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To assume that a region's population defines it's market size for a given product is to assume that consumer priorities and values are the same everywhere. They aren't, obviously.
That is where the concept of natural market size comes in: natural market is about the fraction of the total population that can benefit from the product.
The natural market for ebook readers is that fraction of the total population that reads enough to justify the upfront cost of a dedicated reading device.
The actual market for the product is a subset of the natural market that reflects the product's penetration, the fraction of potential buyers who choose to buy or might be persuaded to buy.
There is nothing universal about natural market size: it depends on things like culture, income levels, custom, demographics...
The buy-no buy decision is always personal and just because somebody might benefit from a product doesn't mean they will. Which is why two equally affluent countries end up with different market sizes for the same product.
US vs Europe? Eink readers?
Easy: reople were buying eink readers in both regions at comparable rates up to 2009.
Then, commercial ebook buying in the US exploded...and it didn't in europe.
The US market for ereaders growth has been driven by commercial ebook buyers since 2010. That is when the price-fix conspiracy kicked in and Nook switched to near-cost pricing. Amazon then matched it. Cheap ereaders meant it was easier to justify the dedicated reading device so the natural market grew. Another side effect of the conspiracy was that as ereaders got cheaper and BPH books got more expensive, indie titles became respectable. And respectable (cheap) indie titles feeding cheap ereaders grew the market even more.
The result was what Bill Gates calls a virtuous circle: cheap ereaders drew in readers who bought cheap reads, drawing more authors and increasing the supply of cheap reads, which helped increase volume/drop manufacturing costs of the gadgets. Key beneficiary? Amazon. They didn't really start the spiral, but they were the best placed to take advantage of the 2010-12 boom.
Europe?
Except for the UK, no boom. Ebook sales run in the 3-5% range of the total market, which is still dominated by traditional publishing houses. No massive influx of readers. Clearly a different ereader user profile. One that cares about interoperability and hardware more than the typical US user, for starters.
For all the griping about Amazon and walled gardens, it is those walled gardens that launched the boom that now has ebooks at about a third of the US market, Amazon at two-thirds of ebook sales, and indies at 40% of Kindle ebook sales volume. Indies are at about a billion dollars in annual sales, if you go by reader spend.
Anyway you look at it, the customers behave different; the markets are different and the sales mix is different.
And growing even more different: a lot of readers are increasingly getting into ebooks via apps on phones and tablets rather than ereaders so the US/UK experience is unlikely to recur. Moving forward, content is going to matter even more and hardware even less.
Want to blame Amazon? Go ahead. They have been pushing content and apps from the beginning, after all.
But it's really just basic economics: the primary product--the reason consumers act--is the stories, the books. For most buyers, Ereaders are just a means to get to the stories. Added features are optional and for many the ereaders themselves are optional.
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