Amazon has big challenges to overcome in China before it launches the Kindle there
After years of speculation about the Kindle’s arrival in China, a wide-spread rumor that Amazon was going to open Kindle pre-orders on April 16 sounded credible, building on the US firm introduced its Kindle apps and e-bookstore in China just four months prior.
That launch was believed to be a clear signal that the firm planned to launch its Kindle in China, however, the rumor turned out to be just that — a rumor. Amazon remained silent on April 16th and once again the timeline for the Kindle’s arrival in China fell back into uncertainty.
It is not actually surprising that Amazon’s effort to introduce the Kindle to China needs more time. Given the current status of the e-book market in China, the outlook for both the Kindle and its e-bookstore seems full of challenges.
In China, the paid e-book market features a limited reader base and lacks quality electronic book content. Given the ongoing problem of rampant piracy of digital content Chinese consumers have not yet grown accustomed to paying for digital content. Indeed, Xiaodong Hu, Vice President of leading e-reading startup Duokan once remarked that “Chinese readers are so used to getting a ‘free lunch’ that it is challenging to educate them to pay for e-content.”
How big is the Chinese e-book market?
Though China has more than 500 million Internet users, it is unclear just how many Chinese netizens are willing to pay for e-books, while the price that they are willing to pay remains up for question. To figure this out, Duokan embarked on a test sale of 17 e-books in the Apple store in January 2012, finding that the best-performing of the 17 sold just 8,000 copies in six months.
A survey of Chinese female e-readers conducted by the China Press and Publication Post also reflected the fact that few were willing to pay. Only 12 percent of the respondents said that they would pay for e-books, while 49 percent said they wouldn’t.
It isn’t just about users, since difficulty cultivating a market for paid e-books readers is also down to a lack of good e-book content. This leads to the fundamental challenge impacting the success of Amazon’s Kindle in China, which is how to obtain attractive and abundant Chinese e-book content from local traditional publishers given that they control the copyright of the majority of Chinese mainstream books.
Negotiating with traditional publishers will not be easy for Amazon. Compared to traditional book-selling in China, the e-book business is not so attractive for traditional publishers. This is because the cost of producing high-quality e-books is high while profit from e-books selling are low given the limited buyer base.
More importantly, concern about Internet piracy of e-book content in particular makes traditional publishers in China feel cautious and hesitant to enter the market. Then there are also doubts about the reliability of current encryption technology and the transparency of the sale data on e-commerce platforms.
The local incumbent
In addition, fierce competition from local player Dangdang also poses significant challenges for Amazon. As an early pioneer of selling books online, Dangdang took the lead in terms of collaborating with Chinese publishers. According to Wenfei Yi, Dangdang’s Vice President of Digital Content Development, the company’s 12 years of experience cooperating with traditional publishers, along with years of making publishers significant profits, give it the strongest network and strongest value proposition for traditional publishers in China.
As early as 2011, Dangdang had already built partnerships with more than half of China’s publishers.
“We have monopoly rights in many cases because of our exclusive book contracts with a sub-set of China’s publishers,” said Dangdang founder and CEO Guoqing Li.
Even Chinese e-commerce giant JD (originally 360buy) cannot compete with Dangdang on the sourcing books from traditional publishers. To make up for the deficiency and compete, JD adopted a strategy of buying copyright directly from the writers themselves. On March 29th, the company launched its ‘exclusive e-book edition by star writers’ when it signed contracts with three famous writers who have created exclusive e-book content for JD.
Bearing all of this in mind, Amazon still has a lot of challenges to overcome before launching Kindle devices in China. The priority for the company should be to develop partnerships with local Chinese publishers and solve the content issues. Without this, Kindle’s arrival in China will be doomed to failure — without a rich library of content, the Kindle will be just like a pretty flower without any roots.
