According to Reuters’ copy of the filing, Apple stated:

“Apple’s entry into e-book distribution is classic procompetitive conduct” that created competition where none existed, Apple said in its court papers.

“For Apple to be subject to hindsight legal attack for a business strategy well-recognized as perfectly proper sends the wrong message to the market,” it added. “The government’s complaint against Apple is fundamentally flawed as a matter of fact and law.”

Apple also denied that the government “accurately characterized” the comment attributed to Jobs.

The “comment attributed to Jobs” is referring to a January 2010 email from Steve Jobs in which he seems to suggest how to set prices of e-books between $12.99 and $14.99.

The “fundamentally flawed” characterization of the case by Apple in the latest filing is a slightly more agressive version of the company’s initial response to the suit last month, when Apple called the accusations from the DOJ “simply not true.”

In April, the DOJ filed suit against Apple and five publishers – Hachette, Simon & Schuster and HarperCollins (who quickly agreed to settle), Macmillan and Penguin — accusing them of colluding to keep Amazon out of the e-book market unless it changed its pricing structure.

To get up to speed on the case since then, see my paidContent colleagues’ “Everything you need to know about the e-books lawsuit” post.

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Apple turned on streaming of purchased TV shows on the Apple TV for customers in the UK, Canada and Australia on Wednesday night. The change does not even require a user-initiated update, and it should be available on all current Apple TVs in those countries right now. It’s good for users, and it’s great for Apple, since it proves yet again that where the international market is concerned, Apple is ahead of the game on a global scale.

To use the new TV show streaming service, users need only an active Internet connection, an iTunes account and to make purchases of shows available for streaming, which you can do directly from your Apple TV. The selection isn’t great right now; only Aardman Studios, A&E, History Channel, PBS, PBS Kids, Vivendi Entertainment and Viz Media appear to have made their content available as of yet. But it’s a start, which is more than can be said for Apple’s biggest competitor, Amazon.

Apple is at least two steps ahead of Amazon in terms of making its content available internationally. Users still have to be in the U.S. to use Amazon’s VOD services, for instance, regardless of their device. Amazon Music has a bit more reach, with availability in a few European markets. Apple, on the other hand, not only offers both video and music stores to many worldwide markets but has also already managed to secure deals that allow for iCloud remote backup, automatic downloads of purchases in select countries and now TV content on the Apple TV.

Reach and an outsize share of the digital market probably account for much of why Apple is able to successfully negotiate international rights deals more easily than Amazon, but it may also be the case that selling abroad just isn’t as much of a priority for Amazon at this point. Still, whatever the reason, this latest development for the Apple TV, along with the likelihood that Apple is working on bringing iTunes Match to international customers sometime in the new year, puts Apple’s ecosystem out front. That could be a key deciding factor for keeping it ahead in the tablet game, now that the Kindle Fire is out and selling well, though again, only in the U.S. for now.

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Sterne Agee analyst Shaw Wu is predicting iPad shipments will be “a little light” for the last quarter of this year, reports AppleInsider. As a result, Wu says he expects Apple to ship 13.5 million iPads instead of the 15 million he’d originally predicted. Wu blames some of that on tablet shoppers opting for the Amazon Kindle Fire this holiday. But he also blames another Apple product — he says some people are looking at iPads and choosing a laptop instead: the MacBook Air.

Wu’s report comes a day after Cannacord Genuity’s T. Michael Walkley told his clients that he is also changing his expectations for the iPad from 14 million units sold to 13 million this quarter, which he also attributes to the Kindle Fire. He is estimating Amazon’s tablet could grab as much as 20 percent of Apple’s tablet unit share during the end of this year.

To be clear, Apple’s tablets account for three-quarters of all tablet sales right now. And even though those two analysts are downgrading their expectations to 13 to 13.5 million units, that would still go down as a record for quarterly sales of the iPad for Apple. (Previous record: 11.12 million sold last quarter.) But, as Walkey notes, that current 74-percent unit share could be reduced to just over half of the market by the end of the holiday quarter. So while Apple is still clearly in a dominant position, slightly fewer sales this quarter could be just the beginning of what’s to come as the Kindle starts to build up steam.

