Sitting comfortably in his Cupertino office, Apple's CEO Steve Jobs reviewed the media coverage of a new eBook Reader being developed. When asked about the unveiling of Amazon's Kindle in a 2009 interview with the New York Times, he had responded, “It doesn't matter how good or bad the product is, the fact is that people don't read anymore. Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.” In fact, a recent polling done by the National Endowment for the Arts claimed that only 57% of Americans read a book in 2002, 4% less than the previous decade.

However, with the recent success of the Kindle, Jobs questioned whether this was a possible market for Apple to pursue. Amazon released the latest version Kindle DX one month earlier in April 2009. To compete with Amazon in the eBook business, Sony announced a content partnership with Google in March 2009.

Is it too late for Apple to enter the eBook Reader market? Apple has a history of famous breakthrough products, from the iMac in 1998, to the iPod in 2001, and most recently the iPhone in 2007. Do we expect to see an 'iReader' next?

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CONTENTS
Introduction
1. Company Overview: Apple Inc.
1.1. History
1.2. Leadership
1.3. Corporate Strategy
1.4. Corporate Culture
1.5. Existing Products
1.6. Prospective Products
1.7. Financials
2. The Evolution of the eBook Reader
2.1. Technology and Innovation
2.2. Content Providers
2.3. Target Market
2.4. Distribution and Sales
2.5. Piracy Issues
3. The Business Ecosystem
3.1. Risks
3.2. Competition
3.3. Hardware Suppliers
3.4. Value Network
3.5. Revenue Models for eBook Content
4. Strategic Options for Apple
5. Exhibits
6. References

ABOUT THE AUTHOR
Professors Micah Siegel (Stanford University) and Fred Gibbons (Stanford University) guided the development of this case using the CasePublisher service, available online at www.casepublisher.com as the basis for class discussion rather than to i)ustrate either effective or ineffective handling of a business situation.

INDUSTRY COMPETITORS
Kindle: Currently in its third generation, the Kindle is the market leader in the eBook reader space. The Kindle I was released in 2008 and had enough memory to store around 200 titles. With storage for around 1500 titles, the Kindle II was released in February 2009 with a significantly thinner profile and a text-to-speech feature. Amazon has also announced the Kindle DX, with a larger 9.7” screen, an accelerometer to allow for page orientation detection and the capability to display PDF files. The Kindle II retails at $359 and the Kindle DX will retail at $489.

According to Citigroup Investment Research, Amazon is projected to sell more than 1 million Kindle readers in 2009, doubling the 500,000 it sold in 2008. “Amazon sold more units of the Kindle than were sold by the iPod in its first year,” said an Internet analyst at Citigroup. Furthermore, Amazon’s retail clout ensures a wide selection of books, blogs, and periodicals.

However, the Kindle is not without limitations. The book content is restricted by DRM, making it impossible to use the eBooks on any other devices without first installing Amazon’s Kindle application. To view PDFs on the Kindle I and II, Amazon charges a conversion fee of $0.10 per file. The Kindle DX natively supports PDF files. The Kindle also lacks a touchscreen display or a back-light.

Sony Reader: The Sony Reader was launched in the U.S. in 2006. Two years earlier, Sony had launched LIBrie in Japan and was the first of the second generation eBook readers to use the E-Ink technology. Sony sells the base model of its latest reader for $299. In December 2008, Sony disclosed that it sold 300,000 units of its Reader from when the device launched in October 2006 to December 2008, which was above Sony’s expectations.

In March 2009, Sony announced a partnership with Google to battle Amazon in the growing eBook market. It will give the Sony Reader users access to more than half-a-million public domain books for free from Google's ambitious book digitization project.

Other eBook Readers: Various other eBook Readers have emerged in the last few years, but have gained little ground, including eBook Readers from iRex Technologies, the Hanlin eReader from Tianjin Jinke Electronics, Foxit’s eSlick, and the Cybook by the French company Bookeen (See Exhibit 12)

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