Which Companies Will Win The Battle For The E-Book Consumer?

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Which Companies Will Win The Battle For The E-Book Consumer?

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We’ve been writing a lot about e-reader devices, but let’s focus on the content for a moment. Why? Because selling a lifetime of e-book content to consumers is the end game of many companies in this space, especially Amazon (NSDQ: AMZN) and Barnes & Noble (NYSE: BKS). The sky’s the limit here: Consumers don’t own digital libraries of books, as they did with music: When mp3 players came out, most consumers owned CDs that could be easily burned to a computer and downloaded to a device. Not so with books.

And the market for digital books, while catalyzed by the existence of dedicated e-reader devices, will extend across multiple devices including desktops, laptops, mobile phones, netbooks, tablets, MIDs, portable gaming devices and devices that haven’t been invented yet. As we discuss in a new Forrester report, Forrester’s data (based on a mail survey of 4,711 U.S. consumers conducted in Q3 2009) shows that 3% of U.S. consumers read e-books on their desktop computers today; 2% read on laptops; and fewer than 1% read on dedicated e-readers, mobile phones, or netbooks, respectively.

The potential for selling content that’s never been consumed digitally before is huge. We project conservatively that in 2010, e-book content sales will top $500 million. This is still small compared to the overall book market, but it’s growing quickly—quickly enough to make companies like Barnes & Noble stake their future on the e-book bet. When B&N launched the Nook at the aggressive price of $259—a full $140 cheaper than the other two e-readers with touch navigation and wireless, the Sony (NYSE: SNE) Daily Edition and the iREX DR800—they drew attention to their long-term strategy: to profit not so much off device sales as from e-book content sales.

To understand more about which companies are in the best position to “win” the battle for the e-book consumer, our new report (available in full to Forrester clients) looks at the consumer followings of six companies: Amazon, Apple (NSDQ: AAPL), B&N, Sony, Target and Wal-Mart (NYSE: WMT). We chose these companies because they were either already market leaders in the e-reader space (Amazon, Sony), major print booksellers (B&N, Target, Wal-Mart), or possible future entrants to e-book e-commerce (Apple). Here are a few of key findings from the report:

Wal-Mart and Target are underplaying their hands. Of the 68 million U.S. consumers interested in reading e-books on any device, more shop at Wal-Mart and Target than at Amazon or B&N. Of the 30 million U,S. consumers interested in reading e-books on e-readers, 61% have shopped at Wal-Mart in the past 30 days and 55% have shopped at Target, while 38% shopped at Amazon and 27% shopped at B&N.

Barnes & Noble has to double-down to beat Amazon. Among the general U.S. population, B&N has nearly the same reach as Amazon: 16% of U.S. consumers report shopping at a B&N store or web site in the past 30 days, and 17% say the same about shopping at Amazon. But among consumers who are interested in reading e-books on e-readers, 40% more are Amazon shoppers than are B&N shoppers.

Sony could compete against an “Apple tablet” wildcard. Consumers interested in reading e-books on e-readers are three times as likely to be Sony consumers as Apple consumers (24% versus 8%).

The bottom line: The battle for the e-book consumer is still anybody’s game, and we’re in the early innings.

Sarah Rotman Epps is an Analyst at Forrester Research, where she serves Consumer Product Strategy professionals and contributes to the Forrester blog for that role.

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