responses on the web, there’s a problem with that argument. It isn’t true.

“Baen, a publishing house that specializes in fantasy and sci-fi, mostly with a militaristic bent, says that they’ve found that e-books significantly increase profits,” responded one commenter at a technology web site, even though that publisher sells DRM-free versions of their ebooks “for substantially less than they sell dead-tree versions.” And then another commenter backed up their skepticism with actual data provided by the New York Times.

Publisher’s Profits Before Overhead
On a $26 hardcover: $4.05
On a $12.99 ebook: $4.56 – $5.54
On a $ 9.99 ebook: $3.51 – $4.26

This isn’t speculation. The Times based their statistics “on interviews with several publishers and consultants who work with the publishing industry.” eBooks eliminate many of the costs associated with stacks of hardcover books, including printing costs, storage fees, and the cost of shipping books (and then shipping back the unsold copies).

“That, obviously, is exactly what logic would tell you,” one commenter concluded. And the Times article suggested the publishers’ real motive might be simple self-preservation — they’re trying to keep up the demand for printed books. In a future with even more digital readers, lower ebook prices would mean “print booksellers like Barnes & Noble, Borders and independents across the country would be unable to compete… if the e-books are priced much lower than the print editions, no one but the aficionados and collectors will want to buy paper books.”

One publisher’s consultant even tells the newspaper point-blank that “If you want bookstores to stay alive, then you want to slow down this movement to e-books. The simplest way to slow down e-books is not to make them too cheap.”

So are publishers being honest about the costs of publishing a book? It’s a hotly-debated mystery, even to those people who are most affected by it: the authors who are actually writing the books! At the end of their article, the New York Times tracked down best-selling author Anne Rice, who admits that “None of us know what books cost. None of us know what kind of profits hardcover or paperback publishers make.”

Most of Rice’s books are available on the Kindle — though not her most famous book, Interview with the Vampire But as the publishing industry faces historic changes, it was nice to see that Anne Rice still remains firmly committed to the future of the ebook. “The only thing I think is a mistake is people trying to hold back e-books or Kindle and trying to head off this revolution by building a dam.

“It’s not going to work.”