The entire tablet landscape is going to look much different a year from now. Corning’s recent earnings report showed that the maker of popular Gorilla glass for tablets will have to cut its global glassmaking supply by 25 percent “amid a glut of supply” by the end of this year due to a weaker demand for tablets.

That’s probably less to do with iPads, according to the analysts at UBS, and more to do with other PC makers. Some of them may start ceding the space to the likes of Apple and Amazon over the next year, and Dell has already begun: on Tuesday it stopped selling its 7-inch Android tablet, just months after ending sales of its 5-inch tablet.

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Steve Jobs sold 383,000 copies in the U.S. during its first week of sales, and it is also one of the fastest-selling nonfiction titles ever in the UK. The title broke records in many international markets, too, including Taiwan, where preorders were higher for it than for any previous book, and in Brazil, where it became the best-selling e-book ever in the country just two weeks after its initial release. Production plans for a movie are already reported as under way, after Sony Pictures acquired the rights.

I would wager there are a few records left for the Steve Jobs biography to break yet, since a lot of the holiday shopping season still remains, and interest in the book will likely spike when the paperback version is introduced. Subsequent major Apple product launches could also help renew interest in the company’s original driving creative force, so expect sales to remain strong throughout the new year.

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Amazon’s first foray into the tablet market, the Kindle Fire, is widely perceived as the first real competitor to the iPad. Whether that’s true or not will be discussed later, but for shoppers looking to gift a tablet for the holidays, it can be hard to decide which is the better gift. That’s why we’re going to compare the two on four points: hardware, software, ecosystem, and price.

Hardware

The hardware on the Kindle Fire is simple. It’s a half-inch thick slab of black plastic with a rubber back. The feel of the Fire is actually pretty nice considering the materials, and the rubber back makes it easy to grip. It’s not nearly as pretty as the iPad, of course, but its cheaper looks comes with advantages; if I were to drop the Fire, I wouldn’t be as concerned about damaging it.

There are several odd choices Amazon made in the design. First, in portrait orientation the bezel on the bottom of the Fire is actually thicker than on the top, making it asymmetrical. Second, there aren’t any hardware volume controls; you have to use a software slider. Third, the power button and audio jack are on the bottom, making it easier to accidentally turn off and making listening to headphones harder.

One of the big draws of the Fire over the iPad is its seven-inch screen. I can easily wrap my entire hand around the Fire, which I can’t do with the iPad. The smaller form factor also has the advantage of portability; you could easily fit the Fire in a purse or small bag, unlike the iPad. The downside, of course, is that the iPad offers a bigger screen for watching movies or playing games.

The iPad has two cameras, one on the back, and another on the front for FaceTime. The Fire has none. This omission makes sense, both to cut costs, and because most people probably already have a smartphone with a better camera than what Amazon could’ve put in the Fire anyway. But it also means that the Fire can’t do video chat like the iPad.

There’s only 8 GB of space included on the Fire, half of what the cheapest iPad has, and the Fire has no SD card slot to expand that storage. Amazon obviously expects most users to access their media from Amazon’s cloud. It’s a problem for folks with lots of locally-stored media and less purchased through Amazon.

Software

More than anything, the software is what sets the Fire and the iPad apart. The Fire’s home screen is a dark faux-wood bookshelf; a search box is fixed on the top, and a list of media categories is spread out underneath it. Below that, recently used items appear on a “carousel” and take up most of the bookshelf, with the rest reserved for a scrollable “favorites” area, where you can pin apps, books, magazines, websites, videos, and even music. The interface is all about getting to your media quickly; rather than tapping on an app and then drilling down to the media you want, à la iPad, you can just click on the media itself. It’s an interesting concept, and it works well.

Amazon made several odd design choices with the software, as with the hardware. One of the first things I noticed is that the text in the top bar isn’t centered. Another is the distracting, persistent black bar which brings up the navigation buttons when video is being played in the Netflix app. In addition, the Fire’s software is buggy. Not show-stoppingly so, but enough to annoy. These kind of things show an inattention to detail and polish that iOS doesn’t suffer from.

