When Amazon introduced their first Kindle eReader, there were a lot of articles that suggested that this device represented the future of books. Many wrote that thanks to the Kindle, eBooks would go mainstream and be the most popular way people would read a book in the future. To some degree, there was a lot of logic and truth in this idea. eBooks can be downloaded instantly and in that sense they are much more convenient then having to go to the local bookstore and pick them up or order them online and wait for them to arrive days later.
The Kindle also had another thing going for it. It had an extremely long battery life and you could read it in direct sunlight. Not too long after the Kindle was released, other eBook readers came out from Kobo, Barnes and Noble and many more and even publishers started to jump on the eReader bandwagon and began releasing thousands of books in eReader formats. Over the last two years, prices have also come down so that you can get some eBook readers for as low as $79.00 today.
While eBook readers have had solid sales up to know, the entry of Apple’s iPad and other tablets are set to challenge their need to exist. Amazon, Barnes and Noble, and Kobo all realize this and have apps to their eBook stores on almost all tablet platforms today and in the case of Amazon and Barnes and Noble, they are also embracing tablets in a big way and, in a sense, starting to downplay their dedicated eReaders and pushing their customers to their tablet versions instead.
Do Amazon and Barnes and Noble think that demand for dedicated eReaders will completely disappear? Not necessarily. But they do know that something big is going on with tablets and that these types of devices will soon become the major platform for reading eBooks. In fact, Amazon is leading the way with their Kindle Fire and adding a key ingredient into their mix that has the potential of really shaking up the entire tablet market and potentially doom the eReader in the future.
The key ingredient is something called subsidization. The Kindle Fire sells for $199, but sources tell us that the bill of materials (BOM) for the Kindle Fire is at least $215.00. But Amazon is willing to sell it at this price because they expect a Kindle Fire buyer to purchase perhaps at last 10 ebooks, rent at least 5 movies and buy various products through the Kindle Fire from the Amazon store that they can amortize against the actual cost of the Kindle Fire and actually make a profit on it.
But Amazon does not have a patent on this idea. Indeed, Walmart has all of the things needed, included an eCommerce store for all of their products along with a real interest in renting eMovies, selling eMusic, etc online to do something similar. And in their case they also have the storefronts to back this up. They may count on the fact that their users will buy even more products from them if they own a Walmart tablet and make it really easy to buy eBooks, eMusic, download eMovies and buy products from their online store. They can use it also as an advertising vehicle for special Walmart offers. And in Walmart’s case, maybe they sell their subsidized tablet for $99 or in some cases, even give it away with special promotions. Although Walmart has shown no interest in doing this, they are the one major retailer who could map Amazon’s model and do something very interesting in the tablet space if they wanted to.
Take Proctor and Gamble as another example. They have over a hundred products they would like to sell you through their retail partners. What if they can get a reasonably priced P&G tablet built and branded for them and then uses it to drive promotions to the users and subsidize part of the cost of the tablet for their customers. From the users standpoint, the Web apps drive their broad content and app needs. But P&G now has a captive audience who is willing to get their ads in return for paying a very low price for this tablet.
If you add the subsidization equation to tablets, you might be able to see that the future for tablets may be where families could have four or five scattered around the house at their disposal and some could be subsidized by various vendors so that owning more than one is the norm. While the OS may still be important to handle localized apps for some, the most used feature will be the Web browser and Web apps, tied to the cloud where most of your personal digital life will reside. And since the Kindle app could be on all of them, your entire library could be in sync and you just pick up the tablet closest to you at the time and start reading where you left off.
The bottom line is that today’s tablets are great and thanks to Apple, the role of tablets in our lives is being flushed out now. But I believe that the tablets of the future will just be screens that use a browser to connect us to everything we need from the cloud and be cheap enough thanks to subsidization so that each room in our homes might have one and when you need one, you just pick up the one that is closest to you. Although there may be some people who would still want to buy a dedicated eReader, it seems to me that subsidized tablets could become so ubiquitous within the home that it could some day become the eReader of choice and the need for dedicated eReaders will disappear.