The original Kindle was an important device. The world’s first web-connected e-reader, backed by the biggest online bookshop in the world. But the Kindle 2 is what we’ve all been waiting for.

Streamlined hardware, beefed up software, and better web connections than ever before. Read on to see why the Kindle 2 will change the world.

Even Amazon boss Jeff Bezos admits e-books are a tricky thing to sell. At the launch of the Kindle 2 yesterday, he explained that “our tools have changed us” and thanks to the internet, there is now a hunger for blog posts, news stories and what he calls “short form” reading.

However, the technology to download “long form” books wherever we are is beginning to fight that trend, and Bezos says e-books are ripe to become the next big thing.

“”We’ve been selling e-books for years, and guess what,” he told a packed audience, “it didn’t work… until fourteen months ago.”

Now Bezos says 10% of Amazon’s e-book sales go directly to Kindle owners. “They’re not all tech savvy,” he says. “They’re grandparents, parents, kids, travelers”. That sounds like a wide demographic, and one with plenty of cash to spend.

While the likes of Apple, Creative and even Microsoft are battling over music and movies on the move, Amazon is quietly answering literary prayers with an altogether different form of portable entertainment.

Newspapers and magazines are getting in on the act too, seeing the Kindle’s web connection as the great white hope of print publishing.

At the Kindle 2 launch, Bezos showed testimonies from real life owners. One let slip that “my local newspaper stopped delivering… and I can download it on my Kindle.” Extra functionality, or a stealth attack and one of Amazon’s least recognised power-plays? It already has the New York Times, Wall Street Journal, Financial Times and USA Today sending morning newspapers direct to Kindles all over America. They download automatically for their owners to read in the morning, and line the publisher’s pockets too.

Magazines are also on board, with Forbes, Time and Fortune all serving digital copies, wirelessly.

And if you were ever in any doubt over the financial viability of e-readers, the figures should convince you: CitiGroup analyst Mark Mahaney has estimated Amazon sold between 189,000 and 378,000 Kindle readers since the original was launched. At $360 each, that’s no mean feat. It means Amazon has generated at least $68 million in revenue from hardware alone. And the new version is an even better deal.

Announced last night, the Kindle 2 offers seven times the storage at 2GB, a much slimmer design and the ability to download new books, newspapers or magazines in less than 60 seconds using 3G.

It’s faster too, with the e-ink screen refreshing 20% faster than the original, but of course, hardware is only half the story.

Amazon has shown there’s an appetite for e-books, e-newspapers and e-magazines. What nobody expected is quite how huge that appetite would be.

Last year Bezos revealed 6% of all its book sales were in electronic form, and says it expects to generate $2.5 billion each year from e-book sales by 2012.

Are others keeping up? In their own way, yes. Sony’s Reader packs many of the features of the Kindle, but lacks the 3G connection that would let it monetise e-book sales, newspaper and magazine subscriptions.

With that in mind, perhaps the biggest threat to the Kindle 2 is the proliferation of e-reading software for mobile phones. But, without an e-ink screen, they’re a poor substitute and an uncomfortable reading experience, even if they can download books on the go.

In short, Amazon has a rare opportunity in the tech market: the right hardware, backed by the right services, and positioned at the right time to completely dominate a rapidly expanding market.

Can Amazon keep all those digital ducks in a row for much longer? It wouldn’t hurt if the Kindle 2 was rolled out to other countries, making it the defacto e-reader worldwide. But then we would say that, being in the UK.

The company claims that, in time, that’s exactly what will happen. Whether Amazon can make it happen quickly enough, remains to be seen.

  • cscs

    Agree about the opportunity for Amazon on books but still think that the daily, weekly, maybe monthly newspaper/magazine type reading will come through the smart phone/mini laptop route.

  • Doug Petrosky

    Maybe but not yet! It might just be the best portable reading experience available but it is well above the impulse threshold for even a mainstream hand held gadget. I’m sure the same was said about the iPod but this has to drop to closer to half the price! $199 is a critical price point for even must have devices.

    Also, you dismiss the mobile phones as not as good but the problem is that for all but the novel they will be good enough for many and effectively free (because you already have the hardware). Also netbooks, and iPod touches which have deeper feature sets will slow the adoption.

    It is a cool product but I’m not sure this multi-media world will value it any where near it’s current price point.

  • cscs

    Doug, you’re damn right about the price -I firmly believe that the breakthrough price for new innovation (and particularly so for second mover..) is free at the margin ie the service/innovation is offered as an added value way of maintaining/gaining the customer relationship.

    The point I was making (in a roundabout manner) is that convenience (and guilt – remember it’s still acceptable in these credit crunch times to read your B’berry etc but pulling out a Kindle says you’re not working!) will also play a considerable part in users’ chosen distribution route.

    I, and I’m sure many others, already get an update/summary from several magazines daily, and in some cases hourly, some of them I subscribe to – others I don’t – but all of them come to my B’berry. I haven’tused a mobile only pphonr for some years and I certainly wouldn’t bother opening a different device to read them, since I use them to think/stay informed during travel/Starbucks/waiting for inspiration, office time etc.

    My view is that user convenience/value is a necessary, but not sufficient, condition for success in innovation but to breakthrough to the wider market “free” at the margin is the key – iPod and iTunes kind of demonstrated it for me.

    So think I agree with you, but doubt that a pure mobile is enough to get full value from the increasingly wide range of useful content that is available.

    Views?

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