After a long wait in the shadows, E-books look set to become big business next year.

Being able to read a vast library of books, magazines and newspapers on a small handheld device is becoming increasingly attractive to consumers and manufacturers know it. The current big names in E-book readers, Amazon and Sony, look set to be joined by heightened competition in the budget end of the market.

DigiTimes reports today that big names in the netbook industry are setting their an Asus Eee branded reader is set for release by the end of the year, while MSI is also evaluating the market. With Amazon likely to expand its Kindle beyond the USA within months, 2010 really is looking like it will be the year of the E-book reader.

Hardware wars

While each manufacturer will bring a slightly different approach to the E-book market, it’s clear what works best – wireless connectivity. Amazon was the first brand to include a mobile phone radio in its readers. Its Kindle family of readers have been so popular that Sony has gone down the same route with its new Reader Daily Edition device.

Connection over a mobile phone network allows E-book readers to be 24 hour bookstores, available wherever a signal is available – convenient for users and even better for retailers’ bottom line. Budget devices from Asus and MSI are likely to rely on options such as USB mass storage for dumping files from a computer. It’s a far less convenient solution but provides a cheaper alternative for those with a smaller budget.

Format wars – The real battle

While competition is hotting up among E-book readers manufacturers, the real war will be between rival E-book formats. There are a dizzying number of formats in use right now but many are proprietary and tied to particular manufacturers’ devices. Take Amazon’s closed proprietary ‘AZW’ format – that only works with Kindle readers.

Amazon is likely to expand its Kindle brand onto other mobile operating systems, it already has an iPhone app in the US iTunes store. This will provide a bigger market for the titles in its Kindle store, the downside is that consumers are locked into using Kindle format titles on Amazon devices.

Meanwhile, the open EPUB format is the ‘MP3 of the E-book world’. Sony supports the format, as does Google. Google Books has just released over a million public domain titles in EPUB format for free download, so it’s got some heavyweight support.

The problem is that the Kindle doesn’t support EPUB. Imagine if Apple blocked MP3s from the iPod to encourage users to only buy from the iTunes store – it’s much the same.

Who will win?

It’s far too early to say. Amazon’s closed ecosystem has won rave reviews from users in the USA. Like Apple’s iTunes, it ‘just works’. Amazon’s Kindle store offers a vast choice of titles, but as Amazon deems these titles ‘licensed’ to the user, rather than bought, they can (and have already) snatched E-books back from customers when publishers change their mind on electronic publishing rights.

As the E-book market grows, EPUB is likely to be supported by a much wider range of devices. Many users may be willing to forego ease of use for portability of files and a cheaper reader. Can Amazon dominate the E-book market like Apple dominates digital audio players? Sony, Asus and others are going to put up one hell of a fight so its far too early to call a winner and it will be interesting to watch how the battle unfolds over the next couple of years.

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