Did Apple Just Punt on Ebooks?

Posted on June 8, 2009 by dmoynihan

I understand that there are some people out there who are excited, because the new $99 Iphone means you can now get an ebook device, assuming you agree to a two-year commitment, at the lowest service plan rate of, oh, $80 a month with taxes, for $2,000 or so!  Plus $36 activation fee.

But beyond price, I think there’s another problem with the idea of Apple-as-the-ultimate-Kindle-competitor: Apple.  Just look what the folks at Cupertino did today with ScrollMotion. Apple featured ScrollMotion’s ebook app at their big annual developer’s conference.

Yep, at the site of many a classic Stevenote, Apple presented a little ebook app maker, albeit one with a lock on most of the best-sellers being put out these days, and a claim to many of the new e-textbooks you’ll also be seeing in the Kindle DX.  Why would you do that if you were about to launch an ebook store that would bring Amazon to its knees?  Why, if you were going to “jump” into the ebook sales market, would you even think about building up a potential competitor?  What would be the point?

Maybe the point is, despite hype from industry outsiders, Apple doesn’t see all that much potential in the market for ebooks.  The #1 ebook app is Classics, which per its author does 20k sales a month.  ScrollMotion’s presence on the app store bestseller list, while lucrative enough to make the company and its .pdf-based Iceberg Reader the second-largest ebook retailer after Amazon (and well ahead of Sony, Fictionwise, BooksonBoard, et al), just does not compare, revenue-wise, to the 500k-selling Pull my Finger.

What I think Apple has said here today was, hey, you want to sell ebooks? Go ahead.  You want to do it off our store? Give us 30%.  You’re a publisher who wants to sell?  Get an App, like the kind our friends ScrollMotion make, but sell through somebody else.  Don’t bother us.  We do movies, games, music, novelties, productivity software, and GPS-based lifestyle applications, and we make billions doing it.  Books aren’t an area of our expertise, and aren’t worth the trouble.

About dmoynihan

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  • DMcCunney

    No surprise, really. Various folks have had wet dreams about an Apple ebook reader (the iBook, anyone?). But why should Apple make one? The market for such a thing isn’t big enough. Apple wants to sell lots of devices, and make high margins on the ones they sell. (Recent commentary indicates Apple is still making dandy margins, thank you, on the original iPhone, even with the price cut to $99.)

    Everybody and their dog has (or wants) a cell phone (and chances are the dog’s is better…), so Apple can and has sold a lot of iPhones.

    Everybody listens to tunes on their MP3 player, and listening to tunes is a background activity you can do while doing something else, like jogging or driving. So Apple can and has sold zillions of iPods.

    What’s in it for Apple in ebooks? Frankly, not enough.

    Fine by Apple if programmers want to produce ebook reader apps for the iPhone/iTouch, and fine by tem if people want to sell them through the Apple store, as long as Apple gets a suitable cut.

    But the market has to be really big for it to be worth Apple’s while, and the ebook market, for both readers and content, isn’t there yet.

  • bowerbird

    punt? market too small?

    what in heaven’s name are you guys talking about?

    apple _is_ in the e-book business, and they are doing
    fine, thank you very much, with their 30 per cent cut.

    are they gonna come out with a dedicated device,
    like the kindle? of course not. that’s beneath them,
    in a half-dozen ways.

    but are they going to come out with a giant iphone,
    or is it a netbook/tablet thingee, it doesn’t matter,
    because they will give it a new name and a mission
    that sets it off from everything else that came before,
    and we’ll all come to think they invented the category.

    heck yes they are. anyone can see that one coming.

    and sure, people will read books on the thing, but
    will also run a hundred thousand iphone apps on it,
    and maybe even software running on mac computers.
    (there’s a reason they say that everything runs o.s.x.)

    steve went head-to-head with the music heads, and
    learned that he didn’t want to do that again _and_ that
    he didn’t have to, he just had to insert himself as the
    middleman collecting a healthy cut, and let the darn
    _marketplace_ teach the content owners about pricing,
    and d.r.m., and all the stupid decisions they’ve made…

    books are just part of the territory, like the g.p.s. stuff
    and the videocamera and the fart apps and all of that.

    -bowerbird

  • DMcCunney

    punt? market too small?

    what in heaven’s name are you guys talking about?

