"Nation of readers" gets its own e-reader

By bne IntelliNews August 20, 2010

Graham Stack in Kyiv -

One of the former Soviet Union's claims to fame was to be a "nation of readers." Now this ex-nation has got its own e-reader, in the form of the Pocketbook devices now widely visible in the region's metros, the brainchild of a Kyiv-based company.

Oleg Naumenko, the 29-year-old Ukrainian entrepreneur who launched the best-selling Pocketbook e-reader on the Commonwealth of Independent States market, epitomises the shift in technologies the new product entails. Hailing himself from a dynasty of printers - he graduated from the same renowned typographic institute as his parents, both printers, and went to work for a state-owned printing plant - when he encountered the first e-reader using electronic ink technology that imitates the eye-friendliness of paper, he fell in love with the new technology immediately, while most colleagues were horrified.

Not only did he embrace the concept, he decided to make one himself for the Russian-language market.

Do not reinvent the wheel

Naumenko's stroke of genius was to realise that an e-reader designed for the Russian-language market could profit from the huge amount of free (ie. pirated) files the Internet is awash in, without itself infringing in any way on copyright laws. The drawback to date with such files was the inconvenience of reading from printouts or LED displays. Naumenko's Pocketbook e-reader range, which costs around $300, does not come cheap, but users recoup their investment quickly if they use it to substitute for buying hard copy.

Naumenko admits the idea was not purely his own. "Initially, we discussed all the requirements for any CIS e-reader with real users of e-readers on professional forums. Many of them we later employed."

The second clever thing he did was to realise that in times of globalisation, it would be crazy to reinvent the wheel and attempt local production of devices. Russia notebook producer Rover Computers, which attempted this strategy with its own production facilities in Vladimir Region, declared in July it would close its plant and launch a new tablet line using entirely imported platforms. Naumenko avoided any similar costly mistake and instead found a partner, Taiwan's Netronix, to supply reliable platforms right from the start.

Then it was a question of relying on Ukraine's home-grown programming talent to develop a flexible reader capable of running as many formats as possible, to maximise the files downloadable to it. And keeping to the flexibility doctrine, the programming used Linux open source code, meaning that users could create and publish their own add-ons to improve the device.

The Pocketbook story illustrates how quickly it is possible to implement a new business idea using the Internet and Asia. "In June 2007, we started to write the first version of the firmware and register the brand. By September 2008, we had the first model and started sales. By the end of 2008, we had sold 3,000 and we sold out," recalls Naumenko.

Good crisis

The crisis year of 2009 was a breakthrough for Pocketbook; it sold 142,000 devices in 2009, earning $37m, with around 60% of the devices sold in Russia and most of the rest in Ukraine. According to SmartMarketing, Pocketbook took 43% of the Russian market, with Sony coming in second with 24%. The success is expected to continue in 2010, with the company expecting to earn $150m.

Illustrating how fast this has all happened, despite last year's rocketing sales figures, only now is Pocketbook starting to build up a sales network - 85% of 2009 sales were made via the Internet. Meanwhile, Naumenko also got an e-book store up and running, where licensed files cost a fraction of hard copy.

And to round off what has been a meteoric rise, in July CIS mobile phone giants Megafon and Mobile TeleSystems both confirmed they were in talks with Pocketbook to use the product when they launch their own branded e-reader product lines.

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