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Amazon to enter the school textbook market

Aug. 26, 2008

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Amazon.com is reportedly looking to enter the school textbook market with the release of a new, student-friendly version of its Kindle electronic book reader. Amazon is already at work on new Kindles and thinks there is an opportunity in the US $5.5 billion textbook market.

The online retail giant has previously confirmed that there will be Kindle updates but isn't commenting on targeting specific markets as of yet. But the company did say to expect an official announcement soon.

Mary Skafidas, spokesperson for McGraw-Hill Education says "today, there are many people that think that major textbook publishers are against e-books. In fact, the exact opposite is true."

That isn't stopping analysts and the technology press from offering educated guesses about an affordable Kindle with a bigger screen that would allow students to download college and university textbooks from all the major publishers.

Improved functionality would let the students click on hyperlinks, highlight text and search the Internet while accessing the same graphically rich, color pages now available in the books.

About 95 percent of McGraw-Hill Education's textbooks are available in digital form, Skafidas said. Overall, e-books are a small part of McGraw's global revenue stream, but it is a growing source that has seen a dramatic increase in demand during the last two years.

"We think that this is great cince the functionality offered in digital devices is more useful and more flexible in the long run to students than printed books. We have a strong relationship with Amazon. We offer our materials in any way that our customers would prefer to use them," added Skafidas.

To prove her point, Skafidas mentioned CourseSmart, a Web site representing a coalition of major textbook publishers including McGraw, Pearson, Wiley, Cengage Learning and Jones and Bartlett. The website is a one-stop-shop for legal digital education materials for students and faculty.

The need to reproduce textbook pages exactly as they appear in print form is also a factor. "It's very hard to do color the way it's used in 90 percent of the textbooks. In a biology textbook, the minute you lose color, you lose real education value. I've seen some color prototypes. They're not that bad but the cost problems are really dramatic."

Frank Lyman, CourseSmart's executive v.p. of marketing says "the near-future of education will center on Kindle-like devices that compliment laptop computers. However, the problems involve both technological developments and old-fashioned dealmaking.

He added "as a whole, the consumer book market is very different from the textbook market. With textbooks, students only buy what they are assigned. It's a narrow set of titles, and you have to have exactly what they're looking for. You need a lot of content."

Amazon or any other deal maker will need to make the right deals with publishers that address concerns like piracy and the ability to update texts.

James McQuivey, a Forrester Research analyst who was once a college professor said "once they get these 20 or 21-year-old youngsters reading on a Kindle, I assume they'll have them for life. They'll pay for the device out of their college funds and then they'll keep it for pleasure reading for years after."

McQuivey used to watch his students wrestle with expensive, phone book-sized texts that were destined to be sold back to bookstores at the end of each semester. A Kindle wouldn't add that much to a college student's budget, he said, and Amazon builds on its own future.

There's also another reason why Amazon is moving so fast in terms of technological updates to the Kindle that can handle graphics and color, McQuivey said: "Overall, textbooks are basically USA Today with hardback binding."

Besides Amazon and Sony, McQuivey said, two other companies have their eyes on this market, with one of the unnamed companies soon to offer a larger device for the academic and business publishing segment.

McQuivey added "by the summer of 2009, there should be four solid readers in the market. Suddenly everyone's smelling war."

Additionally, publishers should also enjoy being courted, having learned from the music industry's bad experience that saw Apple's iTunes become the top music retailer.

"Everybody looks at that and says, if we empower Kindle to be the dominant platform, with proprietary digital rights management and all, we're all going to be doing whatever Amazon tells us to do over the next twenty years. A bit like Google I guess. It's easy to portray publishers as Luddites, but they want that competition in the market and they will do everything in their power to get it," said McQuivey.

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Source: Amazon.com.

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