Headline image via seenful / Flickr
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Ashton Kutcher’s A-Grade Fund Raising At $100 Million Valuation
Today at TechCrunch Disrupt NY, Ashton Kutcher took the stage with Guy Oseary to talk about their A-Grade fund. Arrington started right away about a rumor that the fund is raising money at a $100 million valuation. The two partners confirm the rumors, saying that they are raising “enough money.”
It means that financial institutions and companies will invest a certain amount of money in exchange for equity in the A-Grade fund, valuing the existing investments and activities at $100 million. With three partners (Ashton Kutcher, Guy Oseary and Ron Burkle), the fund has been investing for about two and a half years. Until today, the three partners only invested personal money. It is still unclear how much money they put into the fund to date.
Among its portfolio companies, the A-Grade fund has invested in Spotify, Uber, Shazam, Soundcloud, Fab and Airbnb. It mainly takes part in seed and Series A rounds.
When asked whether it is bundling current investments or creating a new fund, Ashton Kutcher answered that it is doing both. “We’re just somewhat formalizing what we’ve been doing,” Kutcher said.
The new fund will keep the A-Grade name. While the new funding is not official yet, Kutcher and Oseary said that it’s mostly a one-time investment. “We are pretty well filled up,” Kutcher said. The partners will make an announcement when the deal finalizes.
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Is An Always-On Xbox Indefensible Or Is Taking To Twitter Just The Wrong Way To Defend It?
After a very public defense of rumors about the next Xbox’s always-on Internet requirements, a new report claims that Microsoft creative director Adam Orth is no longer with the company. In a series of Twitter posts, Orth defended the move by countering that “every device” is now constantly connected, and then delivered a low-blow when someone responded suggesting always-on connectivity might not work great for customers in rural locations, responding snidely, “Why on earth would i live there?”.
According to Game Informer, which confirmed reports from unnamed sources via a call direct to Microsoft that Orth was no longer employed there (we also contacted Microsoft for official confirmation, but a spokesperson simply said ““We are not commenting further on this issue”), it’s likely that incident led to his resignation or removal. And based on Microsoft’s public apology, it likely is the case that this wasn’t the venue. But the real problem here might be that defending a decision to embrace an always-on Internet connection requirement is bound to devolve into personal arguments, since logical ones that don’t involve owning up to a simple “we want to lock down our product and better control piracy” aren’t readily available.
The original report of how the next Xbox would work included a requirement that a user be connected to the Internet to even begin playing games or apps on the console, along with a 3-minute time out for a connection loss before said games or apps are suspended pending the resolution of the network connection issue. For users who have been burned by the always-on requirements of recent PC gaming titles like Diablo III and SimCity, this rumor (which Microsoft neither confirms nor denies, despite its apology) probably sounds like a total nightmare scenario.
It’s not making things better that a report surfaced this week from the Verge which claims that the next Xbox will interact with your cable box, hence the need for an always-on connection. The timing of that report smacks of Microsoft trying to do some subtle damage control based on these recent leaks, without giving away anything official ahead of its own planned Xbox events, the first of which is reportedly taking place late in May.
Of course, even that doesn’t justify an always-on connection requirement, not for isolated functions like single-player gaming which should have no problem running without an active connection, even if a player has to give up some features like achievements and leaderboard ranking to make that work (you know, exactly the way it works now).
The problem with trying to come up with a coherent argument for why a device or game needs an always-on connection without saying those three dreaded letters (D-R-M) is that it’s impossible to do convincingly. Companies like Microsoft and EA, which have very savvy PR professionals on staff, know that trying to do so without a proper feint like a connected TV service is fruitless. Aside from strongly suggesting that the leaked info was correct, taking to Twitter also meant venturing away from the party line that always-on is value add, not consumer punishment, and that’s not something any company mulling this kind of sensitive and major change to the way it delivers services can afford.
Continued here: Is An Always-On Xbox Indefensible Or Is Taking To Twitter Just The Wrong Way To Defend It?
Here’s What To Expect From Mobile World Congress 2013, Europe’s Biggest Mobile Show
It’s that time of year again — mobile nerds and enthusiasts of all stripes have begun to descend upon Barcelona for Mobile World Congress, and naturally a TechCrunch contingent has set up camp in Spain to cover it all.