    Reality.

    apple _is_ in the e-book business, and they are doing fine, thank you very much, with their 30 per cent cut.

    And that’s 30% of what? Next to nothing in terms of total revenue, I bet.

    That’s not quite like saying HP is in the ebook business, because my S.O. can read them on her HP laptop, but it’s close.

    Is a retailer like a department store that happens to sell books among many other things in the book business? Technically, yes, but will it be a focus for them? Not hardly. Their focus will be “soft goods” (clothing.)

    For that matter, places like CostCo and Sam’s Club are major book retailers, with enormous clout with publishers because of the volume they buy. But ask them, and they’ll tell you they are in the discount retailing business. They’ll sell anything they can move enough of to make it worth allocating the floor space. If printed books suddenly disappeared, they would probably barely notice.

    I’m sure Apple feels the same about ebooks. People don’t buy an iPhone to be an ebook reader, and don’t go to the Apple Store solely to buy them. eBooks are simply one thing you can do on an Apple device, and nowhere near the most important.

    Apple’s big move was releasing an SDK that allowed third parties to create apps for the iPhone/iTouch, even if it did take the phone being jail-broken before they got wise and did it. Once that happened, it was a minor thing to allow ebook reader and content sales through the Apple Store.

    Neither of those things puts Apple in the ebook business by design.

    books are just part of the territory, like the g.p.s. stuff and the videocamera and the fart apps and all of that.

    They are. The question is whether they are a focus of the business, or just along for the ride. Assume the latter. I doubt the money Apple makes on sales of ebook reader apps or ebooks to read with them is even visible on their bottom line, and if ebook reader apps and ebooks to read with them magically disappeared, I doubt Apple would care.

    A tablet from Apple would not surprise me, but the fact you could read ebooks on it wouldn’t put them in the ebook business either. Apple is a hardware manufacturer. They sell devices. A tablet is a segment of the market they can address and potentially sell a lot of devices at a healthy margin. The netbook category is exploding, and Apple doesn’t have an entry in it…yet. It’s what I suspect will be their next major move.
    ______
    Dennis

  • bowerbird

    > And that’s 30% of what?  Next to nothing
    > in terms of total revenue, I bet.

    and the investment against which
    that return is being generated?

    _absolutely_nothing._

    which puts it — more or less —
    in the same class with fart apps.

    profit which drops in your lap is very satisfying.

    > That’s not quite like saying
    > HP is in the ebook business,
    > because my S.O. can read them on her HP laptop,
    > but it’s close.

    it _would_ be close, maybe,
    if h.p. had managed to figure out
    a way to take a 30% cut on the e-books
    your s.o. read on her laptop.

    but they haven’t.

    apple, on the other hand, _has_.

    which means the situations are completely different.

    as in “not close at all”. not even _remotely_ close…

    > Is a retailer like a department store that
    > happens to sell books among many other things
    > in the book business? 

    yes.

    > Technically, yes,

    technically, the “technically” isn’t needed.

    > but will it be a focus for them? 

    oh, i see, you want it to be a “focus”.
    (whatever that means.)

    > Not hardly. 
    > Their focus will be “soft goods” (clothing.)

    i’d say the “focus” will be directly related to
    how much of their business (profits) result
    from each of their categories, which probably
    has to do with a slew of different variables,
    such as how much shelf-space they take,
    how much they weigh, how much demand for it
    at its current price from the current customers,
    how much employee-time it takes to sell
    and support them, etc.

    in the app store, however, all of that is reduced to
    a single state. and if fart apps make more money
    than e-books, then so be it…

    > For that matter, places like CostCo and Sam’s Club
    > are major book retailers, with enormous clout with
    > publishers because of the volume they buy. But
    > ask them, and they’ll tell you they are in the
    > discount retailing business. 
    > They’ll sell anything they can move enough of
    > to make it worth allocating the floor space. 
    > If printed books suddenly disappeared,
    > they would probably barely notice.

    i’m not clear whether you’re arguing your side
    of the argument with this particular paragraph,
    or _my_ side of the argument…

    which makes it difficult for me to argue back…

    > I’m sure Apple feels the same about ebooks.

    with the caveats i’ve listed above, mainly that
    digital goods reduce down to the simple matter of
    the storage and transfer of bits.

