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Amazon's Kindle DX Poses Profitability Challenge To Publishers

The Kindle DX is leading the charge toward e-textbooks, but the result may be as painful for publishers as the freefall in CD sales experienced by the music industry.

The biggest challenge for textbook publishers joining several universities in testing the usefulness of's new Kindle DX will be in finding a way to make money on the large-screen electronic book reader.

Introduced on Wednesday, the bigger, and more expensive, version of Amazon's Kindle 2 e-reader has a lot of the technology publishers need. The device is thin and light, it shows crisper graphics and text without the eyestrain and glare associated with the backlight used in laptops, and it's big enough to display electronic versions of textbooks. (On Tuesday, Amazon received its first Kindle design patent.)

No Clear Path To Profitability

But what it doesn't have is a clear path to profitability. And without that, textbook publishers likely will move slowly toward the digital world, delaying potential benefits for college students and school districts. Those benefits would include lower-priced electronic versions of books and the convenience of having textbooks in a single, lightweight device.

Nevertheless, the Kindle DX is forcing textbook publishers to deal head-on with the growing demand for electronic content, something they've been able to avoid until now. "They're in a better position than some other publishers, but they're not immune from the digital revolution," Forrester Research analyst Sara Rotman Epps told InformationWeek. "It's only a matter of time before schools demand this type of content. Publishers hold the cards for now, but they know the game is changing."

A sign that the change is here is in Amazon's ability to line up five universities to test the Kindle DX on students and faculties starting in the fall semester. The cost of the pilot programs has been kept low, and participants will get a Kindle DX at no charge.

At Princeton University, the High Meadows Foundation, which supports projects that could lead to more environmentally friendly practices, is paying the $30,000 for the Kindle DX test. Amazon, meanwhile, is expected to contribute some of the funding for pilot programs at Arizona State University and the University of Virginia's Darden School of Business.

For the schools, the attraction is the potential benefit to the students, the reduction of manufacturing and transport costs, and a softer environmental impact.

"Our interest in the pilot is to provide Amazon and other vendors with information on what our students and faculty need in such devices to make them successful," said Serge Goldstein, associate CIO and director of academic services at Princeton. "The ability to deliver textbooks in a format that doesn't require paper is probably inevitable."

With schools onboard, publishers Cengage Learning, Pearson, and Wiley, which represent about 60% of the U.S. higher-education textbook market, have agreed to offer some of their products for the tests. However, it's not clear how far the publishers would be willing to go in offering electronic versions of textbooks, if the test proved successful.

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