It’s happening now
Replaced by an influx of e-books, textbooks (and the companies who make them) are falling from favor. When Apple Inc. (NASDAQ:AAPL) released its iBooks application last year, for example, Apple Inc. (NASDAQ:AAPL) processed over 350,000 textbook downloads within 72 hours. Today, as e-books continue to gain popularity, Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL) hold 62% and 10% respectively of e-book sales, respectively.
Some readers may be concerned about Apple Inc. (NASDAQ:AAPL)’s recent reprimand for colluding with e-book publishers to gain market share, but I don’t think the lawsuit will have a large impact on Apple Inc. (NASDAQ:AAPL)’s e-book sales. The Justice Department isn’t seeking damages, and market share that Apple Inc. (NASDAQ:AAPL) snagged from Amazon.com, Inc. (NASDAQ:AMZN) won’t disappear overnight.
On a personal note, the public high school in my area is gradually transitioning to an e-book-only system. Already, each teacher was given an iPad, and students are to be outfitted with them as well (note that the students must return the iPad each year). Administrators say that the plan will save money over time because the school won’t need to purchase thousands of costly textbooks every year.
Final Thoughts
Which stocks will make a killing on the shift to e-books? First, tablet producers Apple and Samsung. The two tech companies own 58% of the tablet market, with Apple in the lead at 40%. Being the first mover in a market is a major advantage, and Apple effectively created the tablet market from scratch.
Second, Amazon.com, Inc. (AMZN) and Apple are in position to corner the digital textbook market – both have various deals with publishers that will make market penetration difficult for future competitors. And if history is any indicator, taking down an industry’s major players is a difficult feat.
Lawsuits aside, both Apple and Amazon.com, Inc. (AMZN) will benefit from a vastly expanded e-book market in coming years. Apple’s e-book sales will help drive iPad growth, while Amazon.com, Inc. (AMZN)’s large market share will push both Amazon’s Kindle tablet and Kindle e-reader sales.
There is more to the tablet boom than a declining PC industry. Digital textbooks are here to stay.
The article Education’s Hot New Trend originally appeared on Fool.com and is written by Marie Palumbo.
This article was written by Randy Holcombe and edited by Chris Marasco. Chris Marasco is Head Editor of ADifferentAngle. Neither has a position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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