Tuesday, April 21, 2009

A dark cloud on the 3G horizon

Most of you have heard the news that AT&T and Verizon, not making much money in the phone game, have decided that they should jump into the eBook Reader battles. Many of you may also like hearing this as more competition might mean lower prices, right? Wrong!!

Amazon is their business model. Amazon sells the eBook Reader (Kindle) at or near their cost. WHY? Because they use 3G to tie the end user to having to buy eBooks from them for all eternity. In short, you pay less on the hardware and then pay thru the nose on eBooks. Choice?? Once you buy their device it is all over. You MUST buy at whatever price they set.

So, why have AT&T and Verizon jumped in? They have the 3G plans. They can sell the eBook Readers at an even lower price and then more than make it up on 24 month plans AND selling their own eBooks. Think of heavily subsidized eBook Readers to lock you into what they wanted in the first place!

Now,where does this leave the independent eBook Reader manufacturers who dislike roping people to a "plan" and are trying to allow competition to determine the price of the eBooks by allowing you to go almost anywhere to buy an eBook (in short: CHOICES mean lower prices)?

How would you like it if you were ordered to only buy from Safeway for groceries? In make-believe, let us say that California went only Safeway. How long do you think it would be before Safeway raised their prices 20-50%?? But... that would be MONOPOLY, right?

So we are going to see lack of competition on eBooks eventually. With the three-headed monster controlling the buying of books ONLY from them... there is a problem. And what about the Astaks and other independent eBook Reader firms giving you full choice? They have to climb in bed with the three-headed monster to get 3G at all... at absurd plan rates.

From my perspective, 3G so far looks more like a curse than a blessing.


  1. Excellent post, RobertB! As an ebook reader, I want choice! Choice of readers and choice of ebooks.

  2. The other day you said that a Russian customer plunked down huge Non Recurring Engineering Cost and ordered 20000 5" machines from Netronix.

    And do you know whythey could do that?
    Because in Russia and Ukraine (and Belorussia, and other parts of former Soviet empire) an e-book costs only a small fraction of what it costs on an english-speaking market.
    And everybody is happy.
    Manufacturers, e-book publishers, readers, authors.
    The piracy is rampant, but this might be a factor that jump-started the entire process. Most people would buy an e-book if they feel they receive a fair value for their money. You would not want to spend hours trawling darknet and downloading very badly formatted e-books, with lots and lots of OCR errors that need complicated and labor intensive format shift for loading on your reader if you could buy a well made e-book for $0.99. In Russia a typical e-book costs just that. that means e-book publishers are doing a very brisk business.

    I am afraid, that most people here feel that they are being overcharged with some e-books costing more than a collector grade hardback and majority of e-books with cost similar to a paperback. Especially when most of your fair use rights are crippled by a draconian DRM. You do not even have right to sell the dammed thing when you finish reading it, like you can sell used paperback.

  3. "Most of you have heard the news that AT&T and Verizon, not making much money in the phone game"

    This is the joke of the day - a classic "WTF???" post...

    ...have you seen their latest reports?

    May I ask what VZ and what AT&T are you talking about?

    The ones I know here (US) are making money HAND OVER FIST, growing quarter-by-quarter.

    "Amazon sells the eBook Reader (Kindle) at or near their cost."

    Except that it's NOT TRUE AT ALL: iSuppli already assessed Kindle 2 and it turned out hardware cost is around $180, aropund half of its retail price tag (it sells for $360).

    With all due respect, Robert: how about doing at least a BASIC FACT-CHECK before you post any more nonsense like this?

  4. Meh.

    Ebook readers are going to be a commodity item in less that 24 months - barely enough time for the lumbering big boys to get something to market. Let them hawk their bundled wares: with the screen being the only new technology, and there being multiple vendors for that part, smaller ebook sellers will find that open-source hardware reading open-source document formats will keep them in the game.

    The whole 'mobile access ebooks' while definitely cool, is ultimately a gimmick: how often have you had to buy a new book right-now-can't-wait-till-I-get-home-to-download-it? Give me a plain old wireless, or a usb port to plug in drives. Or don't bother, I'm happy enough plugging in an SD card, like you already can.

    That said, I can't wait for what this will do for the written word. Long form writing has died on the web, and getting 'published' isn't much less difficult than it has been for a long time. Ebook readers are ultimately going to do to publishers what the web did to newspapers and the old school music industry: make them angrily, petulantly redundant.

    The thing that makes this a long shot for the cell phone companies: Ebooks are for reading books, not acquiring them. I can already get books fine: I need help on a bigger problem. If Verizon or whoever can build an ebook reader that stops time so I can find the time to read, I'll sign up for however long they want to hook me for. :>


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