The new Kindle 2.0 is a cool enough-looking gadget - its hyper-svelt profile (just over a third of an inch) is thinner than most of the books it holds, at ten ounces it's also lighter, and the silvery/white casing (among others) manages to take scuffs and dirt better than its predecessor. The e-ink paper, sporting sixteen shades of gray, is also a compelling testament to what looks like the next major display technology - e-ink retains its state after it's configured, which means that you only have to refresh the page when you move beyond the buffered page content ... which in turn means that you can run the Kindle for days without recharging.
Storage capacity has likewise been beefed up, with the capability of holding 1500 book titles at once. Additionally, the download time has been reduced by about 20% (cutting wireless access costs) and one of the key items of support from Kindle users - PDF support, now appears to be (weakly) functional. All in all, Kindle 2.0 has both the looks and the capability to seriously turbo-charge e-book sales.
Yet for all the hype and oohs and aahs from the gadget early-adopter crowd, I think that the Kindle 2.0 is likely to ignite a number of controversies that make open standards advocates, including myself, more than a little uneasy, and that will certainly have a profound change upon the shape of publishing in general.
In a number of respects, the Kindle's deployment model reminds me a lot of another controversy from about a decade ago - the attempt by Microsoft to "embrace and extend" Internet Explorer to the extent that people would have to use proprietary extensions in order to get the most out of IE. Because of the dominance that Microsoft enjoyed at the time, they could pretty much set the standards without regard to other organizations, and it's only been comparatively recently (within the last couple of years) that AJAX has become sophisticated enough to overcome this.
It's notable that the quality of web applications in the last few years has also increased dramatically across the board, including on Internet Explorer. This isn't accidental. By providing a common foundation for development at a level well above that of the HTML infrastructure, the use of AJAX has meant that people could develop applications that didn't have to reduce to lowest common denominator technology in order to work cross platform. This has almost always been true when open standards are widely embraced.
Kindle2 has support for its own Kindle AZW format, as well as straight text, unprotected Mobi-pocket format (more on that in a moment), the AA audible format (used for a lot of audio-books), and MP3 files. Additionally, if you are willing to go through Amazon's gateway, you can also convert HTML web pages, Microsoft Word documents, and the most common image formats. You can also convert PDF formatted documents to the AZW format.
The AZW format is, of course, a DRM protected solution in the same mode as iTunes. The fact that Amazon supports unprotected (i.e., non-DRM protected) Mobi files itself proves one of the dangers of that particular strategy - your proprietary device is only as good as your marketshare - if a better device comes along (such as Kindle compared to the older Mobi Rocket readers) then that DRM can in fact be a liability not only for you but for all vendors that happen to have staked their business model on the older proprietary format.
As the economy continues to deteriorate, there are now many people who are, perhaps in hind-sight wondering, whether the idea of giving away electronic resources was such a sound business strategy. Perhaps proprietary hardware/software systems should be the way to go, that you can't sustain businesses giving away the goods. Yet overall, this fails to take account of two things - the principle result of DRM has only been to put a speed bump in the migration of electronic resources into non-DRMed formats, and that electronic resources are infinitely copyable once they are broken.
What this means is that Amazon's market advantage with a DRMed format AZW format will likely disappear as people take the reverse engineered spec and start building other formats around it. Right now, the Kindle has a competitive advantage in the market - the Kindle, for all its shortcomings is still far superior to the nearest competing e-reader. Given the potential market that e-books represents with Kindle's turbocharging effects, however, its only a matter of time before other companies (most notably Apple with the iPhone and Google with Android) roll out their own e-readers that will effectively take on the Kindle. It'd probably be in the best interest to Amazon of preparing for that day, taking the intellectual high ground of open standards while they have the clout to affect those standards.
DRM aside, the Kindle should have an interesting effect upon the publishing market. Publishing is in serious trouble right now. The combination of the Internet's erosion, the credit crunch and the deepening recession have left many publishers in the newspaper, magazine and book publishing areas struggling for air. Regional papers have been folding or have been bought up by larger conglomerates which are now in the position of having to make oversized payments even as credit lines collapse. Indeed, there are very few publishers that haven't been forced to cut staff and scale back their publishing output dramatically in any sector, the ones still standing, at any rate.
Electronic books - eBooks - may very well represent at least one solution to this problem. eBook production does not require the initial printing investment that print books or magazines do, nor does it require the same sell through into the large bookstore chains. They do require the same editorial investment (from acquisition to final PDF), but overall editorial costs represent perhaps 15% of the total cost of production for a book.
Moreover, eBooks can generally be created as part of the same process of preparing a book for print publication, which means that making eBook versions of publications can be put into production even if a publisher decides at some point that the print version is not likely to break even.
The major challenge that eBooks have faced, however, have been adoption. Outside of a few specialty niches (eroticized romance novels, oddly enough, have thrived in eBook format), eBooks have not caught fire with the general reading public. A big part of this has been due to fairly poor quality eBook readers - too bulky, difficult form factors, poor legibility, and, oddly enough, not enough sizzle - and for this reason alone the Kindle represents a significant break from the past. People are buying the Kindle because it's the Kindle, not because its an eBook reader, and this promotion of a reader to a status symbol will in turn likely transfer over to the eBook market in general.
In a video and Internet saturated world, who will buy eBooks? Actually, its likely that it will be quite a number of people. If a college student can download her quota of college books onto a Kindle, the Kindle pays for itself very quickly - and she's not forced to haul around 40 lbs. worth of wood pulp from class to class. Avid paperback readers (I'm in that category) may go through 3-4 books a week - say 150 a year, which, at current prices for me runs to about $1,200 a year if I was buying books retail rather than pulling them from the library - Kindle prices would slash that in half, even with the cost of the unit.
Finally there's the technical audience. I have twelve boxes full of technical books, many of which are now obsolete. I purchased the books to get up to speed on a given technology, not to fill out my bookshelf. Buying them in electronic form significantly reduces the overall cost, but it also means that I can concentrate on putting the books I am willing to buy in print on my shelves.
Given those and similar audiences, eBooks (and eBook readers like the Kindle) may very well tap into a niche that will be critical for publishers in the next couple of years - the production of high quality literary and technical works in a mode that will compensate the creators (the authors) and the publishers (who may also be the authors), but that will eventually end up moving into the "public domain" of the Internet. The money is made in subscriptions, in purchases of original licenses, and as the economy begins to recover, in advertising as appropriate.
Overall the authors make roughly what they would have on royalty basis, because even though the overall price is less, the percentage that the author makes is considerably higher (most authors make only 3% - 5% of the retail price of the book in today's system, and that usually spread out over time). Publishers complete a transition that has been ongoing for some time - away from the physical manufacture of the book and towards the brokering of talent and providing services to present that talent effectively (a role that agents had been moving into - one of the reasons I see publishers and agencies merging in the relatively near future).
This isn't going to come just from Kindle buyers - sales of PDFs and other "rich-text" experience eBooks are also continuing to climb, especially for technical books, particularly with Netbooks continuing to dominate the lower end of the PC spectrum. I'm waiting for the rise of e-Ink based computer displays to be used in conjunction with a flip-mount keyboard, that will represent the convergence point between the two sets of technology as the endpoint for the eBook reader, possibly a super iPhone or Android Prime type of thing.
But there is no doubt that the Kindle and Amazon are well positioned to be the vehicle that jump-starts the eBook revolution, and that serves to make electronic books acceptable in their own right. My suspicion is that the rights management issue is an interim one, especially in this economy, and Amazon will need to find the magic price point which makes book sales possible without driving publishers out of business ot encouraging piracy ... which is a common theme in this day and age.