When Russian President Dmitry Medvedev addressed Ukrainian students this May during a visit to Kyiv, he tried to ingratiate himself by telling the audience how he had been reading Ukrainian-born classic writer Nikolai Gogol on his iPad. Right author, wrong e-reader.
While Medvedev was acknowledging that Ukrainians have equal rights to Gogol, he ignored the fact that Ukraine now also has claim to an e-reader, a portable electronic device used to read books. Ukraine’s product is called Pocketbook. While the electronics is produced – not surprisingly – in Asia, the software and business that markets and sells it are Ukrainian. And like Gogol, it has become an export hit in Russia as well.
The Ukrainian Pocketbook e-reader range is the brainchild of Oleh Naumenko, now vice president of the company Pocketbook Global, which is headquartered in Kyiv. “Everything started with a traditional work meeting where a colleague showed around his new e-reader, which, by the way, I still have in my possession,” Naumenko recalled. “I immediately flared up with the idea to make our own, but no one understood and said it was a completely different market and we did not have the knowledge and resources. So to start with, I just did it all myself – production strategy, promotion, and thought up the name, the logo and the development strategy.”
The technological revolution that filled Naumenko with enthusiasm, and has made a whole generation of e-readers possible, is known as e-paper technology. Basically, this is an electronic display with paper-like affect. In contrast to liquid-crystal computer displays, e-paper is just as kind to the eyes as normal printed paper, has spectacularly low energy requirements, allowing you to read for a month without recharging batteries, and remains fully legible in bright sunlight.
As an eye-friendly reading experience, it beats not just traditional computers, but even Medvedev’s beloved iPad hands down. But it also beats the good old book for handling – e-readers such as the Pocketbook are feather-light and can easily be held in one hand.
This was manna from heaven for Naumenko, who at only 29 is a digital native, but one who, as he says, comes from a “dynasty of printers.”
“In 2002, I graduated from the very same institute of publishing and printing from which both my parents had graduated, and immediately entered state service at Ukraine’s largest state-owned printing plant,” he said. By the time he conceived Ukraine’s very own e-reader, he had already risen to become marketing manager for the holding. The holding’s head, Ihor Popov, was the main investor in the business.
While the platform devices are manufactured by Taiwan’s Netronix, what makes this product Naumenko’s baby is the tailored programming, “The main idea in my strategy was the unique multi-functional program which was then developed by a team of Ukrainian IT specialists.” The device uses the Linux open-source operating system.
“In June 2007, we started writing the software and registered the trademark, and by September 2008 the first model was ready and sales started,” Naumenko recalled. “The first batch of books we sold consisted of only 26 e-readers.
A month later, we had marketed and sold 1,000. By the end of the year, we had sold 3,000 readers and went into 2009 without a single model left on our hands. And this has been our dilemma right up to the present. We have no problems with buyers. We cannot turn out enough of the readers. We sell all we have in two weeks, and then have to wait two weeks for a new batch. We also quickly started exporting to Belarus, Moldova, Kazakhstan and Russia.”
While Ukraine’s economy nosedived and tailspun through 2009, Pocketbook surpassed all expectations in terms of sales, as the new technology sparked a revolution in reader habits. Overall e-reader sales in the Commonwealth of Independent States were almost doubling over each quarter of 2009, albeit from a very low base. Pocketbook sold 142,000 devices in 2009, earning $37 million, with around 60 percent of the devices sold in Russia, and most of the rest in Ukraine. About 80 percent of sales were made via internet shops. With e-readers continuing their triumphal march into 2010, the company expects to earn $150 million this year.
In terms of competition, according to market research organization Smartmarketing, Ukraine’s pocketbook took 43 percent of the Commonwealth of Independent States market in 2009, with runners-up Sony taking 24 percent, although most of the Sony models are imported unofficially. Smartmarketing expects the market to double again in 2010. “Our two main competitors – Sony and Amazon (Kindle) – do not have official representation in Ukraine, although they have a not insignificant share of the market,” says Naumenko. “Therefore we feel we are strong leaders, although we are not going to rest on our laurels.”
The takeoff has created huge challenges in terms of production and supply. “Our partnership with Netronix has helped us organize production in a very short space of time and lower the cost of the products, while increasing their quality,” said Naumenko. “We already have offices in Germany and the U.S., and official distributors in the Baltic states, Balkans and Israel. The next markets we have in our sights are South Africa, New Zealand, Brazil and the United Arab Emirates,” said Naumenko.
Oleh Naumenko
The driving force behind Pocketbook’s explosive expansion in the CIS, despite its $250-300 price range, is that users can tap the Internet for free or low-cost contents, to an extent that is unknown in the West. Users who download for free can return the cost of their investment after twenty or thirty books, so bookworms are in for huge savings. “You can find any book you want online for free,” the sales assistant in the Portativ chain in Kyiv that sells e-readers said cheerfully.
This is a major and defining difference to the way the e-reader market has developed in the West, where it has been launched precisely by existing booksellers such as Internet giant Amazon and chain store Barnes & Noble as an alternative sales channel for copyright content, with prices mostly the same as for hardcopies.
Across the CIS, in contrast, the Pocketbook is loved not least because it supports almost all file formats. This makes it easier to find the text you want at low or no cost online. Even licensed literature is cheap in order to compete with pirate versions. For instance, Pocketbook’s own e-book site Bookland.net.ua, offers Sergei Lukyanenko’s recent fantasy smash-hit “Night Watch” for only Hr 4, compared to a hard copy price on ozon.ru, Russia’s equivalent of Amazon, of around $12. At the same time, the unauthorized file is available entirely for free from a large number of pirate sites.
Naumenko says he is now expanding cooperating with publishers. “When we started talks with publishers, they were very suspicious. But cooperation and mutual benefits are gradually overcoming the initial caution. We are concluding agreements with publishers and distributors of electronic books. A great problem in this respect is the absence of appropriate legal base, but every day the number of electronic books grows thanks to us.”
Besides the huge cost savings it offers bookworms, the pocketbook also resolves a key logistical problem in Russian-language reading. With Russian-language literature specializing in weighty tomes such as Fyodor Dostoyevsky’s Karamazov Brothers and Leo Tolstoy’s War and Peace, and the overcrowded metro the nation’s primary reading room, an e-reader reconciles these contradictions very neatly.
In Kyiv’s metro, this means a pocketbook reader can now be spotted on each journey. Katya Ivanchyk, 25, says she finds the pocketbook not just fashionable, but simply very convenient. “The only thing it lacks is an easy way to highlight or underline something, although there is a function for making notes. That means I use it mostly for reading fiction rather than any professional literature,” she said. Ivanchyk was reading the Russian translation of British sci-fi comedy classic “A Hitchhiker’s Guide to the Galaxy,” available for free online.
Anton Kovalchuk, 22, was reading Swedish author Stieg Larsson’s “The Girl with the Dragon Tattoo.” The Russian translation is available free online. “I get most books for free, or by paying a maximum of Hr 10-20,” he said, “and use the pocketbook at home as well.”
Andriy Smorodinskiy, 32, is reading Russian writer Vladmir Sorokin’s “Ice,” also downloadable for free, and said he has over 150 books stored on this device. “It’s not a pocketbook,” he joked, “it’s a pocket library.”
