Can Amazon's Kindle 2 Make e-Books More Popular?

The slimmer, more stylish Kindle 2—or the "Thindle," as I immediately dubbed it in a post-announcement tweet—is everything that the first Kindle should have been. In addition to being more svelte, it has a sharper screen, a 25 percent longer battery life and at $359, sells for the same price as Amazon's original year-old version. While it undeniably takes the e-book genre to a higher level, it remains unclear whether the Thindle can be a mass hit. Millions have taken to digitally downloading music, movies and photographs, but e-books have failed to find a similar following.

Until recently, there were good reasons for that. A few years ago I read parts of "The Seven Habits of Highly Effective People" on my Palm PDA. The novelty wore off quickly. When presented with text on a screen—whether it's a mobile phone, a handheld or a computer—my eyes dart and wander rather than scan and savor, a tendency that doesn't lend itself to the patience that book reading requires. I heard a similar story from James McQuivey, an analyst with Forrester Research. "I read my first e-Book in 1997 on a Psion series 5," McQuivey says. "It was a black and white computer. It ran on AA batteries. All it had were public domain books. The low contrast of the device meant that you needed to be in good light."

E-readers have evolved since then. Having followed the e-book market for more than a decade, McQuivey says that Amazon's Kindle, the Sony Reader and forthcoming entrants from companies like Silicon Valley-based startup Plastic Logic represent the first genuine spark in the e-book segment. On the back of plenty of favorable press and a valuable nod from Oprah, Amazon has sold some 500,000 units of the original Kindle, says McQuivey. Sony, which actually brought its Reader to market more than three years ago, has sold upwards of 350,000 units.

The new products and good press may be reason for optimism, but building on those sales could be a challenge, especially at a time when the number of people who read for pleasure is in serious decline. McQuivey estimates that there are five million people in the United States who read two books a month and are also into gadgets and technology–the target audience for e-book makers. But if Amazon, Sony and others can expand that market by adding a greater variety of reading materials, like more newspapers, magazines, blogs and textbooks, McQuivey projects a potential market of 25-30 million. "The thing that you have to understand about avid book readers is that they may be small in number, but they're passionate and they spend a lot of money," says McQuivey. "If there's an audience of 30 million, Amazon just needs a few million of that for it to be a good business."

To tap that larger audience, however, e-book makers may have to significantly upgrade their offerings. Getting book chapters and blog posts onto e-readers isn't much of a challenge, but converting glossy magazine content is far more difficult. For the moment, e-reader screens are grayscale while nearly all magazines are printed in color and laid out in ways that sometimes get lost in e-translation. Plastic Logic, whose reader will debut next year, hopes to solve that issue by converting pages into PDFs. And to appeal to business and news junkies, as well as to avid fiction readers, the company has also signed deals with periodicals like USA Today, the Financial Times and the New York Times. Plastic Logic also hopes to launch a full color version of its reader, before Amazon and Sony can.

In the end, the real tipping point for e-books might be found on college and high-school campuses. In the not-too-distant future, I'm convinced that shelves of expensive textbooks will be replaced by downloads onto e-readers. But McQuivey cautions that reality might be slow to catch-up with my optimism. Textbook publishers, he says, have no interest in cannibalizing their profit margins "even if it improves the experience for students." It will take a major university like Harvard to mandate that its entire entering class have e-readers and then force publishers to offer electronic editions. "Then places like Yale and Stanford, will follow suit, then state schools," says McQuivey. And if the Kindle does nothing else but light a fire under textbook publishers, the long march to establishing the e-book will have been worth it.