    > People don’t buy an iPhone to be an ebook reader,
    > and don’t go to the Apple Store solely to 
    > buy them.  eBooks are simply one thing
    > you can do on an Apple device,
    > and nowhere near the most important.

    and that means _what_, precisely?

    absolutely nothing.

    it seems you’ll only be satisfied with
    a dedicated device, which only does e-books,
    sold from a dedicated bookseller.

    which basically leaves you with the kindle,
    from amazon… (who, by the way, also sells
    lots of other things besides books, you know)…

    because, major clue, e-books don’t mean
    jack shit to sony.

    indeed, i wish we had a way to settle the bet,
    because i would bet you a lot of money that
    apple has already made _more_ _profit_ —
    maybe even lots more profit — off e-books
    than sony. come to think of it, that would be a
    sucker’s bet, since apple has incurred few costs,
    so almost every single penny that they’ve made
    off e-books has fallen into the “profit” cell.

    > Apple’s big move was releasing an SDK
    > that allowed third parties to create apps
    > for the iPhone/iTouch, even if it did take
    > the phone being jail-broken
    > before they got wise and did it.

    well, yes, that was a “big move”. but then you
    attribute it to something stupid. apple _makes_
    computers, and from the get-go, they were
    thinking of how to put apps on the iphone,
    which is why they made it run on a stripped
    version of mac osx.

    so “jailbreaking” had nothing to do with it.

    the reason they didn’t allow it at the outset
    was because the scope of the iphone was so
    revolutionary from prevailing “smart-phones”
    that it made a.t.&t. outright fearful.

    > Once that happened, it was a minor thing to allow
    > ebook reader and content sales through
    > the Apple Store.Neither of those things
    > puts Apple in the ebook business _by design_.

    i think you totally fail to appreciate the grandeur of
    the perspective with which apple “design” manifests…

    > The question is whether they are
    > a focus of the business,
    > or just along for the ride.

    they’re just along for the ride.

    with the fart apps and all else.

    which is exactly how it is when
    you build a general machine…

    so now you are faced with the conundrum
    which has _always_ faced the people who
    want a “dedicated” machine for e-books:
    are you willing to pay the same amount for
    a “dedicated” machine that will _only_ do
    e-books as you pay for a “general” machine
    that will do e-books and lots of other things?
    are you willing to pay even _more_ for that
    “dedicated” machine than a general one?

    because if you’re not, then the general machine
    will predominate.

    and you can whine all you want about “focus”
    and all that bloody rot.

    > Assume the latter.  I doubt the money
    > Apple makes on sales of ebook reader apps
    > or ebooks to read with them is even visible
    > on their bottom line, and if ebook reader apps
    > and ebooks to read with them magically
    > disappeared, I doubt Apple would _care_.

    so what?

    i mean, you’re wrong, because that money is
    _pure_profit_, return on a zero investment,
    so apple absolutely loves that arrangement.

    but so what if they wouldn’t care one little bit
    if it “magically disappeared”? what would you
    prefer for them to do — break down and cry?

    > A tablet from Apple would not surprise me,
    > but the fact you could read ebooks on it
    > wouldn’t put them in the ebook business either.

    it doesn’t matter how many times you repeat a
    ridiculous point, it won’t make it any less ridiculous.

    no, apple is not “in the e-book business”.

    just like they are not in the “fart app business”.

    nonetheless, they are making a _lot_ of money off
    e-books — probably more than any other e-book
    seller except amazon (and maybe even amazon,
    because of the losses from their loss-leaders) —
    just like they are making a _lot_ of money —
    many millions of dollars — off fart-apps…

    so, in a basic and fundamental way, yes, apple
    is indeed “in the e-book business”, and in deep.

    > Apple is a hardware manufacturer. 
    > They sell devices.

    yet they’re also making lots of money off
    their 30% cut on apps. and soon from the
    sale of stuff through apps. all via the simple
    storage and transfer of digital bits. nifty…

    > A tablet is a segment of the market
    > they can address and potentially sell
    > a lot of devices at a healthy margin. 
    > The netbook category is exploding,
    > and Apple doesn’t have an entry in it…yet. 
    > It’s what I suspect will be their next major move.

    as i just said, _anyone_ can see that move coming.
    so your “i suspect” prediction is a bold one, indeed.

    -bowerbird