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On May 7, just 3 months after introducing the second-generation Kindle, Amazon officially announced its rumored third-generation ebook reader, the Kindle DX, expected for release this summer (http://amazon.com/kindledx). The announcement of the product, still in early beta, was made at Manhattan's Pace University by Amazon's Founder and CEO Jeff Bezos. This "deluxe" Kindle version offers a much larger (9.7") viewing screen, added storage capacity, and E Ink's 16 shades of gray, allowing a reading experience "like printed words on paper because the screen works using real ink and doesn't use a backlight, eliminating the eyestrain and glare associated with other electronic displays." Offering storage for up to 3,500 books, from a catalog of more than 280,000 titles in the Kindle Store, the new Kindle DX will also offer editions of The New York Times, The Boston Globe, and The Washington Post and textbooks from a variety of major academic publishers.

The new features include a built-in Adobe Reader Mobile PDF capability as well. The system appears, from pictures and prototypes, to be well-designed. "Cookbooks, computer books, and textbooks-anything highly formatted-also shine on the Kindle DX. Carry all your documents and your whole library in one slender package," Bezos explained. The price tag of $489 is $130 more than the Kindle 2 system, and it seems to have many wondering whether the added functionality will be enough to make the Kindle the future for printed materials.

Amazon's Cinthia Portugal notes that "Over time, we believe that analog reading, be it paper books, magazines, newspapers, etc., will be replaced by digital. The responsibility is ours, though, to continue making the digital reading experience better than the physical experience." The Kindle DX, Amazon believes, is a step in the right direction.

Textbooks

At the news conference, representatives from various textbook publishers and universities extolled the "enormous potential" that the Kindle DX may hold for education. Arizona State University, Case Western Reserve University, Princeton University, Reed College, Pace University, and Darden School of Business at the University of Virginia have all agreed to some type of trial program for their schools in which students will be given some type of discounted or free Kindles to "take notes and highlight, search across their library, look up words in a built-in dictionary, and carry all of their books in a lightweight device."

The following textbook publishers have agreed to add some of their products to the Kindle catalog: Addison-Wesley, Allyn & Bacon, Benjamin Cummings, Longman & Prentice Hall (Pearson), Wadsworth, Brooks/Cole, Course Technology, Delmar, Heinle, Schirmer, South-Western (Cengage), and Wiley Higher Education. Amazon estimates that this represents more than 60% of the U.S. higher education textbook market. The only major publisher not involved is McGraw-Hill Education.

Newspapers

Amazon currently provides access to 37 newspapers on its Kindle ebook readers. Bezos' presentation stressed that the Kindle DX's content will provide a platform that might provide salvation to struggling newspaper companies throughout the U.S. The three papers targeted for the initial Kindle DX newspaper lineup are The New York Times, The Boston Globe, and The Washington Post. Each would offer the papers, without any ads on the pages, to subscribers living outside the general delivery areas of each paper for a fee. A reduced price on the Kindle DX unit would be offered to those signing long-term subscription agreements.

Corporate Documents and Catalogs

Bezos described the DX as "a business productivity tool"-allowing users to upload documents, using Adobe PDF as the standard for viewing-reflecting Amazon's intention to position the reader for business use. Users are able to email PDF documents or Word documents to their Kindle email addresses or use a USB connection to move them from another storage device. For businesspeople who frequently travel, needing access to catalogs, contracts, or other information on-the-go, Amazon believes this system will fill a need.

Targeted Markets

The Amazon Kindle DX faces competition from the existing Kindle userbase-no plans have been announced that would allow for discounted upgrades as new systems are introduced. Additionally, Kindle faces competition from other ebook readers on the market-such as Sony's Ebook Reader (www.sonystyle.com/webapp/wcs/stores/servlet/CategoryDisplay?catalogId=10551&storeId=10151&langId=-1&categoryId=8198552921644523779); FirstPaper reader (www.firstpaper.com), which is supported by the Hearst group; PlasticLogic's Reader (www.plasticlogic.com/product.html); iRex Technologies' iLiad (www.irextechnologies.com/products/iliad); and the Cybook Gen3 (www.bookeen.com). Perhaps even more ominous for Amazon is the so-called iPad, the long-rumored extension of the iPhone under development at Apple. Given Apple's track record for innovation and design (and a rumored summer release), perhaps this is one reason for the product announcement from Amazon even before any beta units were available for review.

