A New Chapter for E-Books

What comes first--the product or the market? In high tech, it's often the product, and building a market for something that people don't yet know they need can be arduous. That is the case with electronic-book readers, which launched with great fanfare more than a year ago, but have enjoyed at best modest success. Things may be about to change, a result more of business developments than new technology.

E-books, devices that can electronically store and display books, have to solve a three-cornered problem to succeed. Consumers won't buy the reader devices in large numbers unless they are cheap and there's plenty of content available. Current e-book readers cost $200 to $600, and that's with monochrome screens, not the color needed for high-quality text. To drive costs down, makers need to sell millions of units, not thousands. And publishers want the incentive of a mass market to make books available electronically.

PRICEY TITLES. One factor that may get the market moving is the bulking up of e-book makers. SoftBook Press and NuvoMedia, makers of the SoftBook Reader and Rocket eBook readers, have been acquired by Gemstar International Group, owner of TV Guide, the VCR Plus+ recording system, and online TV listings. Gemstar plans to relaunch the paperback-size Rocket eBook and the larger SoftBook with a marketing campaign that their startup owners could not afford.

A big marketing campaign may help convince publishers that the e-book market is worth paying attention to. While there are lots of classics available in electronic form, current titles are sparse. Just as bad, publishers are not pricing e-books so they can jump-start the market. For example, bn.com charges $19.96 for a Rocket eBook version of Tom Brokaw's The Greatest Generation from Random House--$7.50 more than the same title in hardcover. Since I, like most people, would rather have the printed book, such pricing is a problem for the infant industry.

There are signs that things may be loosening up a bit. Single-function readers like Rocket eBook aren't the only way to get e-books. Microsoft (MSFT) is about to ship its first products using a technology called ClearType, which dramatically improves the quality of text on a color LCD display. Not only do the characters look much better, but ClearType fixes the erratic spacing between letters and lines that makes electronic displays hard to read. Microsoft Reader, a ClearType-based electronic-book program, will appear on a new breed of Palm-size Pocket PCs in April. I've been playing with a prototype, and while the display--15 lines of about 6 words each--is small for serious reading, the quality of the type approaches print on paper. The technology will also be made available for laptops and, perhaps, on a new line of more booklike electronic tablets.

Publishers like the looks of ClearType but are worried that Microsoft has paid too little attention to preventing piracy of downloaded books. That's the problem Adobe Systems has tackled with PDF Merchant, designed to facilitate the sale of e-books while blocking unauthorized duplication. You can see a demonstration of the software in action by downloading a free Glassbook Reader from www.glassbook.com.

Unfortunately, Adobe's Acrobat technology works much better for high-quality printing of electronic text than reading it on-screen. Combining Microsoft's display technology with Adobe's rights management seems a natural. But the two companies don't get along very well, so don't hold your breath.

We can only hope that a marketing campaign will sell more readers on e-books and that, in turn, will persuade publishers to offer more titles at lower prices. There are some encouraging signs. Simon & Schuster, for one, will sell a new Stephen King short story exclusively in electronic form, for $2.50.

For now, the readers are useful mainly for periodicals, corporate materials, reference works, and self-published texts distributed through channels such as NuvoMedia's Rocket Library or Fatbrain.com's eMatter. Electronic textbooks, however, are waiting in the wings. Sales of e-book readers in various forms seem poised for at least a modest pickup, and that may be all it takes to interest publishers enough to make e-books a real alternative to paper.

Questions? Comments? E-mail tech&you@businessweek.com or fax (202) 383-2125

By STEPHEN H. WILDSTROM

To read a letter to the editor about this story, click here.

TABLE: Building a Market

The hardware
The most prominent contenders, SoftBook Readers and Rocket eBook, have been purchased by Gemstar International Group, which has the resources to promote them widely

The software
Microsoft is ready to introduce ClearType, which dramatically improves the appearance of text and can be used on laptops and other devices, as well as e-books. Adobe Systems has developed software to thwart piracy

The content
Prices are still relatively high for books that can be downloaded, but wider distribution of hardware and better software may make the market more inviting for publishers

More Fun for the Fingers

Aside from the display, the part of your computer that counts most in making it pleasant to use is the keyboard. Yet even when you buy an expensive desktop system these days, you're likely to get a keyboard whose main virtue is its low cost for the computer maker.

