Amazon Kindle Disruptive Industry Change

Case Study: eReading: Amazon’s Kindle – Industry Disruption

The Amazon Kindle debuted in November of 2007 to a market ready for a leader to take charge.  The rapid adoption rate by the public caused substantial disruption in several industries.  Amazon quickly assumed a leadership position in the eReader market, and maintains that position today.

The most immediate industry affected by Amazon’s entrance was the existing eReader market.  Companies such as Sony and Apple were immediately impacted by the disruptive entrance of a consumer-friendly competitor.  Sony, who had the market leading eReader product at the time, immediately lost market share.  Apple, whose products, at the time, were not direct eReader competitors, but rather smaller devices optimized for music, was impacted to a lesser extent.

Providers of free e-content were also affected by the Kindle’s launch.  Google, for example, had a business model that relied on visits to its websites (and associated eMarketing sales) as opposed to sales of eBooks.  Its ambitious Google Library project has been mired in legal issues for years.  If it is ultimately successful, it could cause severe disruption in the market again (it very recently hit yet another legal hurdle).  Meanwhile, Kindle’s sales continued to rise as the market for immediate access to electronic books grew.

Educational publishers, such as Penguin, whose traditional business model relied on sales of hardcover and paperback books, have had to deal with a changing marketplace.  While not yet (at the time of the case) heavily disrupted by the advancing eReader market, it is certain to have a long-term and permanent effect on the way these traditional publishers approach the market.  As the case study points out “All new Penguin titles were being published in both print and electronic form and the publisher was also digitizing its backlist.”  Other publishers would do well to follow this trend if they have not already begun doing so.

Undoubtedly the most heavily impacted industry has been, and will continue to be, the “brick-and-mortar” book retailers.  Large chains such as Barnes & Noble may be able to adapt and continue to grow and remain profitable.  In order to do so, they will have to compete directly with Amazon and other eReader players.  While the case makes note of Barnes & Noble’s increasing revenue, it does not specifically mention its concurrently declining margins.  The bookseller’s Operating Income and Net Income both declined as Revenue increased.  Similarly, small retailers and independent bookstores have been heavily impacted by the growth of the eReader market.  These smaller organizations do not have the ability to compete in the eReader business.  While bibliophiles (like myself) will continue to frequent these establishments, they will find continually declining revenue and profitability as the eReader market continues its growth and mainstream acceptance.