Kobo / Apple purchasing changes

[fjtorres]

Originally Posted by Scott Nicholson

As an author who gets my income reported directly, and from the data of other indie authors, I can tell you iBooks maybe--with a huge stretch--has three percent of the ebook market. I'd put it at one percent (remember Steve Jobs claiming a third of the ebook market a year ago?) Maybe they're trying to be more competitive,

1- Apple stopped bragging about the number of ebooks *downloaded* from iBooks over a year ago. Their claim of a third of the market was for *one publisher* and only the first month. They just phrased it as if that reflected the full ebook market.

2- There was a thread round these parts last fall that reported that iBooks, at the time, held a 28% share of iOS ebook *sales*, with Kindle and Nook running about 60%.

3- Last week, there was a comment circulating that Apple had sold more iPads than *paid* ebooks through iBooks. Not sure how accurate it might be but it probably reflects the underlying reality that with iPad Apple hit a homerun and with iBooks a dribbler to the catcher.

Numbers aside, it is clear Apple wouldn't be doing this if iBooks were any kind of success, right?

[murraypaul]

This was never about books, they just got caught up in it. It is about newspapers and magazines, and the new newsstand app that is coming in iOS5.

[MrsJoseph]

Originally Posted by murraypaul

This was never about books, they just got caught up in it. It is about newspapers and magazines, and the new newsstand app that is coming in iOS5.

I think that this was totally about books - which is why the first thing Apple did was go after large publishers and help in the creation of Agency6.

I think that Apple (Read Jobs) thought that the iPad1 would blow the kindle, nook, and anything else out of the water. They were wrong.

[kjk]

Originally Posted by fjtorres

1- Apple stopped bragging about the number of ebooks *downloaded* from iBooks over a year ago. Their claim of a third of the market was for *one publisher* and only the first month. They just phrased it as if that reflected the full ebook market.


Numbers aside, it is clear Apple wouldn't be doing this if iBooks were any kind of success, right?

Over a year ago? iBooks was released in March 2010, just a year and 4 months ago.

They announced in March 2011 they had 100 million downloads.

They announced in June 2011 they had 130 million downloads.

Not saying those are good numbers (I have no idea what they are really counting, or what to compare it to), but to claim they've stopped "bragging" is incorrect.

[murraypaul]

Originally Posted by MrsJoseph

I think that this was totally about books - which is why the first thing Apple did was go after large publishers and help in the creation of Agency6.

Which is an entirely defensive move. It prevented Amazon et al from forcing Apple to compete on price. Apple wanted to offer a bookstore and have it be competitive, without risking having to run it at a loss under attack from the other booksellers. It wanted to have its own book platform, so that it wasn't entirely hostage to Amazon and the others, but it didn't want to have to spend much effort on it.
How much revenue do you think the iBookstore has ever made for Apple? It is irrelevant in the context of Apple revenue, or even iTunes revenue, and the whole of the iTunes store only runs at about breakeven.
The point of forcing subscriptions through in-app purchases will come with the newsstand app, with all the different magazines and newspapers presented through a single front-end application controlled by Apple. It makes the process easier for users and so improves the perceived value of the iOS platform, and will help to drive hardware sales, which is what Apple actually cares about.
Amazon make money selling content, Apple makes money selling hardware.

(Apples Q3 2011 revenue was $28.57 Billion, of which iTunes made up only $1.1 Billion, that is less than 4%.)
[I just said 'only' and '$1.1 Billion' in the same sentence, that just seems wrong!]

