Tuesday, January 26, 2010

Apple Tablet Said to Lure Publishers With Features Kindle Lacks


Apple Inc.’s planned tablet computer is luring publishers with features that Amazon.com Inc.’s Kindle and Sony Corp.’s electronic readers lack, such as color photos, video and author interviews, analysts said.

Hearst Corp., McGraw-Hill Cos. and Hachette Book Group have held talks about featuring their content on Apple’s tablet, expected to be unveiled this week, according to people familiar with the matter. The device will allow publishers to create more interactive content, said James McQuivey, an analyst at Forrester Research Inc. in Cambridge, Massachusetts.

“Apple is in a killer position,” McQuivey said. “The majority of reading we do cannot be done on current e-readers. The Apple tablet will be first to make the claim that you can read everything from Sesame Street to Dan Brown to the Atlantic to the Denver Post, all on the same device.”

Amazon.com’s Kindle and Sony’s e-readers, which dominate the market today, have black-and-white screens and can’t display video.

Apple’s device will let publishers tap new sources of revenue by offering premium features to an audience that is deserting print publications for the Internet, said Rich Maggiotto, chief executive officer of Zinio LLC, a San Francisco-based distributor of digital books and magazines.

Coming Tomorrow

Apple CEO Steve Jobs said yesterday that the company will introduce “a major new product that we’re really excited about.” The company is holding the event tomorrow in San Francisco.

Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to discuss unannounced products, saying the company doesn’t comment on rumors and speculation.

Apple rose $5.33, or 2.7 percent, to $203.08 yesterday on the Nasdaq Stock Market. Amazon.com dropped $1.12 to $120.31.

Plastic Logic Ltd. and Skiff LLC, a startup backed by Hearst, plan to sell e-readers this year that are designed for newspapers, magazines and professional documents. So far, many devices on the market have fallen short of what those publishers want, Maggiotto said.

Newspapers lost an average 11 percent of daily circulation in the six months ended in September, according to data compiled by the Audit Bureau of Circulations. Advertising revenue for U.S. newspapers fell 28 percent in the third quarter, according to the Arlington, Virginia-based Newspaper Association of America.

Small Market

“One day there will be very little newsprint,” said Sandy Schwartz, president of Cox Enterprises Inc.’s Cox Media Group, which oversees the operations of four daily newspapers, including the Atlanta Journal-Constitution. “My hope is that someday soon there will be a tablet that can do everything: GPS, telephone, advertising.”

While the e-reader market isn’t large enough yet to significantly boost publishers’ revenue, the Apple tablet may increase the popularity of e-readers over the longer term, said Randy Bennett, senior vice president of public policy for the Newspaper Association of America.

About 6 million e-readers will be sold this year, up from 3 million last year, Forrester estimates. Amazon.com’s Kindle has about 60 percent of the market, while Sony’s products have 35 percent, Forrester says.

Drew Herdener, a spokesman for Seattle-based Amazon.com, declined to comment, as did Kyle Austin, a spokesman for Tokyo- based Sony.

Reinventing Content

It’s unrealistic to think that new devices alone will transform the industry, Maggiotto said. Publishers will also have to invest in creating content that is unique for these devices, he said.

“It’s one thing to shovel print content onto a screen,” he said. “It’s another thing to think about how to reinvent your content for that medium. That’s the publisher’s responsibility.”

The Apple tablet will also have a back-lit screen, which will drain the battery more quickly than current electronic readers, and it may cost more, McQuivey said.

Still, Apple’s tablet is likely to boost demand for digital textbooks, said Frank Lyman, executive vice president at San Mateo, California-based CourseSmart LLC, an online marketplace started by five publishing companies to sell textbooks. By 2012, digital versions of textbooks may account for as much as 15 percent of total textbook sales, up from less than 3 percent today, according to data from members of the National Association of College Stores.

“Apple has a history of growing markets,” Lyman said. “They’ve grown the smartphone market. They’ve grown the personal-computer market. The tablet will capture that next group of students who haven’t yet had that light bulb go off.”

Older publishers are taking note. National Geographic Society said yesterday that its namesake magazine will be available on Zinio’s service. National Geographic, founded in 1888, plans to add audio and video to its digital magazine later this year.

“All the current e-reader devices will fall to the bottom of people’s Christmas lists this year when they see what a full- color reading device will do,” McQuivey said.