Amazon Kindles The Flame Of Competition With the iPad
posted Friday Feb 12, 2010 by Jon Wurm
In the left corner weighing in at 10.3 ounces. The pride of the e-book reader industry. The Amazon Kindle! In the right corner, the challenger, weighing in at 1.5lbs., the Apple iPad! Wait a minute, this match up seems a little one sided. After all the iPad is more than just an e-book reader. Many of you may be wondering what in the world Amazon is thinking by directly competing with the iPad. Apple's new pride and joy turned up a little over two weeks ago and Amazon wasted no time releasing some impressive numbers regarding the Kindle in Q4 last year. There was a 42% increase in sales and a 71% increase in net income. Amazon execs are expecting a promising year for both versions of the Kindle, especially since 6 Kindle books are sold for every 10 physical books. Their CFO, Tom Szkutak stated, "We believe that readers deserve to have a dedicated device." That reasoning certainly has worked well for them but what do others think about the iPad as a competing e-book reader? Goldman Sachs analyst James Mitchell said,
They would argue that (the iPad is) a tangential rather than a direct threat because there are people who want to buy a reading-only device. Amazon can also argue, that the Kindle is much cheaper, offers 3G connectivity without a monthly phone bill, has a battery that lasts several weeks, and is easier to read thanks to its e Ink technology, which resembles paper rather than a backlit screen.
The iPad has started to cause some pricing related problems for Amazon however as larger publishers like Macmillian are trying to force them into switching to an "agency model" where the publishers charge $12.99-$14.99 for e-book versions of hardcover and bestseller titles and then pays Amazon a 30% commission. Amazon would make more money under the agency model that Apple uses to sell e-books in their iBook store but they would also lose their price advantage over Apple they have now by offering those same types of e-books for only $9.99. Besides all of this Amazon recently opened up 50 jobs in their hardware development section called Lab 126 and expect to release a new Kindle with an improved user interface that will offer touch screen capabilites and full internet capabilites, including flash, by the end of this year.
I understand the iPad isn't a dedicated e-book reader and has many other functions, none of which can really be considered "revolutionary," as Steve Jobs put it because it doesn't actually do anything an iPhone or iPod Touch can't do except be bigger and not fit in your pocket. In my mind the Kindel is the clear winner here. It offers the best e-book experience and that's all it's meant to do. We have smartphones and netbooks for the rest. Not to mention that Amazon is fighting to keep the price of e-books down while Apple is encouraging publishers to charge more for no reason. Hey Apple, thanks for nothing.