Big Boost for E-Books Forecast

Electronic book sales are expected to see a "huge surge" in 2010, partly due to the recent addition of e-book readers for iPhone and BlackBerry devices and new form factors in production, according to Fictionwise LLC's Steven Pendergrast.

Despite recent criticism that smartphone screens are too small or lack the clarity of dedicated e-book readers, electronic books are selling well to smartphone and handheld users, said Pendergrast, president and chief technology officer of Fictionwise, the e-book seller that Barnes & Noble Inc. purchased for US$15.7 million earlier this month.

Fictionwise announced support for BlackBerry e-readers earlier this week but has been creating e-reader application software for various handhelds since 1997, going back to early versions of the PalmPilot PDA, Pendergrast said in an interview Friday. In all, the company has e-reader applications for 300 different devices, including those that run Windows Mobile, Palm, iPhone and Symbian operating systems.

"The vast majority of our customers read on smartphones or handhelds or other kinds of form factors," Pendergrast said.

Fictionwise sold 1.5 million e-books in 2008, and Pendergrast said the average sale is the same as the cost of a market-price paperback book, ranging from $8 to $15. Fictionwise has seen 50% year-to-year revenue growth each year in the past several years, and Pendergrast said he expects the same in 2009, despite the economic downturn.

While Fictionwise sells e-books primarily to users of smartphones and handhelds, its nonencrypted versions of e-books are sold to owners of dedicated e-reader devices, such as the Kindle from Amazon.com Inc. and Sony Inc.'s two e-readers, Pendergrast said. "We sell hundreds of them each week," he said.

But 2010 will see a "huge surge in e-book sales," he predicted, citing the various kinds of devices running e-readers. In addition to its recent announcements, Fictionwise expects to add more form factors and devices. For example, Pendergrast said the company is working on an e-reader that runs on smartphones using Google Inc.'s Android operating system, and a device from Plastic Logic Ltd. that's the size of a sheet of paper (8.5 by 11 in.), although not quite as thin.

While the availability of more devices that can work as e-readers is expected to improve sales, Pendergrast said there is a "tipping point" of e-book popularity that will occur in 2010, as more consumers see users reading e-books on planes and subways.

Fictionwise research also shows that the company's typical customer is a woman, between 40 and 50 years old, who tends to have a higher-than-average income and level of education. In comparison, a few years ago, the typical customer was a man, who might have been a "gadget freak," Pendergrast said.

Because 55% of traditional book readers are women, the fact that more e-book customers are now women "is evidence that e-book sales have shifted away from the early-adopter stage," he said. "As the technology improves, e-books will be more and more accepted on the mass consumer level."

The growth will not just benefit Fictionwise but all e-book sellers and will come about partly because of the success of the Kindle and Sony readers. When the first Kindle appeared, Pendergrast said that people feared for Fictionwise's business, but the Kindle just spurred the popularity of all kinds of e-books, he said.

"The first day Kindle was announced, our sales outstripped earlier records," he said.

As for whether a smaller smartphone is harder to read than a Kindle, Pendergrast said, "Don't tell that to our customers," since the vast majority read on a smartphone or PDA. Fictionwise has found that many of its buyers read for hours on smaller devices, buying "multiple books" each month.

Another factor with Fictionwise readers is that most read on multiple kinds of devices. Even if they own a Kindle, they still might take only a multiuse device such as a smartphone on a trip for reading an e-book. "Some [handheld] sizes are very small, but the BlackBerry Storm or Touch or the iPhone is more than sufficient," Pendergrast said.

Jack Gold, an analyst at J.Gold Associates, said he could understand reading a book on an iPhone for 15 minutes, but reading text for four hours "would make my eyes pop out."

Rob Enderle, an analyst at Enderle Group, said much the same thing, pointing out that LCD screen displays on smartphones are not as clear as those of a Kindle or Sony e-reader.

But Pendergrast questioned whether the critics have tried to read an e-book on a smartphone for very long. "If they try it, they might find it's a lot better than they expected," he said. "Besides, if you get absorbed in a book, you'll stick with it."

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