At the end of last year I was often asked to suggest some things that I expected to happen in 2009. Speculating about anything to do with finance seems to me to be a mug’s game, and it’s not something I know much about in any case. I’m on firmer ground with technology, however, so one of my predictions for 2009 is that Apple is going to kill the Kindle by opening the iTunes Store to sell e-books, and turning every iPhone and iPod touch into an e-book reader overnight.
There are two reasons I think Apple will do this. The first is that it needs an answer to the netbook phenomenon; and like many other people, I think Apple’s answer will be a larger iPod touch (perhaps twice as big, though not perhaps as big as the mock-up shown on the left). That would be a great machine for web browsing on the sofa, etc, and it would be consistent with Steve Jobs’ insistence that Apple could not make a sub-$500 laptop that was not a “piece of junk”. A bigger iPod touch might cost $399 and would do many of the things that people use netbooks for. It would also make a great e-book reader. At the same time, all those iPhones/iPod touches have a pretty good screen for reading already, and a big installed base, so it would be silly not to include them too. (There are some impressive third-party e-book readers for the iPhone already, but not much content is available.)
The second reason is that the e-book market is Apple’s for the taking. The situation now is much like that in the music industry, pre-iTunes Store (ie, pre-2003). There are lots of different standards for e-books, but none has achieved critical mass. The publishing industry has formed various committees to design a common standard, which will probably go nowhere. So far, this is exactly what happened with music (oh look, a historical analogy). What is needed is for an outsider to come in and make things happen. Amazon thinks it is the company to do this, with the Kindle, which it (but hardly anyone else) likes to call “the iPod of e-books”.
But Amazon has only sold an estimated 400,000 Kindles (the company won’t give figures). Apple has sold over 15m iPhones and, let’s say, 10m iPod touches. So it would wipe the floor with Amazon in scale right away. Adding e-book support would require trivial software upgrades to the iPhone/touch operating system and to iTunes, and Apple’s engineers can do this kind of thing in their sleep. They’d need to invent a file format, of course, but that wouldn’t be hard; probably a DRM-wrapped PDF would do the trick.
Would the publishing industry accept this? I think it would. Much as Hollywood and other industries are wary of Apple, because they can see how much power it has over the music industry, the alternative for publishers — letting Amazon call the shots — is worse. Amazon is reviled for putting many bookshops out of business and for forcing publishers to offer much steeper discounts. I think publishers would love to go with Apple instead, and the people I’ve spoken to in publishing have not contradicted this suggestion. Best of all, e-book sales would suddenly take off.
The other interesting knock-on effect would be for newspapers and magazines. Once you’ve got a way to charge for e-books on the iPhone (and similar devices), you’ve got a way to charge for regularly updated content (daily, weekly or monthly periodicals) too. I suspect that this is how The Economist will go electronic. Apple will set the format; we will deliver a file once a week; Apple handles the distribution and billing through iTunes. That’s my guess, anyway. (The Kindle already offers subscriptions to periodicals in this way.)
There’s another historical parallel here, which is the switch from the original black-and-white Macintosh to a wider range of models with different screen sizes. Programmers writing software for the Mac could no longer assume a 512 x 384 black-and-white screen; they had to check at run-time to see what sort of display was available, and act accordingly. The arrival of a larger iPod touch (and, perhaps, a smaller “iPhone nano” at the same time) would mean the same. All those apps in the App Store would have to be recoded for different screen sizes. This is not hard, but Apple would have to provide a month or two’s notice, to ensure that there was lots of software available for the new devices on day one. So I would bet on a summer announcement of the new hardware, and a September launch (in time for students going back to school, who would snap up an e-book reader that can hold all their textbooks). That’s my guess, anyway. But what do I know.