This article was originally published in Maclean's Magazine on June 15, 2009
Canadians Have to Wait for the Coolest New Gadgets
In a university hall in New York City last month, in front of a standing-room-only crowd, Jeff Bezos, the founder and head of Amazon.com, unveiled a piece of electronic gadgetry that could revolutionize the way the world reads books, gets news, and receives information of all kinds. It was an ugly-looking slab of computer screen, but that didn't dampen the crowd's enthusiasm. The wireless gizmo, called the Kindle DX, may not be pretty - it lacks the elegant simplicity of the Apple iPod - but it does one thing virtually no other device has been able to do. With its big, crisp 9.7-inch display, it makes reading online as easy and enjoyable as doing it the old-fashioned way. And it can quickly download a library's worth of content.
There have been no shortage of e-book skeptics, but earlier versions of the Kindle have flown off of shelves. Amazon.com sold an estimated 500,000 Kindles last year - and was sold out of the device over Christmas. One analyst estimates it will earn the company over $1.5 billion in revenue by 2012. In the U.S., book sales may be on the decline, but e-book sales are surging. In Japan recently, four of the top 10 bestsellers were released exclusively as e-books. And Bezos was joined onstage by the chairman of the New York Times, Arthur Sulzberger, Jr. - "Wonderful!" he shouted at the device's unveiling. Along with the Times, the Boston Globe and the Washington Post will soon be testing their products on the Kindle in the belief it could save their industry. What Bezos unveiled was a whole lot more than a gadget. A lot of people are thinking the Kindle will be to the printed word what iTunes has been to music.
But here's the thing: you can't have one. When the Kindle DX goes on sale this summer (for a hefty US$489), it will be available only in the United States, just like earlier versions of the gadget. Amazon has given no indication that it's headed for Canada any time soon. "We haven't announced a timeline yet and we are not doing so at this point," was all an Amazon.com spokesperson would say in an email. The Kindle, which first debuted in the U.S. in 2007, joins a long line of new and potentially groundbreaking technologies that are available in the United States but not in Canada. Whether it's the hugely popular online video service Hulu.com or ring tunes for the iPhone (another product that Canadians waited months for), we're out in the cold. While frustrating for consumers, this lag is also a potentially crippling problem for a country with any ambition to be a player in the digital economy. Canada may be a wealthy, wired, well-educated place, but it is also quickly becoming one of the Western world's technological backwaters.
Amazon.com is not what you'd call an insular company, and you can hardly accuse it of being overly obsessed with the American market. It has a successful Canadian division, Amazon.ca, and fully half of its business comes from outside the U.S. But there are a few big reasons why we can't get U.S. technology like the Kindle faster. One is market size, says Warren Shiau, a technology analyst with the Strategic Counsel. If the Kindle DX is a hit, then Amazon.com will have all the business it needs in the U.S. The added cost and hassle of the Canadian market just isn't worth the time and effort in the early stages. That's what happened with the popular Flip Video brand of palm-sized video recorders. Flip just recently said it will start selling its full product line in Canada, months after it was being raved about in the U.S. But an even bigger roadblock is rights issues. Once a company decides it has time for Canada, making the move isn't as simple as it might seem.
Behind the scenes, there are often some steep barriers that can at the very least severely delay new technologies from landing in Canada. In the case of the Kindle, Amazon.com needs to strike a deal with a wireless carrier - like Bell or Telus - which uses the same technology as the Kindle to download books and newspapers. Analysts say this is the single biggest sticking point. Establishing rights to publish American books in Canada electronically is also an issue that can complicate a smooth border crossing.
Negotiating these kinds of technicalities can be time-consuming, especially in Canada. When Apple decided to start selling iPhones here - only after the initial buzz in the U.S. started to cool - it had to go through Rogers Communications. It's still the only cell carrier with the advanced wireless technology the iPhone uses. "Everybody has got a market that they have a vested interest in and in the Canadian market there are a few powerful players you've got to deal with," says Shiau, about the kinds of hoops that tech companies must go through. Neither the carriers nor the tech companies can really be faulted for wanting to get the best deal possible, but it does take time and can influence where a company decides to push new products, he adds. Ultimately, it makes sense for manufacturers to target markets "that are accessible with the least modifications or negotiations." Canada doesn't always fit the bill.
If there's one other revolutionary service, next to the Kindle, whose absence seems to infuriate Canadians, it's Hulu.com. The online television site streams popular U.S. shows like Saturday Night Live and House as well as sports (including NHL games) and news, usually the day after they first air. With the backing of NBC, ABC and Fox, it's set to overtake YouTube in ad revenue. But try and access this wealth of free entertainment and you get an apologetic message that videos "can only be streamed from within the United States." Why? "Licensing, licensing, licensing," says Michael Geist, a law professor at the University of Ottawa who specializes in TECHNOLOGY and the INTERNET. When Canadian broadcasters, like CTV or Global, buy a U.S. television series, they also typically end up with the online rights to those shows. Hulu would have to convince those networks to give up those rights, or wait until those contracts are renegotiated by the U.S. networks, says Geist. Licensing issues have also prevented Canadians from accessing Skype's much-anticipated Internet-based phone service for the iPhone.