Fortunately, there are lots of good keyboard upgrades available for Windows systems. I looked at an assortment of products from Microsoft Corp. and Logitech (LOGIY) that are among the best.

I'm a fan of the Microsoft Natural Keyboard. I have no idea whether its split and angled key design helps prevent repetitive-stress injury, but I find I can type more accurately and comfortably on one. The top-of-the-line Microsoft Natural Keyboard Pro ($65) adds programmable keys that provide one-touch access to e-mail, favorite Web sites, and the programs of your choice, plus controls for a CD player and two universal serial port connectors. The $48 Internet Keyboard Pro offers similar features in a traditional straight design.

Logitech's keyboards have the additional virtue of using a wireless radio link to the computer. The iTouch keyboard ($50, or $70 with cordless mouse--pictured) includes CD controls, Internet hot keys, and a sleep button. The iTouch Pro ($110 including mouse) offers the same features in a countered design similar to the Microsoft Natural Keyboard.

Help Desk

Many readers replied to my Feb. 28 column on Apple Computer Inc.'s (AAPL) upcoming Mac OS X by taking exception to my saying the new operating system would require upgrades of existing software. A bit of clarification is in order.

Apple has built three modes into OS X to handle a variety of software. Classic mode is for existing applications. They will run but will not be able to take advantage of the advanced features of OS X, including improved crash-proofing.

The real key to the transition is the mode called Carbon. Programs written to the Carbon specification can run under both the existing and new systems. But Carbon programs make only limited use of new OS X features. The good news is that it's relatively easy to ''carbonize'' programs, and many Mac software vendors, including Adobe Systems and Microsoft, are well into the process. But the updated versions will require upgrades.

Ultimately, Mac applications will migrate to Cocoa, which allows use of all OS X features. Cocoa apps will probably also be the first to match OS X's high-style look and feel. But since development of these programs is relatively complex, they may not be available in quantity until after OS X ships, probably in late summer.

The bottom line is that Mac users will be able to use most old applications with the new operating system. But taking full advantage of it will require not one but two upgrades.

Web Destinations

If it's mid-March, it must be time for one of the year's most popular sporting events--the National Collegiate Athletic Assn. basketball tournaments. And with 128 teams in the men's and women's Division I competition playing 126 games in just over a two-week period, the action gets a bit hard to follow, even for dedicated fans. Fortunately, there's the Web.

One good starting place is the NCAA's own site, www.finalfour.net. The site features pairings, team news, and a sort of running play-by-play on games in progress supplied by Total Sports Inc. (www.totalsports.com). The NCAA Web pages are about the only place where the men's and women's tourneys get close to equal billing. If you are a small-school fan, it also offers lots of information on the Division II and III tournaments.

College basketball coaches get their due at www.nabc.com, a site for the National Association of Basketball Coaches by Total Sports. The leading feature of the site is live online chats with top college coaches. (The site for female coaches, www.wbca.org, gives no indication of special content for the tournament.)

CBS has television rights to the men's tournament, so it's not surprising that its Web site, cbs.sportsline.com, has extensive college hoops information. One novel feature is an ''alumni tracker.'' Click on the name of a college, and find out where former team members are playing in the National Basketball Assn. (North Carolina boasts an amazing 14 current NBA players.) A less pleasant novel feature: The CBS site regularly throws up commercials featuring sound and animation that obscure much of the browser window.

If the NCAA tournament is here, the NBA playoffs cannot be far behind. www.nba.com, run for the league by ESPN, offers exhaustive information on the teams, the players, and the games. Streaming audio broadcasts are also available with some games free and a subscription to all games available for $14.95. The NBA also offers a Spanish-language version of the site at www.nba.com/espanol and an edition featuring Canadian teams and players at www.nba.com/canada.

NBC is the league's broadcast network, and the www.msnbc.com site offers a large collection of video highlights, interviews, and features from the network's coverage.