Pad vs. Pad: Amazon Strikes First Against Apple, Then Retreats

kindle-ipadUnless you’ve been spending the past few days under a rock, you’ve heard the news about a little release from Apple called the iPad {previous coverage}. When the $499 entry-level pricing was announced, along with the introduction of an iBooks marketplace, many people wondered what Amazon’s response would be.

When Macmillan, a large international publisher with a substantial number of textbooks (among other types of books), pressured Amazon to bring its pricing and revenue share in line with Apple’s future iBook store, we found out. The initial response? Take your ebooks and see how well they do without the Kindle and support from Amazon. Both electronic and physical book titles were yanked from the Amazon marketplace. The message to Apple? We’re the big dog in online book sales, and you won’t get any without a fight.

The New York Times is now reporting that Amazon is grudgingly backing away from that position. Macmillan ebooks will now retail around $15.99, rather than the $9.99 they’ve encouraged for new release and best-seller ebook titles. Calling the new prices “needlessly high,” Amazon could also be upset that the 70/30 revenue split that previously favored them will likely now flip the other way to pose formidable competition to Apple, who will leave publishers with 70% of revenue from sales.

There are many who think the Kindle (and possibly the Nook {previous coverage}) will survive the iPad because of e-ink, which is easier on the eyes than a backlit LCD screen for extended periods of reading. Additional points in favor of e-readers: the 10-hour iPad battery life isn’t that great when you compare it with the days long battery of the Kindle; the Kindle also comes with free 3G wireless which easily beats the $30/month you’ll spend with AT&T for the same on the iPad. Those in the iPad camp remind us that even though the LCD touchscreen might not be the best choice for frequent readers, the applications will make it the choice for so many things besides reading that it could still be a great replacement device.

In the end though, no matter how hard they compete, two major ebook distribution points mean publishers win. And if the iPad and eReader market grows large enough, authors who self-publish and are willing to compete on price with major publishers could win big. Throw in whatever Barnes & Noble has cooked up for the Nook, and there’s real competition. Considering that there’s no single formidable competitor to iTunes or the App Store, we think it’s also a good thing for consumers that Amazon is keeping their hat in the ring.


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