[MrsJoseph]

Originally Posted by murraypaul

Which is an entirely defensive move. It prevented Amazon et al from forcing Apple to compete on price. Apple wanted to offer a bookstore and have it be competitive, without risking having to run it at a loss under attack from the other booksellers. It wanted to have its own book platform, so that it wasn't entirely hostage to Amazon and the others, but it didn't want to have to spend much effort on it.
How much revenue do you think the iBookstore has ever made for Apple? It is irrelevant in the context of Apple revenue, or even iTunes revenue, and the whole of the iTunes store only runs at about breakeven.
The point of forcing subscriptions through in-app purchases will come with the newsstand app, with all the different magazines and newspapers presented through a single front-end application controlled by Apple. It makes the process easier for users and so improves the perceived value of the iOS platform, and will help to drive hardware sales, which is what Apple actually cares about.
Amazon make money selling content, Apple makes money selling hardware.

(Apples Q3 2011 revenue was $28.57 Billion, of which iTunes made up only $1.1 Billion, that is less than 4%.)
[I just said 'only' and '$1.1 Billion' in the same sentence, that just seems wrong!]

Defensive my ass. They thought they had the new iPod and it wasn't. Defensive would have been if they already had a store and wanted to be able to compete.

Last I checked, when you fire the first shot in a war that you have no stake in - it's offense not defense.

[murraypaul]

Originally Posted by MrsJoseph

Defensive my ass. They thought they had the new iPod and it wasn't. Defensive would have been if they already had a store and wanted to be able to compete.

Last I checked, when you fire the first shot in a war that you have no stake in - it's offense not defense.

It is a box-ticking measure.
They wanted to be a viable ebook reader, they didn't want to be controlled by a third-party, so they wanted their own ebook platform.
They didn't want to be hassled doing much with it, hence the Agency agreement. It provides them with a store that for all major books will be no more expensive than anywhere else, without having to compete on price.
And what they did with the Agency agreement wasn't to start a war, but to enshine a non-aggression pact. They can't go to war with Amazon or anyone else on price to win market share, but neither can anyone else go to war with them on it. It is a method that almost guarantees they won't win a major slice of the market, but also guarantees that their offering won't be so poor compared to the alternatives that it impacts the desirability of the device, or allows one of the other booksellers to get a hold over them.

Obviously the focus of people here on MobileRead is going to be on eBooks, but in the grand scheme of things, they just aren't that important. How much money is there to be made in eBooks vs music? eBooks vs movies? eBooks vs TV-on-demand?

They do have the new iPod, they are selling every iPad they can make and dominating the tablet market. It isn't as though books are swinging it one way or another.

From the results:
"From the results, iPhone is growing 142% year over year, and with 9.25 million units sold the iPad saw a 183% increase over the year-ago quarter. Apple sold sold 7.54 million iPods with a 20% unit decline. The third quarter has been the best non-holiday Mac quarter ever, best iPhone quarter ever, best iPad quarter ever. There are now 28.7 million iPads out there, including 14 million units shipped this calendar year."

(I had the iTunes revenue wrong before, it was $1.4Bn. iPad revenue was $6Bn+. They made more than four times as much revenue from selling new iPads as from selling iTunes content to all iPods, iPhones and iPads that already existed. They are a hardware company. The purpose of controlling content is to make the hardware platform more attractive.)

Right now, Apple have $76 Billion in cash on hand. If they wanted to dominate a market by cutting prices and just buying market share they could do. The equivalent figure for Amazon is $6.88Bn.

[MrsJoseph]

Originally Posted by murraypaul

It is a box-ticking measure.
They wanted to be a viable ebook reader, they didn't want to be controlled by a third-party, so they wanted their own ebook platform.
They didn't want to be hassled doing much with it, hence the Agency agreement. It provides them with a store that for all major books will be no more expensive than anywhere else, without having to compete on price.
And what they did with the Agency agreement wasn't to start a war, but to enshine a non-aggression pact. They can't go to war with Amazon or anyone else on price to win market share, but neither can anyone else go to war with them on it. It is a method that almost guarantees they won't win a major slice of the market, but also guarantees that their offering won't be so poor compared to the alternatives that it impacts the desirability of the device, or allows one of the other booksellers to get a hold over them.

