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Amazon Kindle: Doomed?

Boing Boing contributor and sci-fi writer Cory Doctorow wrote an interesting article for Locus magazine on why hardware e-book readers, like the Amazon Kindle, are bound to fail–at least for now. His reasoning cites competition with other entertainment products and a limited supply of manufacturing facilities:

It's fine to be a medium-sized small fry in those areas where the capacity is nigh-unlimited — say, Internet hosting, xeroxing, offset printing. No one's going to tell you that there's no room for your e-books website because the Internet is full. You're not going to have a hard time sourcing programmers to hack together your neat little social book-recommendation system. The world has lots of these commodities.

If, on the other hand, your cool idea requires that you outbid other would-be artists and entrepreneurs for resources, your success requires more than being right and passionate and smart: you also have to have deeper pockets than the competition. When your plan hinges on something scarce — say, high-quality manufacturing capacity — you need to be able to win the inevitable bidding war.

Doctorow points to the Nintendo Wii and the Kindle as examples of this dilemma in action. As Wiis and Kindles flew off the shelves during the Christmas shopping season, the two companies could not keep up with the demand. Faced with shortages, both had to enter a bidding war with other companies in order to get more factories–mostly located in China–to manufacture their high-demand products. Not only did they have to compete with other companies for factory rights, but they also had to vie for the best factories: Chinese manufacturers that wouldn't ship rushed and shoddy versions of Wiis and Kindles. No electronics company wants gadget news websites talking about how their 1st generation product had explosive batteries or dead pixels; that's the kind of news that could doom a product before it even gets off the ground.

While the Wii will probably continue to thrive due to its popularity amongst gamers, the Kindle will face a more dire problem according to Doctorow: Reading, as a pastime in America, is not as popular as watching movies, playing video games and other forms of entertainment. E-book readers are a relative one-trick pony, whereas devices like the iPhone can function as a phone, PDA, Internet browser, MP3 player, etc. Most people won't dish out $400 for a single-function portable electronic device when they can have the same function and more with their iPhones and laptops (i.e. read e-books, plus do everything else). Granted, the Kindle has free wireless internet access, but it is limited by its grayscale display, which–while great for reading text–will not display color photos or play videos. Therefore, more versatile electronic devices will command the majority of high-quality manufacturing factories in China and be produced in such numbers that they can be sold at a loss because users will pay for additional content (e.g. games, applications, internet access). As e-book readers are currently a niche device they have to be sold at a higher cost, which in turn will keep many people–like myself–from purchasing one.

I think e-book readers do have a future, but in order for that future to arrive sooner prices have to be lowered–possibly sold at around the price of an iPod shuffle. Subsequent profits will have to be made off of e-book sales, electronic newspaper subscriptions and other content. It'll be interesting to see how e-book readers like the Kindle and Sony Reader will do in the next couple of years. Hopefully, they prove doubters, even the well-meaning Mr. Doctorow, wrong.

(via Boing Boing)