Perhaps an even more significant uphill battle is the fight for a separate ebook reading device in an era of convergence and embedded competing products (such as handheld PDAs, cell phones, and personal/laptop computers) in difficult economic times. Today, more than 80% of college students have laptop computers, and one could estimate that virtually all students have cell phones or PDA devices as well.

Textbooks: More Than Just Black Words on White Paper

Today's textbook market is a far cry from the monolithic thick-as-a-brick printed book that Bezos described in his presentation. Electronic or web-based materials are widely available. Frank Lyman of CourseSmart, an etextbook company, has been quoted as estimating that more than 5,600 higher education institutions in the U.S. are already using electronic texts. And most textbooks today come in full color-not the shades of gray that will be offered by the Kindle system.

Today, many colleges require students to own laptop computers, as well-computers that can easily access journals, newspapers, web-based products, and electronic books from libraries, linked to course management systems, available from online booksellers or freely available on the web. Laptops, however, can do all this and much more. How many students can one expect to pay this much for a device that doesn't integrate other needed functionality for their academic work? For many, the Kindle becomes, in effect, just another thing to lug around-the very compliant that Bezos claimed Kindle DX was addressing. Envisioneering Group's Peter Glaskowsky's analysis of the complex issues for Amazon in the textbook market was well-covered in a recent CNET News posting (http://news.cnet.com/8301-13512_3-10234955-23.html).

Newspapers

Initial criticism from newspaper organizations seems to focus on the control that Amazon already exerts on pricing and distribution and the fear of losing more control in an era of declining newspaper revenues and newspaper closures. The announced partnerships with the three newspapers by Bezos were very sketchy in details. Readers-in areas where "home delivery isn't available"-would be offered the paper and a discount on the DX. Portugal notes that the content available will vary "between newspapers, but generally the Kindle Edition contains articles found in the print edition, but will not include some images, stock quotes, and tables." The amount of the discount is rumored to be based on the length of the subscription purchased.

Currently, Amazon's arrangements with newspapers allow the company to collect an estimated 70% of the subscription revenues, with the newspapers keeping their own advertising revenues. In an era when newspapers have seen dramatic drops in advertising, can newspapers afford to buy-in to the Kindle and maintain any profits? Will Kindle have to resort to some cooperative advertising scheme to keep their news sources in black ink? At least for the present, Amazon has said that the newspapers will run without any additional ads on Kindle. Many in the industry wonder how long this arrangement can last. The costs of newspapers in generating content-and particularly working to create and maintain these Kindle editions-might potentially kill any motivation to participate. For Amazon, the need to move into news areas, in which one needs to upload and deliver fresh content even just once daily, will require far more resources than the more static book-types of information.

Arthur O. Sulzberger Jr., publisher of The New York Times, described the paper's partnership with Amazon as "an experiment and a laboratory," allowing them to test out options for digital delivery of news content. "The newspapers will announce more details when they launch their pilots," Portugal explains.

Practicing journalists have their own concerns about the viability of this endeavor-and particularly Bezos' implications that Kindle can somehow "save" newspapers. Recently, Arianna Huffington, editor-in-chief of the Huffington Post, noted that "the future of quality journalism is not dependent on the future of newspapers. We are actually in the midst of a golden age for news consumers. The discussion needs to move from ‘How do we save newspapers?' to ‘how do we strengthen journalism?'-via whatever platform it is delivered."

Jane Ellen Stevens, journalism professor at University of California-Berkeley, believes that the early adopters have already found a new medium: "Haven't newspapers' high-income early adopter customers moved to the Web already?" Bill Dunphy of Canada's Breaking News (www.billdunphy.ca) notes that "The thing is that MOST news content produced by ‘newspaper' newsrooms is still consumed on paper, the so-called ‘wealthy early adapters notwithstanding'. The next generation delivery model has not yet clearly emerged."