Obviously the focus of people here on MobileRead is going to be on eBooks, but in the grand scheme of things, they just aren't that important. How much money is there to be made in eBooks vs music? eBooks vs movies? eBooks vs TV-on-demand?

They do have the new iPod, they are selling every iPad they can make and dominating the tablet market. It isn't as though books are swinging it one way or another.

From the results:
"From the results, iPhone is growing 142% year over year, and with 9.25 million units sold the iPad saw a 183% increase over the year-ago quarter. Apple sold sold 7.54 million iPods with a 20% unit decline. The third quarter has been the best non-holiday Mac quarter ever, best iPhone quarter ever, best iPad quarter ever. There are now 28.7 million iPads out there, including 14 million units shipped this calendar year."

(I had the iTunes revenue wrong before, it was $1.4Bn. iPad revenue was $6Bn+. They made more than four times as much revenue from selling new iPads as from selling iTunes content to all iPods, iPhones and iPads that already existed.)

I'm not trying to change your mind...and I doubt you can change mine.

I still believe that Jobs looked at the growing ebook market and thought that Apple could control that market the same way they controlled the music market. AND THEY WERE WRONG. They wrote a check that their asses couldn't cash and the result is Agency6 and the removal of bookstores from the iOS apps.

Of course ebooks don't make the kind of money that music/whatever does for iTunes - cause it FAILED. I think that Jobs feels that if he isn't going to make book money on the iThing than no one would make money on the iThing.

[j.p.s]

Originally Posted by GreenMonkey

Other choice excerpts:

I posted a ‘review’ of my own, explaining the decision.
...
It’s appeared on the Canadian store, but hasn’t yet arrived on the US one. Probably still being reviewed for applicability…

I should note, however, that the Borders app for the US was subject to almost NONE of these restrictions. This is all the more amusing since the Borders US app is built from the exact same source code, with a different colour scheme and titles.

[murraypaul]

Originally Posted by MrsJoseph

I still believe that Jobs looked at the growing ebook market and thought that Apple could control that market the same way they controlled the music market. AND THEY WERE WRONG. They wrote a check that their asses couldn't cash and the result is Agency6 and the removal of bookstores from the iOS apps.

If they wanted to control the market:
a) Why did they arrange for prices to be fixed, so that they couldn't use their much greater cash pile to buy marketshare?
b) Why did they allow Amazon/B&N/Kobo to have eBook apps in the first place? Amazon don't allow it on the Kindle, B&N don't allow it in the Nook or Nook Color.

Of course ebooks don't make the kind of money that music/whatever does for iTunes - cause it FAILED. I think that Jobs feels that if he isn't going to make book money on the iThing than no one would make money on the iThing.

Some figures I have found:
"Annual net sales of e-Books in the U.S.: $313 million (2009 figures, 176.6% increase comparing to 2008) "
How many times would that number have to double before it made any impact on Apple's finances at all?
It just isn't a very important market.

[fbrII]

Amazon make money selling content, Apple makes money selling hardware.

Whether Apple's ultimate aim is hardware or content for the user it ends up being about content and ease of use. I don't think may people buy a device for it's hardware specs unless it can be shown as demonstratively superior. Apple did that with the creation of the iPad.

But now there are multiple vendors with big pockets entering the tablet market and that gap will quickly narrow or disappear. The buying decision will come down to content (that's why you bought it right) and ease of use. This decision is a step back on both fronts.

This is not a bold strategic move anticipating future market needs, it's simply what it look like on the surface, dumb and self serving. It won't be that long before we will be reading the "What happened to Apple?" articles and when we do, whether it's this year, next year or several years from now, this decision will be one of the bullet points in the article.

Lately their reputation has been growing, but not in a good way and they have chosen to ignore it. (Always a bad sign) I'm sure they see it as simply a spin problem for the marketing department.

This clearly is not the straw that breaks Apple's back, but its certainly one that will be counted when their fall occurs.