The main navigation buttons on the Fire.

While the Fire runs a heavily modified build of Android 2.3, you can still feel Android when you’re using it, in the jerky scrolling, in the ever-present software Back, Home and Menu buttons, and in the slightly modified notification drawer. The Fire isn’t for people who can’t stand Android.

The browser on the Fire, called Silk, has a feature that’s supposed to accelerate page loading: Popular pages are monitored by Amazon and cached on their servers, so when you browse to one of those sites, it loads faster. The problem is that the service doesn’t seem to work well; Vimeo user Sencha did a video comparison of the Fire’s browser with acceleration turned on and off, and the results showed that Silk doesn’t make much of a difference. For now, the iPad’s browser is just as fast as the Fire’s, but Amazon will likely improve Silk in the future.

The Fire's text-slection tool in action.

Reading on the Fire is a no-frills affair; Amazon simply tweaked the Android Kindle app and put it on the Fire. The page turn animation is a boring slide, which isn’t as nice as iBooks’ realistic animation. Even the iOS Kindle app has an option for realistic animations, so I don’t understand why Amazon excluded them on the Fire.

Ecosystem

The Fire is heavily integrated with Amazon’s content ecosystem, as is the iPad with Apple’s. It’s worth pointing out that Amazon develops apps for iOS, most notably Kindle and Amazon Mobile. Apple isn’t likely ever going to do the same for the Fire.

Books

Amazon’s selection of books is as excellent as ever, and while Apple has greatly improved the selection in the iBookstore, it still can’t approach the Amazon store. The prices of Amazon’s e-books also tend to be cheaper. Amazon Prime customers get an extra perk: one free book every week. If your taste in books is broad, that’s a pretty good deal.

Video/Music

Amazon’s video offerings are pretty competitive with iTunes. Movies can be rented in standard definition for 48 hours at around $4, or bought at around $15, depending on if it can be bought. TV shows are $2 a pop. The video quality is about what you’d expect from a stream: watchable, but not great. Since iTunes only allows media to be downloaded, the quality is better, but with the caveat that you have to wait for the download to finish. Prime customers can get some of Amazon’s video content for free, with popular inclusions such as Lost, Firefly, and The Girl With The Dragon Tattoo.

Music can either be streamed using Amazon’s free Cloud Player service, bought directly on the Fire, or transferred via USB. The price of music in Amazon’s store is also competitive with iTunes. The Cloud Player service allows you to upload up to 5 GB of music for free, which automatically shows up on the Fire. The songs buffer quickly, and the audio quality is the same as the uploaded file, which are both nice.

Apps

The app ecosystem is the biggest pain point with the Fire. It doesn’t have anything near the quality and selection of the iOS App Store. Most of the apps were designed to run on Android phones, so they get resized to fill the Fire’s bigger screen. Even worse, the Facebook and Twitter apps aren’t apps at all, but just links to the mobile websites.

Developers have been slow to submit their apps to Amazon’s Appstore, so Amazon’s making a bet on the Fire bringing more of them into the fold. But right now, there’s no guarantee that it’ll get better. One bright spot is that the Appstore offers one free app every week, even to non-Prime customers, but that’s little consolation.

Price

My dad summed this up nicely: “If the iPad were $200, I’d have an iPad. But it’s not.” Price is arguably the biggest feature of the Fire; it’s $300 less than the cheapest iPad, so someone could buy two-and-a-half Fires for the price of one iPad, something consumers should keep in mind if they want multiple tablets this year. Even so, with the iPad the adage “you get what you pay for” holds true; the iPad has more polish, better design, and more power than the Fire.