About the only good news Canadians have had is the announcement last week that Apple will start selling current episodes of U.S. sitcoms on its iTunes Canada store. Unlike Hulu.com, it's not free. Single episodes will cost about $2.50 to download. Regardless, it's something many Canadian fans of U.S. television have been waiting to hear for years.
Akihabra is a section of Tokyo, Japan, that's often referred to simply as Electric Town. With its bright lights and bustling collection of high-tech vendors, it's like Times Square on speed. If Canada is in the technological slow lane, Akihabra is the autobahn, where companies end up when they want to unveil any new technology and try it out on consumers.
There are good reasons why Canada should be trying to be more like Akihabra, and it's not just to placate impatient consumers. Ken Coates is the dean of arts at the University of Waterloo and has written about technology and innovation in Japan. He argues that there are some big economic advantages to being an early adopter of tech products. To begin with, most tech companies are inclined to set up shop in a place where they can easily test new technologies. "If your major markets are outside the country, it's really hard to stay on the cutting edge." RESEARCH IN MOTION, which makes the BlackBerry, is based in Waterloo, Ont., but even it tends to try out new products in the United States before they're offered here. "If you have to go launch in other countries and worry about how that works out, that can be really time-consuming and really frustrating for an organization," he says.
Even more troublesome is the fact that countries that are slow to adapt lose out on the immeasurable spinoff benefits that technologies bring. Take, again, the iPhone. After it was launched, hundreds of U.S. companies and individuals started developing applications for it. An entire industry has emerged around this one piece of technology. And while Canadians waited for the iPhone, they also missed out on the early stages of that development. "The technology is only the starting point for innovation," says Coates. "The future of the high-tech economy is equally on the application side." The same thing is happening with the Kindle. "The Kindle is a terrific device," says Geist. "It's the sort of thing that would be great for Canadian authors and books. But the spinoff effects here, the benefits that accrue to creators, are being lost."
Compared to the U.S., Canada is fast developing a reputation for having a market that's unfriendly to new technology. We may be highly regarded for our mathematics and engineering and science, but not for being a place that can translate that into commercial, high-tech applications, says Coates. Our smallish size isn't much of an excuse either - places like Finland, Israel and Singapore are regarded as cutting-edge nations. And that is a strike against Canada. "As this new economy unfolds this stuff will be 10 times as important as it is now and we're either on top of this or we're lagging way behind."
Canadian publishers, meanwhile, are anxiously awaiting the arrival of the Kindle. It will help give new life to Canadian books and help them reach new markets, says Diana Barry, the director of digital services with the Association of Canadian Publishers. Publishers are already racing to put their books into digital form so they'll have plenty of content to hand over to Amazon.com if and when it brings the Kindle north of the border. There are no rights issues standing in the way of Canadian books: they're already being sold on Sony's e-book reader, which is available in Canada (though it lacks the wireless capabilities that have people so excited about the Kindle).
There is no easy way to repair Canada's sinking high-tech reputation. Coates argues that Canadian consumers and electronic retail stores could stand to be more aggressive, and demand that these "only in America" products be brought here sooner. Aside from the occasional Internet rant, there's been no push to try to speed the arrival of the Kindle. Others suggest that a more competitive communications industry would make it easier for companies to negotiate service agreements. For now, the only real alternative is patience. But that's another commodity that's in short supply in the world of consumer technology.
The retail landscape in the United States is second to none - far richer and more diverse than Canada's. With a market 10 times bigger and more densely populated in most areas, the U.S. has more competition and more players. Here's just a few stores you won't find up here:
J.Crew, Victoria's Secret, Target, L.L. Bean and Trader Joe's.
Americans have different taste palates than Canadians - they generally like sweeter and saltier foods. Often, the added cost of making a version of a product that suits Canadian tastes isn't worth the effort. So only Americans get things like:
Reese's Nutrageous, PayDay chocolate bars, Cherry Coke, Parmesan-flavoured Goldfish crackers and Cookie Crisp cereal.
The size and diversity of the U.S. market means restaurant chains are more profitable and easier to run than in Canada, says Doug Fisher, president of the restaurant consulting firm FHG International. So there are more options. Only in America will you find:
In-N-Out Burger, White Castle, Peet's Coffee & Tea, Baja Fresh, P.F. Chang's, Chick-fil-A and Nathan's Famous.
Maclean's June 15, 2009