[MrsJoseph]

Originally Posted by murraypaul

If they wanted to control the market:
a) Why did they arrange for prices to be fixed, so that they couldn't use their much greater cash pile to buy marketshare?
b) Why did they allow Amazon/B&N/Kobo to have eBook apps in the first place? Amazon don't allow it on the Kindle, B&N don't allow it in the Nook or Nook Color.

Well, as I don't own any black turtlenecks I can't say for sure why Apple did anything. My opinion is that Apple thought that they would do the same thing this time that they did with iPod - take over and create the vehicle for sales later. The money is never made in creating infrastructure prior to sales, that would just be stupid. And regarding fixing prices: it was Apple's price of admission. Agency6 didn't really need a large seller, they have those by the truckload. What they needed was someone to give them leverage against their other sellers - which is exactly what Apple did.

Why does Apple allow 3rd party book apps on their iOS system? Ummm, my guess is because the iPad is not an ebook reader the same way the iPhone is not a phone.* The iPad is a tablet computer so it needs a lot more content than a dedicated ebook reader. That plus the fact that the iBook store was crap-on-a-stick when it first opened...

* I've spoken [read complained] to Apple about this, according to them it is a computer with a phone application (which is a distinct difference, they say, when dealing with a warranty)

[kjk]

Originally Posted by MrsJoseph

* I've spoken [read complained] to Apple about this, according to them it is a computer with a phone application (which is a distinct difference, they say, when dealing with a warranty)

Really? I remember AT&T using the "it's a computer not a phone" excuse when it came to access to certain apps at the time (Slingbox), but don't recall Apple making that argument as justification for warranties. Apple has one year warranties for their products, and offers extended 2 year warranties for Macs, iPads, iPods, and iPhones.

What "distinct" differences would Apple have/gain by calling an iPhone a computer instead of a phone? Obviously the carriers might want to make such a distinction, since they carry more than one model/types of phones, both feature and smartphones. AT&T refused to offer insurance for the original iPhone, for example.

[fbrII]

Which is an entirely defensive move. It prevented Amazon et al from forcing Apple to compete on price. Apple wanted to offer a bookstore and have it be competitive, without risking having to run it at a loss under attack from the other booksellers. It wanted to have its own book platform, so that it wasn't entirely hostage to Amazon and the others, but it didn't want to have to spend much effort on it.

So, if Apple didn't want to be forced to run a book store at a loss and Apple's real intent was to sell hardware and magazines. Why not just let Kobo, B&N, Amazon etc. sell their books at a loss while providing Apple with free content for their users?

It wanted to have a book store so it wouldn't be a hostage to others? I'm trying to figure out what it was Amazon and the others were going to do to Apple who didn't want to put much effort into their book store because what they really wanted to do was sell hardware and subscriptions?

[MrsJoseph]

Originally Posted by kjk

Really? I remember AT&T using the "it's a computer not a phone" excuse when it came to access to certain apps at the time (Slingbox), but don't recall Apple making that argument as justification for warranties. Apple has one year warranties for their products, and offers extended 2 year warranties for Macs, iPads, iPods, and iPhones.

What "distinct" differences would Apple have/gain by calling an iPhone a computer instead of a phone? Obviously the carriers might want to make such a distinction, since they carry more than one model/types of phones, both feature and smartphones. AT&T refused to offer insurance for the original iPhone, for example.

What they get out of it I can't really say. I can only say what happened to me. I’m a recovering Apple fanboy; I’ve had iPhones since the first day they were released. When I purchased my 2nd iPhone (also on release day) I had to wait to buy a case because the store where I got it from was out. I ended up shattering my iPhone by the end of the day.

Making a very long story short, they told me the phone was a computer and that it wasn’t built to be carried around and used with the same rough nature of a phone. It was a computer and needed to be treated delicately as a computer.

BTW – they sent me a new one for free.