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The Real Secret Of Kindle's Success

Most attribute the runaway success of Amazon's Kindle to the E Ink technology that makes it so readable. But if that were true, why didn't Sony's Librie, which used the same technology and was launched three years earlier in the vibrant Japanese book market, succeed?

The true explanation of the Kindle's triumph is something far less obvious—the behind-the-screen elements that make up a product's backstory. Kindle got those elements right; Sony didn't. Although backstory elements are easy to overlook, the same pattern pops up in one demand story after another: It's what you don't see that counts.

In 2003, Yoshitaki Ukita, the vaunted designer of Sony's Discman, developed a prototype e-reader that read like ink on paper, not electronic dots on a screen. He showed it to Japanese publishers with bravado: "One day, millions of people will read everything you publish on a device like this one. It holds up to 500 books at a time, and weighs 300 grams. This is the future."

They couldn't disagree, especially with innovative Sony behind it. They promised access to their publishing libraries, and even investment. But they set a trap—each of the leading publishers would give Sony access to 1,000 titles. A thousand titles may sounds like a lot, but it's just a drop in the bucket. What good is an e-reader that provides access to only a sliver of books in print? However sublime the reading experience, the Librie suffered from the Curse of the Incomplete Product.

Jeff Bezos first saw the Librie being demonstrated by E Ink at a conference in 2004. "Uh-oh," he said, "This is a machine that could destroy my business." He ordered 30 Libries for his staffers to play with. Soon he was talking to E Ink about building his own e-reader, a bizarre hardware project for an online bookseller to tackle. Bezos assigned his right-hand man, Steve Kessel, to set up Lab 126 in Silicon Valley, far from Amazon's Seattle headquarters, to make it real.

When Amazon released the Kindle, it had a wireless connection, a step up from Sony's USB connection. But its real advantage was an unmatched catalog of e-books for sale. Bezos had developed working relationships with every major publisher, and through Amazon's "Search Inside the Book" amassed experience with digitizing texts. On launch day, Amazon had 88,000 e-books available for download—more than four times the number Sony offered. Anyone with an Amazon account could buy an e-book with one click. Most were priced at $10, a significant discount from the cost of a trade paperback or a new hardcover. Beyond this, Amazon already had a relationship with 65 million online shoppers. Shoppers in Connect, Sony's online store, soon found themselves in a ghost town.

Look at the Kindle, and you don't see the wireless connection, the relationships between Amazon and the publishers, the vast online bookstore, or the personalized book recommendations. But all these backstory elements dramatically enhance the e-reader experience, making Kindle magnetic in a way the Librie never was. The first production run of Kindles sold out within five-and-a-half hours.

Amazon moved outside its comfort zone to design a hardware device, which was Sony's forte. But Amazon leveraged its comfort zone to build a complete solution for the user. As a result, Kindle's sales outstrip Sony's readers by three to one. E Ink made the e-reader a reality. Behind-the-screen deals—the backstory—made Kindle a winner.

Adrian Slywotzky is a partner at the global management consulting firm Oliver Wyman and a best-selling author. This article is based on material from his new book, Demand: Creating What People Love Before They Know They Want It (Crown Business), to be released on October 4, 2011. Follow the Demand blog at www.demandthebook.com.

[Image: Flickr user Annie Mole]