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Summary:

Despite the threat of competing e-readers such as the Nook, an impending price war and the omnipresent threat of iPad, Amazon’s Kindle will be the winner of the e-book war. All Amazon has to do is stay true to its technology roots and focus on users.

To paraphrase Yoda: Begun, the e-book wars have.

Barnes & Noble started the week off by cutting prices on its Nook e-book reader to $199 from $259, while also introducing a new, $149 Wi-Fi model. Not to be left behind, Amazon, which helped jump-start the e-book reader craze, decided to cut the price on its entry-level Kindle model to $189 from $259. The punch and counterpunch has prompted more than one watcher of the space to declare that an e-book price war is about to break out.

Others are musing about Amazon’s fate. All this hand-wringing is old hat for our community, because Kindle hardware or not, Amazon is expected to make a billion dollars from its digital book-related business this year. From where I stand, Amazon has nothing to worry about, as long as it pays attention to a few details. (And no, that doesn’t mean sharing a bigger cut of revenues with publishers.) Regardless, there are three technological reasons why the online retail giant can and will win the e-book war.

1. Buy once, read anywhere

The day I first laid hands on Apple’s iPad I banished my Amazon Kindle to the back of the proverbial drawer. And yet, I have been spending, on average, about $10 every 3-5 days on Amazon’s site buying a book to read using the Kindle application on the iPad. In fact, the reading experience on the iPad is so superior to that of the Kindle I often find myself staying up later than usual reading a book.

In comparison, I’ve bought three books from the iBooks store and quite frankly, see no reason to go back. It has fewer options, but more importantly, I can only read those books on the iPad. The books I buy in a Kindle store will work on an Android device, as well as on an iPad, iPhone or Mac. Oh, also on my Kindle by the way, which I can take out of my drawer at any time.

This is a big advantage for Amazon, for as more people start living multidevice lifestyles, such cross-platform availability of content will increasingly become a big deal. Unlike Amazon’s Kindle store, iBooks is going to be limited to the iPad/iPhone platform — which is not good enough for me. I like the flexibility of the Kindle app, even if it offers books to me in somewhat of a less attractive format. In other words, Amazon should be thinking about Kindle as a platform that leverages other people’s hardware.

2. We go way back

Most people already associate Amazon with buying books online. Meanwhile Barnes & Noble, while a great brick-and-mortar brand, hasn’t been able to translate its offline presence into a digital one. As a customer, Amazon has all my billing information and has built a profile of books and digital goods that I like. Could Amazon’s recommendation system be better? Absolutely. But in comparison to Barnes & Noble and other booksellers, it’s good enough.

I do wish Amazon would take some time to improve the customer experience. For example, I recently bought the printed collected works of John Cheever’s short stories — after already buying it on my Kindle. It would have been great if the service had reminded me that I d already bought a digital copy and then asked if I was sure about buying an analog version. There have been other times when I’ve reordered a book I originally purchased, say, 10 years ago — it would be nice for Amazon to ask me: Do you still want it? Or, did you lose it and want a new copy? You get the drift.

What I’m suggesting is nothing radical. Mining data and deriving intelligence from it is a fast-growing field and Amazon has 15 years’ worth that can be used to its advantage.

3. It’s always about the software

When I see companies such as Barnes & Noble try and diversify by building technology products, I laugh; they just don’t have the DNA. Barnes & Noble is a retailer first and everything else later. It’s even funnier to watch the company think it can wage wars with hardware. If that was indeed the case, Samsung, Nokia and others wouldn’t be running scared of Google and Apple.

The reason the mobile industry is all topsy-turvy is because Apple and Google have made the hardware industry about the software. Sure, the latest features matter, but what matters more is the ability to create and release software at a rapid clip, thus improving the platforms on an ongoing basis. Traditional handset makers are on a product release cycle that’s at odds with such agile development.

Barnes & Noble — and any other competing e-reader makers — are going to find themselves in the same place as well. I think this is Amazon’s third technological advantage: It is, at heart, a software company that sells books and other things. Given the rapid speed with which it has been innovating with its cloud computing offerings, it’s clearly also a disciple of agile development methodologies.

