E- books

Case 1: Forecasting the Adoption of E-Books
Product
p q Market Structure (=0.3)
Product Characteristics (=0.7)
Weighted Numerical Score
CD player
0.055
0.378
5
5
5/20.4=0.245
Cable television service
0.100
0.060
7
3
4.2/20.4=0.206
Home Personal Computer
0.121
0.281
4
6
5.4/20.4=0.265
Cellular telephone
0.008
0.421
3
7
5.8/20.4=0.284
Weighted Average for e-book
0.0684
0.2990

Question 1
The size of the market for e-books in the long-run:
293.7 million x 46.7% x 8% = 10.973 million
(Total US population x percentage of US population reading literature x Percentage of traditional paper books purchased online in 2003)
It will take 10 years to reach 95% penetration of the potential market.

Question 2
I predict that the sale of the e-book when it first became available is 0.751milion (pm) (Assumption: each innovator buy one book.)

Question 3
The long-run total adoption of e-books would be 10.973 million. (Total US population x percentage of US population reading literature x Percentage of traditional paper books purchased online in 2003)

Question 4
I do expect the market for e-books tend to be guided by imitators rather than innovators. According to the table above, I found that the weighted average for e-book of q (0.0684) is larger than p (0.2990).
In addition, the word of mouth takes an important role in the adoption of e-books. The information about the e-book from the innovators contribute much to the adoption of e-books since people tend to hesitate to change their old reading habit.

Question 5
S(t)=[p+(q/m)N(t-1)][m-N(t-1)]
Year 1: [0.0684+(0.2990/10.973) X (0)][10.973-0] = 0.751 million
Year 2: [0.0684+(0.2990/10.973) X (0.751)][10.973-0.751] = 0.908 million
Year 3: [0.0684+(0.2990/10.973) X (1.659)][10.973-1.659] = 1.059 million
Year 4: [0.0684+(0.2990/10.973) X (2.717)][10.973-2.717] = 1.176 million
Year 5: [0.0684+(0.2990/10.973) X (3.893)][10.973-3.893] = 1.235 million

Question 6
The adoption of e-book will be very different from digital music obtained online. The adoption of e-books face more challenges when comparing to the adoption of digital music.
To most of the listeners, there is not much difference in experience between listening to a song from an iPod and a CD player. Therefore, they have a relatively low switching cost and more willing to change their habits. On the contrary, to most of the readers, it is definitely very different from reading an e-book to reading a printed book. The feelings of holding a printed book and flipping over a physical book are irreplaceable. So readers are loyal to printed book and hesitate to switch from traditional books to e-books. Hence, it is reasonable to predict that the pace of adopting digital music is faster than the pace of adopting e-books.

Question 7
I think both of the attitudes about reading and purchasing e-content have changed a lot in recent years.
In the old time, people could read e-content via PC only. Nowadays, people are able to read e-content through various mobile devices. Therefore, they spend more time on reading e-content especially during leisure time and even commuting time. However, the quality of the reading effort is diminishing as the overload of e-content available on Internet. In addition, people tend to rely more on the e-content since it is very convenient, environmentally friendly, high mobility and high accessibility.
For the attitude about purchasing e-content, more people are willing to pay for the e-content in recent years. The advanced online payment system plays an important role. People feel more secure and also convenient when dealing online ever than before. Moreover, more well-known and large-scale publishers offer more choices of e-content for readers. Besides, in the light of the prevalent of mobile device, people have more time and chances to read the e-content regardless of the time and places. Thus, people are more willing to spend on e-content than before.
Question 8
The hardware plays a paramount important role in the adoption of e-books. No matter how amazing the e-content is, the e-books would not be popularized if the hardware were not user-friendly. However, a good hardware is very likely to boost sales of the e-books. It is because the hardware is a fixed cost while the e-books are the variable cost to the readers.
A portable hardware with proper size of monitor and high capacity is very attractive to the readers. They no longer need to neither carry the bulky printed books nor spare some places for storage. Moreover, the hardware enables readers to read comfortably when comparing to read via PC or smart phone. It is good for the readers’ eyes. Last but not least, the hardware contributed to protecting the environment as it saves much paper.
Only when the hardware preforms better than the tradition printed books, the adoption of e-books will be success.

Question 9
I do expect the size and also the pattern of diffusion are quite different globally as compared to the United States. The size and the pattern of diffusion depend on many factors. Population, culture, attitude to new products, technology and even literacy could be one of the variables of the size and pattern of diffusion.
Take Africa as an example; though the population size of Africa is much larger than The United States, the potential size of the market for e-books must be obviously different from the United States. So it is not difficult to understand that the size and pattern of diffusion of various places will not be similar to the United States.