Random House may soon bring catalog to iBookstore

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Date: Tuesday, March 1st, 2011, 05:16
Category: iPad, News

If you can get the big fish, the others will follow.

Per AppleInsider, Random House, the world’s largest book publisher and most high profile holdout from Apple’s eBook digital download, could soon bring its catalog of top selling novels to the electronics maker’s iOS ecosystem.

In a brief statement to the media Monday, Random House said that it has agreed to “the agency model for e‐book sales” in the U.S. effective Tuesday. That means that going forward, “Random House will set consumer prices for the e‐ books we publish, and […] will provide retailers with a commission for each sale,” the publisher said.

The concession could bring to an end a near year-long standoff between Random House and Apple’s iTunes-based iBookstore, which operates on the so called ‘agency model’ that allows the company serving the content to take a cut of sales. For its iBookstore, Apple employs the same 70-30 split that has seen renowned success on its App Store for software on the iPhone and iPod touch.

“The agency model guarantees a higher margin for retailers than did our previous sales terms,” Random House said. “We are making this change both as an investment in the successful digital transition of our existing partners and in order to give us the opportunity to forge new retail relationships.”

The statement appears to imply that the publisher could be on the verge of announcing plans to bring its catalog to Apple’s iOS devices though the iPhone and iPad maker’s iBookstore. Currently, iOS device users can only purchase and download from Random House’s digital catalog through Amazon’s Kindle app for those devices.

In the lead up to the launch of Apple’s iPad last April, Random House executives were said to be exploring the adoption of the agency model with their authors and agents before agreeing to Apple’s terms, which dictate that Apple receives a 30% cut of all sales on the iBookstore. At the time, chief executive Markus Dohle said his company hadn’t ruled out reaching a deal before the April 3rd, 2010 launch of the tablet device, but added that he was proceeding with caution.

Under the traditional business model, resellers have bought books from publishers at discount prices and then marked them up to make a profit through sales. But Apple’s agency approach has the publishers set the prices paid by consumers — something Random House executives were concerned could lead to considerably lower prices, and thus lower profits.

Word that Random House could join on the iBookstore five of its biggest competitors — HarperCollins, Hachette, Penguin, Macmillan and Simon & Shuster — comes just two days before Apple is expected to take the wraps off its second-generation iPad in San Francisco, a device that is rapidly altering the landscape of the publishing industry.

Cool stuff if it happens and stay tuned for additional details as we get them.

Analyst: Apple may be looking into offering lower-priced/prepaid iPhone option

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Date: Tuesday, March 1st, 2011, 05:33
Category: iPhone, News

A series of comments from Apple Chief Operating Officer Tim Cook indicate that Apple doesn’t want its products to be “just for the rich” have fueled speculation that the company is interested in offering a cheaper iPhone.

According to Forbes, Bernstein Research analyst Toni Sacconaghi met last week with Cook, Apple Chief Financial Officer Peter Oppenheimer, and Vice President of Online Services Eddy Cue. The analyst came away with the impression that Apple is “likely to develop lower priced offerings” in its handset business.

Cook also reportedly said that Apple is planning “clever things” to compete in the prepaid handset market. He also said that Apple is “not ceding any market,” and the company doesn’t want its products to be “just for the rich.”

Cook’s comments, and the analyst’s interpretations, come soon after two prominent publications claimed that Apple is working on a new, smaller, US$200 contract-free iPhone that it could sell directly to customers and bypass wireless carrier contracts. Both Bloomberg and The Wall Street Journal said that Apple’s alleged plans were in an effort to compete with Google’s growing Android mobile platform.

Going against the tide, The New York Times rebuffed those two reports only days later, and said that Apple is not developing a smaller handset. However, it was reported by the Times that Apple has explored opportunities to create a less expensive iPhone.

In his meeting with Sacconaghi, cook reportedly referred to the iPhone as “the mother of all halos,” as the handset has expanded sales of Apple’s other devices, particularly in emerging markets. Apple has long referred to sales of the iPod — and later iPhone — as having a “halo effect” that drives sales of Macs.

And one emerging market where Apple has found great success in a short period of time is China. Cook reportedly acknowledged that Apple has spent “huge energy” in China, and also noted that it is a “classic prepaid market,” which would be an ideal candidate for a cheaper iPhone.

The company is also said to be looking to expand its carrier partnerships. Oppenheimer said that Apple has 175 carrier partners, while rival Research in Motion, maker of the Blackberry, partners with 550 carriers.

Cook also said he believes the tablet market will eventually be bigger than the PC market, and that competition for tablets will be even more intense than with smartphones. He also hinted that the company has interesting new things in its product pipeline.

Finally, Oppenheimer also said that Apple’s current capital structure is not efficient. He said the company is likely to use its cash to secure supplies of key components, much like the recent secret US$3.9 billion deal Apple recently revealed it made with component suppliers.

Stay tuned for additional details as they become available.