Amazon should indeed be spending all its energies on furthering its app experience to make it the best book-buying and reading application on any platform. That, in my opinion, would be money well spent. The user experience is why Apple is able to command a premium for its products. Amazon can do the same.

So what about Kindle — the device?

If Amazon wants to keep the device around, it will have to transform it from a mere e-book reader to a content consumption device that matches the iPad in its capabilities. Otherwise, like the Nook, it’s already dated.

By Om Malik

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  1. Om,

    I think you are assuming that there is a large overlap between the iPad and Kindle device clientele. I am not sure if you are basing this on data already available, but why can’t there be a market for just a book, no apps, no iTunes, no browsers, nothing else. Just a book.

    Isn’t this simple device the one that most non-tech artsy users would want? Curling up in a corner with a book to me should not involve all tech heavy features including emails, chat, apps, and the like. This is what Amazon is targeting. Its roots, of being a book seller.

    B&N is waging a losing battle on eBook readers. It would have done better to license this to Sony and thought of book carts in railway stations, downtowns much like Higginbothams in India did.

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  2. I wasn’t aware you could read Amazon books on an Android device as stated in the article. I’m not finding the app in my Market, either…?

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    1. You should check out the Amazon Kindle website for help finding the app. Also check out this link. http://bit.ly/bC11RU

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  3. Yep. This is kinda what I was saying in February. It has come to pass that I lost my Kindle on an airplane somewhere, but I still have all of my Amazon stuff. I can read it on my Mac, on my PC, on my iPhone. The Amazon Store makes all the difference and now that I know that it goes on the iPad, I have yet another reason to stick with Amazon – which I always wanted to do.

    You’re right that it makes sense to make the Kindle reader smarter and take advantage of different hardware. But does it have color anywhere? It’s not a showstopper, but..

    Question. Recall the mysteries surrounding Apple’s new extended multimedia format for the iTunes Store? Was that nothing else but iBooks? Wasn’t there supposed to be something for liner notes and other extra content for music albums? Whatever happened to all that?

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  5. Just like the book market supports high-end hard back books and lower end paperback books, I think the ereader market could probably support 2 ereader devices. The high-end, almost a computer iPad style and the low-end book only ereader.

    For that to happen the Kindle needs to hit $99. Might do that by christmas.

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  6. I too recently downloaded the Kindle software to my macbook. Looking forward to my first Kindle Book purchase.

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  7. Is the Kindle device really dead/dying? I’ve got both devices I like the Kindle’s lighter weight, screen contrast in direct sunlight & longer battery life for reading books. I’ve actually found the iPad difficult to read one-handed in bed or on a red-eye flight.

    Thus does the Kindle really need to match the iPad in capability or simply be an excellent eReader (to Ram’s point)? Should they be compared apples to apples – pun somewhat-intended.

    Now if Amazon were to do away with the proprietary power/usb cable… better yet use the ipad/ipod cable.

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    1. You have the power/usb cable comment backwards. Apple uses a proprietary connector. The Kindle 2 and Kindle DX use the industry standard micro-usb connector – you’ll find this same connector on many different brands of phones (e.g., BlackBerry, Motorola Droid, HTC Incredible, etc.) and they can all interchange cables/chargers with each other.

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      1. But why continue changing USB connectors at all? This creates problems when it has to be packed for traveling. It works out better when one cable can be left in the car, one in the luggage, one in the computer at home, etc.

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      2. Don, micro USB has become standard. I doubt Amazon will change again.

        My wife’s phone that we just got last month uses the same cable that my phone came with 2 years ago. Different brand phones.

        Apple is the company that continues to use proprietary connectors.

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      3. The USB connector on the Kindle might be standard the problem is that the convertor isn’t. It supplies a higher than normal current (whilst geeky, I’m not geeky enough o remember what but it is well documented). Consequently, a PC or Mac will only trickle charge it, to get the full flavour behaviour, you have to use the Amazon charger. This is like the set up with the iPad charger as well. Of course neither the Amazon or iPad chargers tpdo the others job.

        USB for me has always been baffling in it’s ubiquity of ports and plethora of electrical implementations? I distinctly remember having had task specific Motorola, Blackberry and Apple chargers. And now Amazon too!!!

