Will supersized Kindle save newspapers?

 

Gallery

By Reuters

Posted on 5 May 2009 at 08:57

Amazon's Kindle eReader was supposed to revolutionise publishing by freeing people from having to carry books around. Now the web retailer may supersize it for newspaper readers.

Amazon plans to launch this week a bigger version of the Kindle, which sports a 9.3 display, as opposed to the current 6in unit. The New York Times claims the new device will be unveiled on Wednesday and its parent company will be involved.

But a larger-format eReader may not be a quick fix for a struggling newspaper business devastated by crumbling ad revenue and declining readership. Nor would it guarantee a big boost to Amazon's bottom line anytime soon, analysts say.

Questions about whether such a device will host ads and how Amazon shares revenue also pose key concerns.

But a larger-format device could at least ease Amazon's entry into digital text books, which some have said represents the best guarantee of a steady revenue stream.

The Wall Street Journal claims that the upcoming Kindle will be doled out to students at six US colleges - including Princeton - starting in the autumn.

It will also feature a more fully functional web browser, the newspaper claims. Amazon declined to comment.

Amazon has credited the Kindle with helping prop up sales and its bottom line - although it has never disclosed that data nor the device's profitability. The company's shares are up nearly 60% this year, far outpacing the Nasdaq.

Amazon and Sony are the only two major manufacturers of eReaders, but a host of companies from Polymer Vision in the Netherlands to Plastic Logic in the US are working on devices geared to newspapers and other formats in which a larger screen is a benefit.

Pearson's Financial Times and Gannett Co are working with Plastic Logic on a newspaper-oriented reading device expected to launch early next year.

News Corp chief executive Rupert Murdoch said in April his company, which owns The Wall Street Journal, New York Post, and The Times of London, is also investing in a reading device with a larger screen for newspapers.

New newspaper model?

Analysts wonder if the device may usher in a new model for newspapers struggling to slash costs and stay afloat.

The recently-launched Kindle 2, the updated version of the original Kindle that made its debut in 2007, already allows users to read newspapers and magazines, as well as books and blogs.

"What we're anticipating is that Amazon will release a device with a bigger screen also," says Forrester Research analyst Sarah Rotman Epps. "[But] just because it has a bigger screen does not mean they will primarily be used for newspapers and magazine readers overnight," she says, adding that bookworms, rather than newspaper fans, drive eReader sales.

And if the device costs more than the $359 Kindle, consumers might balk at paying more than they would for a netbook, claims Sanford Bernstein analyst Jeffrey Lindsay.

"Should I pay $359 or more for it without half the functionality [of a netbook]? It's a real dilemma," he says.

While the Kindle has its fans, others believe the paperback sized gadget is hard to navigate. "Clearly if news is an important mechanism for this ... they're going to want a bigger format," says Lindsay. "Probably the 7-inch device is too small for convenient navigation."

But consumers, whose love of handheld gadgets has spurred the success of the Blackberry from Research in Motion Ltd and Apple Inc's iPod and iPhone, might not know what to do with a device the size of a small newspaper. "Where would it fit into your bag?" Lindsay asks.