Or, we’ll try anyway. MWC is a behemoth of a show, packed to the brim with enough phones, tablets, and apps that it’s enough to make even the more ardent mobile nerd’s heart go a-twitter. To say that we’ve got a busy week planned is quite an understatement, but here’s a brief look at some of the players that are in attendance and what (we think) they’re bringing to the table.
First, there are the earlybirds — the companies that wanted to get some of their big news out ahead of the show in order to avoid drowning in a sea of press releases. HTC will be around as it always is for instance, but it’s already made its big reveal during a pair of simultaneous events in New York and London. Personally, I’m hoping that an HTC Mini is floating around the show floor somewhere so I can finally try and figure out why it exists.
And then there’s Sony, who managed over the past few weeks to make some waves with its Xperia Z and Xperia Tablet Z. So far the company has done well to avoid raising any eyebrows in advance of its press event on Monday, but that hasn’t stopped the rumor mill from churning — Sony may announce that it’s bringing that Tablet Z to the UK (and hopefully beyond).
Those of you expecting a glimpse at a brand new flagship phone from Samsung will probably come away disappointed this week — the Korean consumer electronics titan seems to have stopped using MWC as a launchpad for its top-tier smartphones. The big Samsung announcement expected this week is that of the Galaxy Note 8.0, the S Pen-friendly tablet whose existence has been leaked so often that even HTC would blush. The latest? Slashgear obtained this image (above) taken at the Fira Gran Via earlier today, confirming that the GalNote 8.0 would indeed take the stage here in Barcelona.
Samsung may not be planning to show off too much in the way of high-end phone hardware, but eternal rival LG seems more than eager to fill in. Sure, its big ol’ Optimus G Pro may have already enjoyed its share of the spotlight, but I’m looking forward to some hands-on time with it. Also on deck are LG’s mid-range Optimus F series handsets — the F5 features a 4.3-inch qHD display and a 1.2GHz dual-core processor, while the F7 bumps things up slightly with a 4.7-inch 720p IPS screen and 1.5GHz dual-core processor. Maybe not the most exciting things in the world, but probably a damned sight better than last year’s Optimus Vu .
Meanwhile, as rumors of a super-svelte Catwalk Windows Phone continue to make the rounds, Nokia is seemingly gearing up to unveil a pair of new Lumias this week. A handful of recent leaks pointed to the existence of the Lumia 520 (left) and 720 (right), and now a set of leaked images from none other than EvLeaks (who, in case you were curious, has a rather solid track record with these sorts of things) have added even more fuel to the fire.
Nokia’s wallet-friendly device portfolio has also been pegged to grow this week with multiple new, non-Windows Phone handsets. Apparently, it’s all part of a plan to shore up the company’s presence in developing markets, which jibes rather nicely with the previously-stated goal of connecting “the next billion people.”
China’s ZTE has been awfully transparent about its plans this year — you can expect to see the company’s hefty Grand Memo (complete with 1.7GHz quad-core Snapdragon S4 Pro and 5.7-inch display), as well as one of the world’s first honest-to-goodness Firefox OS phones. Not exactly a shock considering that Firefox OS is being geared heavily toward making a splash in developing markets, but it’ll be neat to see what sort of hardware ZTE cooked up to match Mozilla’s web-centric OS. There’s even a spec sheet floating around now, thanks to some Engadget tipsters who managed to get into the MWC venue a little early:
Speaking of Chinese OEMs, Huawei has been keeping its cards close to its chest so far. It’s pretty obvious that the mid-range Ascend P2 and its 720p screen will be making an appearance very shortly, but the question is whether or not it’ll be alone — after all, Huawei did reveal two heavy-hitters during CES. There’s little doubt in my mind that Huawei knows how to make a good phone, but another question to mull over is whether or not this year will be the one that sees Huawei finally fit into the mainstream.