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    2. I also think that it is premature to think the Kindle as a device is dead. The two devices serve different, overlapping market segments – with some users owning and using both devices. The better user experience on the iPad – as Om mentions in his post – cannot by itself compete with all the other factors which heavily favor the Kindle – price, weight, e-ink etc. all being important. In fact, I had made a list of the top 10 reasons why the iPad will not kill the Kindle back in Jan, most of which I think are still valid – http://bit.ly/amsjC3

      There is still a huge market of serious book readers who want a cheap, light, portable device that delivers text on a screen, and don’t really care about other reading email or surfing the internet while reading. This is Kindle’s market segment.

      The iPad, on the other hand, is shaping up to be the ultimate media consumption device. It has the potential to change reading by changing books themselves – into multimedia, interactive experiences – like the Vook does.

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      1. The vook – not to be confused with the Nook – is the interactive, multimedia “book” from vook.com – a great application that can reinvent books and reading on the iPad.

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  8. Excellent article. I totally agree with these points. The Kindle vs Nook comparison based on hardware is not really the thing that matters most. In the end, consumers will come to appreciate the advantage of having their content accessible on multiple devices, easily, quickly, and cheaply. Amazon wins on that front. It’s so much about the software that even Ray Kurzweil is focusing on Blio, a new eReader software platform. You’re not gonna scare Amazon with a price cut. They have plenty of capacity to handle it. By lowering their device to $10 below the Nook, that was the message, loud and clear. And yes, Amazon do have the mindshare advantage of being known as the place to get books online, quickly and easily. More on these thoughts on my blog post: Wow. This is incredible. Both devices are now pretty damn affordable. It was about to become obvious what the best choice would be a few hours ago, but now it’s not so clear. Amazon Kindle is a great product with a huge selection. And now its $10 cheaper than the comparable Nook. But then again, the $149 wifi version of Nook has just been released! It’s a great time to be an ereader fan, I must admit : ) Can’t wait to see how low eReaders will go. Thanks for the post! You can hear more of my reaction at my blog: http://ebookreader-ben.com/let-the-ebook-reader-price-wars-begin/

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    1. Actually, you CAN access B&N content on multiple devices easily, quickly and cheaply. You use their app the same as you’d use the Kindle app on your PC, smartphone or tablet. They all sync with page furthest read, downloads, subscription deliveries, etc.

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  9. I’d beg to differ. Between the iPad and the Kindle, I still prefer my Kindle as it is way lighter, much better battery life and I can actually read it under the sun, at the beach!

    Given all that, the Kindle and the iPad are targetted at different consumer groups. The Kindle’s target is solely book readers, readers who do not want to be distracted with other fancy frills like games, and the internet. I already have plenty of other devices for such frills, why do I need it in my book reader as well? The iPad, however, is for mass market consumption, for people who read one or two books each month. Coming from someone who reads daily, the iPad is not going to cut it. The common masses is buying the idea of the iPad as a book reader because Jobs says so. The main function of an iPad is not a book reader, its a media consumption device.

    Both of them play very different roles, despite Jobs’ argument of putting the Kindle behind the iPad. Ultimately, there will be people like me who will take the Kindle over the iPad anytime, anywhere.

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    1. Isn’t the kindle reader software changing to put games on it as well? I thought I remembered seeing that mentioned lately. So, even Amazon, who makes the kindle seems to disagree with your assessment of who uses this device.

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      1. Kindle now has apps. People may write games for it, but the device is unsuitable for games unless you are talking about a crossword or sudoku.

        Amazon does not disagree with @na – They just put up an app store because everybody seems to be doing that.

        Ultimately @na is right. There is a niche for which the kindle still rules. Mainstream people however might end up with the iPad.

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  10. Nice point but what you are missing is the facts. Amazon takes a huge cut of the slice from publishers or independent authors though they are planning on going the apple way and charge only 30% or so instead of 70% or so.

    And then, the iPad is a greater device with more power than just a black and white slate. I am sure some other integrations into the iBook store can start taking place. For instance, the iPad can even play video using the html5 technology within books.

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    1. Actually Amazon paid more money to publishers before Apple helped bring about the Agency Model which charges consumers more and pays the publishers less.

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