November 9, 1999 8:15 AM PST

Getting a read on e-books

Electronic books have been slow to catch on among consumers, but big Internet companies are betting that the time for e-books has come.

The e-book market has come alive in the past week, thanks to deals from Microsoft and behemoth bookseller Barnes & Noble that could help to popularize a technology that has so far lingered on the sidelines. Microsoft and others claim reader technology has improved drastically. Still, it may be some time before consumers drop their printed books in favor of electronic replacements, analysts said.

Microsoft announced on Thursday that it had struck a deal with publisher R.R Donnelley to convert print titles into an electronic format.

Last week, Barnes & Noble took a 49 percent share in online publisher iUniverse.com and will step up its promotion of e-books during the holiday season, according to a company spokeswoman.

And in August, networking giant Cisco Systems invested in e-book maker NuvoMedia.

"We believe we have the technology to make the [e-book] category work," Microsoft researcher Bill Hill said.

Barnes & Noble spokeswoman Brenda Marsh added, "We're selling every [ e-book title] we can get our hands on."

Some analysts, however, doubt that either strategy will replace paper books in the hearts of readers.

"This is not the time for the e-book," Tom Rhinelander of Forrester Research said. "This is one of the areas where computers can't improve on the original technology, which in this case is ink and paper."

One reason for this, industry analysts say, is that computer screens often make reading large blocks of electronic type uncomfortable for many consumers.

Companies invested in e-book devices--such as Mountain View, California-based NuvoMedia and Microsoft--are betting that technological improvements to computer screens will ignite the e-book market. Makers of the e-book, such as NetLibrary, are hoping they can sell customers on the content itself.

Some analysts, however, question the viability of the e-book business in light of the success of online booksellers Amazon.com and Barnesandnoble.com. Forrester Research predicts that more than $1 billion paper books will be sold online this year and Forrester projects that figure will rise to $3 billion in the next five years.

"Just because you take a look at something in a new way doesn't mean it's a better way," Malcolm Maclachlan, International Data Corporation (IDC) media analyst, said. "E-books to me do not address a real need."

Microsoft's Hill begs to differ.

Hill, who is a member of the company's e-books group, acknowledges that computer screens make reading online hard on the eyes, but said Microsoft's innovations will greatly improve the experience.

In August, the company launched Microsoft Reader, a software application that uses its ClearType technology, which enhances font resolution on liquid-crystal or flat-panel displays. Hill said that reading electronic text with the help of ClearType is just like reading from the printed page.

Start-ups such as Menlo Park, California-based Softbook Press and NuvoMedia have also worked on improving the quality of computer screens, but have mostly taken on another big problem consumers have with e-books--their lack of mobility.

People typically enjoy reading in a variety of places; computers, even laptops, make the experience cumbersome. As a result, these companies developed a handheld device, dubbed e-book readers, to enable e-book mobility.

Softbook and NuvoMedia introduced their devices in July of 1998, with NuvoMedia's Rocket eBook quickly gaining the most notoriety. The similar hard-plastic devices are about the size and weight of a hardbound paper book and hold about 4,000 pages of text (roughly equivalent to 10 books). NuvoMedia executives say that its device, which retails for about $269, also features software that enhances the computer screen's readability.

"NuvoMedia is a provider of e-book content, but we needed to provide a means for people to read that content," Marcus Colombano, NuvoMedia's director of marketing, said. "We think the Rocket eBook duplicates the same reading experience that books do."

On the other hand, NetLibrary says e-books don't need special screens or reading devices to provide value. Using a typical personal computer, someone looking for information can scan an e-book library and find specific text faster and easier than searching through library stacks, according to David Melancon, chief officer of marketing for the Boulder, Colorado-based company.

"There are some books you don't have to read cover-to-cover to receive value from," said Melancon, whose company catalogs academic, reference, and technical materials.

But converting paper books into electronic ones can be a long and expensive process. NetLibrary, which last month received $70 million in third-round funding from several publishing houses such as Houghton Mifflin and McGraw Hill, employs more than 100 workers to create its e-books.

NetLibrary obtains the rights to publish paper titles online from a publisher and usually receives electronic files from the publisher. If electronic files don't exist, however, employees will have to scan or type the text into the NetLibrary computer system.

The time and expense involved with creating e-books has made it difficult for retailers such as Barnes & Noble to offer a wide selection, said Forrester's Rhinelander.

"Many of the e-book makers have inadequate distribution systems," Rhinelander said. "It's a chicken and egg scenario. The e-book makers don't want to ship until they have orders and the retailers don't have readers ordering because they don't have enough e-books to offer."

Marsh of Barnes & Noble said that the company is offering about 2,000 e-books while the company sells on average of 75,000 titles in any one of its stores.

"To get readers to buy e-books, you have to have the books they want to read," Marsh said. "We've been trying to make our customers aware that they exist. This [holiday season] is really a test year for e-books."

 

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