Sadly, this year attendees will have to do without the frozen treats and the scores of Android pins that Google brought to the show last time around. While the company hasn’t officially stated why it downsized its presence on the floor this year, we’ve got our own theories. In a slightly related vein, Motorola Mobility has never really had a big presence at MWC, so odds of a big X-Phone announcement are pretty much nil — sorry folks, better luck at I/O.
There have been persistent rumors that Asus intends to reveal its third-generation Padfone at MWC, which seem to have been corroborated by a recent (and incredibly corny) teaser video that pointed to a moment when “Pad and Phone come together” to form a “metallic miracle.” It would be a peculiar move given how long the older models have been around. The original Padfone is less than a year old for one, and the Padfone 2 was only released a few months ago. Subsequent teasers point out that whatever Asus plans to show off is Intel-powered too, so that strange FonePad is starting to look like a lock.
This may seem like a lot, but trust me — this is just a fraction of what Mobile World Congress has to offer. Be sure to keep up on all the latest news out of Barcelona by checking out our full event coverage here — the fun kicks off in earnest tomorrow.
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Nexus Tablet Success And Why There’s No Time Like The Present For A Google Retail Store
Rumors from an “extremely reliable source” speaking to 9t05Google have suggested Google will start to operate its own physical retail stores starting as soon as the 2013 holiday season in the U.S. Brick-and-mortar shops from an Internet search company? Sounds like a stretch, but the Goog is breaking out of its search box big time, and recent additions to the Nexus line are proving it has a real chance at establishing a direct relationship with customers.
Google has had a difficult time keeping its Nexus 4 smartphone, manufactured by partner LG, in stock, with the device being mostly unavailable through Google’s Play store until just recently. But the company’s efforts to sell direct weren’t an overnight success; it attempted to sell hardware direct with the Nexus One back in 2010, but stopped selling after a few months, since very few customers opted to buy the device at its full, unsubsidized price online.
But if Google does one thing well, it’s iterating on less-than-stellar product launches and building on a firm foundation of failure. And that’s exactly what it has done with Nexus; the tablets it starting selling the via its online hardware store did major one thing better than the Nexus One, by offering no-strings-attached hardware at a bargain basement price. Hardware sales, Google seems to have learned, won’t work if customers are asked to eat a cost hit in exchange for freedom. They needed both, and weren’t willing to trade economy for freedom.
Now Google has the recipe right for online sales, and it appears to have worked very well for the Nexus 4, and at least moderately well for Nexus tablets. But Google is still missing a key ingredient that has helped the iPad gain enormous consumer traction, and this latest rumor indicates it’s listening to the words of its biggest rival about how to possibly finally come up with a significant breakthrough for Android tablet market share.
Apple CEO Tim Cook has made no secret about Apple retail’s impact on iPad sales. Most recently, he essentially attributed the iPad’s worldwide success to Apple’s physical stores, and the opportunity they provided to make believers out of customers who might otherwise not necessarily have understood Apple’s tablet as a product category. As Ingrid noted in her recent piece covering Cook’s comments on retail at a Goldman Sachs investor conference last week:
“One of the things that’s not understood that well about the stores is that I don’t think we would have been nearly as successful in the iPad as an example if it weren’t for our stores,” said Cook. He noted that people’s view of the tablet, prior to the iPad, “ingrained in their minds [was] a heavy thing that no one wanted.”
Google needs a tablet to achieve the same kind of thing with an Android tablet, or at least to come close. Making an “experience”-baed retail store akin to what Apple’s offering doesn’t guarantee consumers warm up to Android tablets, but it’s a risk that’s likely worth taking, given that Google has had positive indicators for its online retail efforts of late, and that Apple seems to place a lot of the credit for the iPad’s success squarely on the Apple Store’s shoulders.
Nexus tablets need a home run, and that hasn’t come in the form of hardware so far, despite modest gains by gadgets like the Nexus series and the Kindle Fire. But maybe that’s because a device isn’t the answer they’re looking for: customer outreach is.
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