February 12, 2011

(e)Books

Introduction

When mankind invented writing, it changed the world. Keeping track of natural events, planning crops and harvests, tracking commerce, history, it all became possible when we started writing. Similarly, it is often said that the invention of the printing press brought about one of the biggest changes in the history of mankind, since this made it possible to make texts available to the grand public: printing religious texts, scientific text and – when printing became more wide spread and thus cheap – also news, novels, poetry et cetera.

When more and more texts became available, new issues had to be resolved. The great library of Alexandria may have been big in its day, it is nothing compared to what modern day libraries have stored. A personal favorite is the beautiful public library on 5th avenue and W42nd Street in New York, USA. Having so much information at hand creates the need for better ways to store, preserve, and index materials leading to such fine things as the dewey decimal system and full-text search based on the tf.idf family of weights. Full-text search became even more important with the rise of the Web which can be seen as a whole new way of distributing information (some more background of that can be found in my dissertation. See my publication page for details).

With the rise of the Web, the adage “information wants to be free” got a whole new meaning. Indeed, many texts are available for free on e.g. google books and the Gutenberg project. There is, however, still a big market for paid content: books, magazines etc. Interestingly, the biggest threat for book selling companies may not be the free content available on the Web itself, but the developments around e-book which are all about distributing content cheaply and digitally without the need of sending a paper copy of a book over such old fashioned media as the postal company or UPS!

Several players, including Amazon, realized early on that e-books are here to stay and took the challenge head-on. Amazon successfully introduced the kindle e-reader. Interesting questions in this respect are: how big is the impact of e-books on (the architecture) of companies in the book-business, and what changes for customers?

Market analysis

Typical market analysis uses Porter’s 5 forces model, possibly combined with the 4 PEST-factors. The introduction of e-books as a way of getting access to content changed the market drastically, changing the market definition from buying books to a market for content, with segments for the way this content is delivered: paper, or digitally. Further segmentation can be based on such things as types of content (i.e., art or “just letters”) or price.

It is not hard to imagine that – similar to physical book distribution – economies of scale apply here as well. Having a large piece of the e-book market makes it easier to maintain a good distribution network. Companies such as Amazon (with no physical stores) tried to gain competitive advantage by offering a complement product: the e-reader (kindle) with integrated access to their stores and automatic synchronisation of bought materials with devices. Other online sellers of e-books (e.g. the Dutch bol.com site) do not have this advantage.

The technological innovations partially provide the key to understanding why Amazon is so successful. Cheaper access to certain types of content, large / diverse supply, and instant delivery goes only so far. In my view, Amazon’s competitive advantage stems in no small part on the fact that they approached reading as an experience. Their business model is based on:

  • A relatively cheap device with easy to use interface and excellent functionality for bookmarking, note keeping etc.
  • Clients in hardware form (the kindle) and software form (apps for tablets, smart phones and computers)
  • An integrated approach involving Amazon’s store; a personal account with sufficient storage capacity for your materials; excellent delivery channels and automatic delivery to devices and clients

Of course there are also challenges to overcome. Barnes and Noble – which is not a pure webshop but also has a chain of very nice bricks and mortar bookstores throughout the us – also offers its own e-reader: the nook. In contrast to Amazon’s device, the nook has a color screen and offers functionality to loan books to friends, something that Amazon doesn’t have just yet.

In the e-reader market, competition comes mainly from rivals such as Sony (with an excellent e-reader) and the introduction of the tablet computer (such as the Samsung Tab and the iPad) it was predicted that sales of e-readers would drop. Given the loose coupling principle that Amazon applied, this may be a threat to its e-reader business. For book-sales, however, this is not the case as software based clients for these tablet devices are readily available.

As the big boys are fighting and start their technology race, it is the consumer who benefits!

Consumer perspective

I confess to being somewhat old fashioned. I write using a fountain pen (green ink!), prefer vinyl over CD’s, and enjoy my old film-based SLR camera. It’s no big surprise that I enjoy my physical, paper books as well. Nothing beats picking up an old book that I inherited from my grandfather and reading the letter from his old soldier buddies that he put in there. Lots of sentiment there.

However, being a father of two I sometimes have to be practical too. Collecting books (and music and … other stuff) eats up a lot of space. Not so long ago, I therefore thought I’d give the kindle a chance. I was in for quite a surprise, as this really rocked my world: reading experience is awesome, ease of ordering materials is dangerously easy and supply is growing at a dazzling pace. Still waiting for the Dutch newspaper to be available, but other than that I am (to quote a marine buddy of mine) as happy as a pig in shit.

Personally I don’t miss the color view of the nook, and since I use the device mainly for reading I won’t even consider a tablet pc. The race is on, though, and more features that make life easier for consumers are to be expected in the next few years. Let’s see if the big boys such as Amazon manage to stay ahead of the pack!

Architecture

From an architecture perspective, the addition of e-books and paraphernalia (kindle etc.) is interesting as well. The following figure illustrates part of the architecture of Amazon. Note that I have to make assumptions / guess here and there as I have never been at Amazon to discuss this (unfortunately! Invitations are more than welcome!).

In describing the architecture I adopt a business function perspective, firstly focussing on the outbound logistics part. Models are of course made in ArchiMate. For physical goods, Amazon already had arrangements. Physical goods are shipped throughout the world using the services of a third party such as UPS or FedEx. For digital goods (e-books), something new has to be arranged.

More on the delivery functions follows. Staying in the business layer of ArchiMate for a bit, the sales-functions are also interesting to consider:

The order goods business service was at first only accessible via the webshop channel (business interface). However, with the arrival of kindle, a new channel has to be added. The kindle-shop (which resembles the webshop but is directly accessible via the kindle device and therefore optimized for a smooth experience) is new.

IT-support is also interesting, especially since the “kindle shop” is pretty much all IT. There are several ways to go about modelling this: either by staying in the behaviour column or the structure column of the ArchiMate metamodel. The following example combines these two from the process perspective

Here we see that the e-book ordering service (part of the e-books product) is a specialization of the order goods business services. The order handling process uses four application services which are realized by several systems. As Amazon also offers access to materials from third parties, links to (the interfaces of) external systems have to be taken into account as well. This also goes for payment handling which is typically done by credit card companies. Not that the diagram doesn’t use a roadmap view. It is obvious, however, at the e-book management system is new and most of the rest of the system is already available.

Actual delivery requires some tricks. Devices and network connections are modelled at the infrastructure layer:

This (partial) diagram shows part of the reason why Amazon’s kindle is such a success. It shows the integrated approach that Amazon uses for its kindle store. On the one hand, the kindle store is assigned to several business services (such as ordering of e-books). On the other hand, it also shows that the kindle store has an integrated delivery mechanism that ties directly to the kindle device. That is, delivery of e-books to the kindle does not require plugging the device into the computer and manually installing the e-book on the kindle device.

Finally, it should be noted that there is a lot more to be said about this cas:

  • Note the WWW connection in the last diagram. The system is setup in such a way that the kindle device uses a wifi-connection if available. Some models of the kindle use a built-in 3g connection as a fall-back mechanism to be able to shop if no wifi-connection is available.
  • Note that in the architecture discussion we spoke only about the kindle device. There is, however, also a kindle client that can be installed on other devices such as the iPad, the Samsung tab, a pc or even smart phones. By using loose-coupling, these clients can tie in directly to the kindle-store as well as the delivery mechanism.

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