Blogger Bob Wyman notes that "For Kindle to be the ‘answer' for newspapers, they would have to ensure that no one creates and is successful marketing a Kindle-like device that allows data, particularly web pages, to be loaded onto the device for free. If, for example, anyone was to create a popular Kindle-like thing that allowed generalized web-browsing over an internet connection (wired or wireless) without incremental cost, the utility of the Kindle to newspapers would be largely eliminated-unless the newspapers stopped providing free access to their content over the Internet. Of course, if they ever tried to stop such free access, then competitors would rapidly fill the void thus created."

The Big Three of Innovation Today

The days of huge corporations such as Microsoft-or IBM and others before them-controlling innovation are far gone. Today, there are two companies that seem to be driving innovation and change in the information sector: Google and Amazon-and Apple is the wild card.

Google

Research firm Hitwise released data for April 2009 indicating that Google's dominance in search engine market share is widening. Nearly 73 % of all U.S. internet searches were through Google; Yahoo! was a distant 16.27%; MSN Search about 6%; and Ask.com about 4%. Google, a $21 billion company, has deep pockets and interests that go far beyond the search: Productivity tools such as Gmail and Google Documents; content such as Google Books, Patents, and Scholar; and multimedia with YouTube. Although many of these remain officially in "beta," they represent an increasingly compelling base for anyone needing any level of interaction and resources.

Google has the inherit power that comes from being the biggest, most consumer-focused, and, many would also say, the best of the innovative companies operating today. Google's interest in content is strong, web-based, and well under development. Can Amazon hope to catch up to this apparent content rival?

Amazon

"Amazon.com has a strong, 14-year track record of innovation and understands readers," Portugal notes, "which makes us uniquely positioned to provide the world's best digital reading experience." In April, Stephen Ju, stock analyst with RBC Capital, estimated that Amazon is now responsible for close to a third of all U.S. ecommerce transactions, eclipsing eBay as well as other online booksellers through its aggressive efforts at marketing and price breaks. Its service programs and customer satisfaction rates show the company to be fleet-footed and forward-thinking. The ability of Amazon, a $30 billion company, to control such details as pricing and distribution with its content providers is renowned. Amazon clearly is looking to broaden its range and reach, perhaps with Google's recent initiatives in mind.

The move into other formats for content is natural and has generated some successes. In October 2008, Oprah Winfrey's endorsement of the Kindle was seen as a major stimulus to sales and public acceptance. Portugal verifies one statistic that Bezos made at the conference: "Kindle titles already account for more than 35 percent of unit sales for books that are available in both print and on Kindle." This sales reach shows impressive growth.

Despite the number of competing ebook hardware systems available today, Amazon promises to continue to focus on Kindle development in hopes of capturing increased market share. "Kindle is a wireless, portable reading device with instant access to over 280,000 books, newspapers, popular magazines, and blogs," Portugal explains.

Focused but Keeping Its Options Open

Amazon recently acquired Lexcycle (www.lexcycle.com), a company that created Stanza, a free application for the iPhone and the iPod touch that allows users to browse and share documents, books, and periodicals. Amazon seems to be keeping its options open by also maintaining an iPhone version of Kindle. Given Apple's dedication to backward compatibility, one would assume that Amazon's iPhone Kindle application will also work with any new Apple iPad device, allowing Amazon to compete directly with Apple's ebook store.

If Apple does release a much rumored iPad product this summer, all bets may be off. Apple proved with the iPod that it could create a product that was innovative in design and functionality and, at the same time, could create a whole new system for content acquisition and use that, with the iPod, revolutionized music distribution.

Bezos began his presentation at the press conference with the statement that the Kindle goal is to have "every book ever printed in any language, all available in less than 60 seconds." The statement is very similar to Google's statements about its Google Books project. Whatever the future holds, users would appear to be the true winners in this race to bring the printed word into the 21st century.