Amazon Will Soon Contend with Apple's Market Power

By Don Reisinger  |  Posted 2010-01-20

10 Reasons Why Amazon Should Worry About an Apple Tablet

Unlike so many e-readers that came before it, the Amazon Kindle captured consumer attention by combining a nice reading experience with a convenient distribution platform through the Kindle e-book store.

In many ways, Amazon's strategy with the Kindle followed Apple's iPod strategy: build a device that people want and make it easy for them to get content onto that device. It worked. And today, the Kindle is the leader in the e-reader market.

But all that can change in a week. When Apple CEO Steve Jobs takes the stage at his company's press event next week to reportedly announce the launch of his company's tablet PC, a new computer that some believe will jumpstart the tablet market, it's possible that Amazon will be affected.

As tablets revealed at CES have shown, tablets, especially Apple's design, could provide the most realistic book-like experience on the market. It supports color. It can potentially work with Amazon's e-books. And most importantly, it can provide a more robust experience than the Kindle. In short, Apple's tablet could be a Kindle killer. Here's why.

1. It's about color

Amazon's Kindle doesn't support color. When reading a novel with no pictures, that might not be a problem. But consider the fact that universities and enterprises-two key sectors of the market-rely on color and it becomes blatantly clear that the Kindle is lacking. Apple's tablet won't suffer from that issue because the device will be able to display e-books in full color.

2. Web, apps and much more

The Kindle does one thing and it does it well: reading e-books. But Apple tablet could offer an e-reader, while throwing in access to iTunes, the ability to use apps, Web surfing, checking e-mail, and much more. Simply put, the Apple design could be a full-featured product. When it comes to value proposition to the consumer, that might mean more than anything the Kindle offers.

3. The e-books are easy to come by

Although Amazon's Kindle Store is a key reason for its success, it likely won't be hard for Apple to get e-books on its device. The iPhone already reads e-books from Kindle's Store, which means that service could be available on the Apple tablet. Allowing Apple's device to work with Kindle e-books would be a smart move for Amazon, since it still can generate revenue from the sale of e-books in its store. But what does it do to the Kindle? Chances are, Amazon's device will quickly turn into the also-ran.

4. It's Apple

Let's not forget which company Amazon is battling against. Apple isn't Sony or Barnes & Noble. Apple fully understands what it takes to make a tech gadget successful in an increasingly crowded and competitive marketplace. It also knows what the customers really want from a tablet device. Amazon's Kindle could be facing a tech juggernaut that leaves just scraps for the competition. It's a scary proposition. 

Amazon Will Soon Contend with Apple's Market Power

5. Consider iTunes

Although Amazon's Kindle Store provides a simple way to quickly add e-books to a Kindle from the device, consider the fact that iTunes will likely be offered on Apple's tablet. Amazon's Kindle Store might be nice, but it doesn't provide users access to music, movies, television shows, or podcasts. Remember, the gadget market is about value. The more value the Apple device provides to the customer, the more likely that customer will buy the device.

6. PDF support?

PDF support is a must-have for Apple's tablet. With that simple feature, users, especially the enterprise, will be able to view documents right on the device. Admittedly, the Kindle offers PDF support. But if the Apple tablet comes with PDF support out-of-the-box, it's just another feather in Apple's cap that could make some wonder why the Kindle would ever be the better option.

7. Apple's customer base

Apple's customer base will contribute heavily to the tablet's success. But it could also spell trouble for Amazon. Although it's well known in some circles, the Kindle is still a niche product. The vast majority of books are still sold by traditional means. Most readers aren't using an e-reader to enjoy a novel. But with Apple's name behind a tablet design, the hardware company can bring e-books to the mainstream a feat that could take Amazon years to accomplish. In the process, Amazon's Kindle could become the "other" device on the market.

8. Amazon has nothing new in the pipeline

Due to the technology limitations of e-ink, there's not much that Amazon can really do to drastically upgrade the Kindle. That could be a problem for Amazon. If the Apple's tablet does feature an e-reader component, some will be waiting to see how Amazon responds. Unless it totally changes the technology running its e-books, it's likely that the Kindle won't stack up well for years to come.

9. It's one of many

Apple's device won't be the only product on the market challenging e-readers. At CES this year, several tablet makers said that they would be adding e-reader support to their devices. If Apple's tablet becomes a success, it's likely that far more vendors will jump into the market attempting to steal some market share. If those vendors offer e-reader technology, which they likely will, it could spell even more trouble for Amazon's Kindle.

10. Price matters

Currently, Amazon's Kindle retails for $259. The Kindle DX is on sale for $489. It's not overly expensive, but it's not cheap, either. Regardless, Amazon's product is selling well at that price point. But just how much longer that will be true is up for debate. If Apple's tablet offers e-reader technology and combines that with the slew of other compelling offerings, Amazon will find itself in a bad position: the middle. The Kindle will be far more expensive than a single book, but cheaper than a product that provides a much higher value proposition to the consumer. After all, if Apple's table is priced right, wouldn't the average person opt for a device that does so much more beyond reading e-books than a device designed specifically to help users read e-books?

I certainly think so.

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