Monday, May 17, 2010

The Paper Business - What's next ?

The history of paper as a commodity is very interesting and one which really reflects many aspects of our humanity. The fact that it helps us communicate in a variety of ways (including for sight-impaired through braille) is a testament to its importancefor us as humans, because we know humans are social beings and it is "in our DNA" to communicate.

Starting from the ancient Egypt in approx 3700 BC, "papyrus" replaced clay tablets, and gradually perfected -- and we should give a nod to the Chinese during the Han Dynasty around 105 AD for really improving the media.

My dad tells me that when computers first became more prevalent in business in the 1970's, paper companies were in a bit of a nervous quandary because they felt that paper sales were going to drop dramatically since "word processors" were going to eliminate errors and eventually the paperless office would come into full force. Ironically, paper sales actually skyrocketed because the "dot matrix printer" made it so much easier to just reprint and reprint. Paper sales went through the roof !

Fast forward to 2010. The concept of "going green" permeates every part of our lives, including politicians trying to convince us that he or she is "greener" than his or her opponent. People are seeing the advantage of reducing paper use in many ways, and many email signatures I've seen say "Please save the environment - think twice before printing this email".

Adobe's "Portable document format" (PDF) technology has matured - allowing people to fill out applications online with no use of paper whatsoever. Testing centers are now many times taking tests on computer - reducing the need for me to find several "number 2 pencils". The list of paper-reduction efforts is broadening.

Now we have e-book readers like Kindle and the Sony Reader. Publishers are tracking closely the growth of this (sure to grow even more) industry. Ironically, many "ebook reader" metrics I've seen don't even include the grandaddy "iPad" because it's not marketed really as one, though in many ways its the biggest threat to "paper" publishing and the greatest boon to "e-book" publishing.

Here are some interesting graphs: The first one shows paper consumption by country in 2006.

As expected, US is very high , followed by Germany, UK, and Japan.

Keep in mind these are not by any means 100% scientific but still a decent indicator of who is using paper more.

This chart is 2006 - several years before the "true emergence" of the e-book reader wave of popularity.

Next, let's look at another graph -- which shows the general trend of e-reader sales worldwide. I think the juxtaposition of these two graphs can tell an interesting (almost intuitively simple) story about where we can expect paper sales (or book sales) to trend over the coming 5 years. Keep in mind the left axis represents thousands of shipments.
This means that in 2008 approx 1 million e-book readers were shipped, yet in 2013 we're approaching 28 million ! I believe this number can be underestimated, in light of a recent article I read remarking about the potential number of iPad sales in 2011 - potentially 30 - 40 million worldwide !

One must believe there is a correlation between the number of e-book readers that are sold and the reduction in "paper" books, magazines, newspapers, etc that are sold.

Easy conclusion to make -- and one which bodes as another interesting challenge for the paper industry.

Well, for me personally, I just hope this all makes my backpack lighter - I'd much rather carry a backpack with one iPad in it that 40 pounds of books !