Conclusion

The Kindle Fire isn’t an iPad competitor. It’s a multimedia Kindle that’s tightly integrated with Amazon’s services. While integration with Apple’s services is certainly a big part of the iPad, it’s not its main purpose, which is to run apps. You can see this distinction in how the two tablets and their software are designed. The iPad has a bigger screen so that apps have more room to shine, and iOS at its fundamental level is a grid-based app launcher. The Fire is smaller, so it’s easier to enjoy media like books, and the software is designed for launching media. In short, the iPad is for apps; the Fire is for media, and media mostly sourced from a particular ecosystem.

There’s more, of course. To sum it up, the Fire appeals to people who:

• Buy most of their content from Amazon.
• Don’t need to create media.
• Want a more portable tablet.
• Can’t afford to spend a lot of money.
• Don’t mind limited storage.

And the iPad appeals to people who:

• Buy most of their content from Apple.
• Want to create media as well as consume it.
• Don’t mind the iPad’s larger size.
• Can afford to spend a little more.
• Need a lot of storage.

Which features of each tablet mean more to you? That’s how you decide.

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Amazon’s tablet was the device of choice for 22 percent of the 3,043 customers polled by ChangeWave for its latest survey. The next closest device was Samsung’s Galaxy Tab, with just 4 percent of those surveyed expressing a desire to pick up that product. The Kindle Fire’s emergence as a strong second to Apple’s iPad is mostly bad news for other Android-based competitors, and less of an issue for Apple, which currently enjoys around 67-percent market share, but that doesn’t mean it should quietly allow the Fire to dig itself in as the budget-conscious shopper’s tablet of choice.

How Apple can put out the Fire

The easy answer, of course, is to make a cheap iPad, but that’s not something Apple will do easily or without a very specific, measured approach. Apple’s brand cachet and success depend on consumer perception of its products as high quality; just pulling things out until a smaller iPad resembles a Fire in terms of specs but runs iOS isn’t likely an option. That said, Apple also isn’t afraid to take a good idea from the competition and make it better in order to move hardware. That’s what I think it’ll do in this case.

Take away the huge price gap

Amazon’s Fire is really appealing because it provides cheap access to content acquired and stored in Amazon’s extensive ecosystem of music and movies, and its growing AppStore. The hardware is really secondary to those considerations, and likely accounts for why Amazon is willing to sell it so cheaply.

If Apple wants to regain its absolute dominance of the tablet market, it needs to take price off the table, but also to avoid setting itself up for the kind of criticism Amazon and other low-cost tablet makers face because of corner-cutting. It’s a tricky balance to strike, but Apple has a lot of advantages that could make it possible, chief among them being Tim Cook and his masterful control of the component supply chain. And Apple doesn’t need to close the gap entirely. It needs to bring an iPad close enough that the Kindle Fire’s faults seem like unwarranted sacrifices for what you save.

Apple can go cheap with few sacrifices

Amazon is taking a big risk on a relatively unproven market (7-inch tablets), and in doing so, it probably can’t achieve the parts-ordering volumes Apple could manage. That should allow Apple to eke out more profit per device even at a much-reduced price point. Apple is also making great strides in achieving big price breaks by leveraging older hardware; the free (on contract) 3GS is a great example. A smaller iPad would automatically save on display costs, and Apple can also save money using the older A4 processor (or an A5 if it debuts alongside a next-gen A6 for the existing iPad).

It will likely be difficult for Apple to get Kindle-Fire-cheap with a product it can stand behind, but the entry-level iPod touch recently hit the same $199 mark, and a similarly specced, slightly larger device at $249 (same price as the Nook Tablet) or $299 isn’t too much of a stretch to imagine. It would likely mean the death of the iPod touch in terms of cannibalized sales, but Apple is famously willing to release forward-looking products even if they might hurt past top producers.

Ecosystem plus

Apple’s content ecosystem can go toe-to-toe with Amazon’s, especially in international markets where lots of Amazon’s content isn’t available. ICloud and access to past iTunes purchases help make the differences between the two minimal, and despite Amazon’s big advantages with books, Apple still wins in terms of digital movie and music sales. If a smaller, cheaper iPad can provide access to that content, with fewer hardware/software downsides, it’ll win over customers, even with a price disadvantage.

Apple also still has a huge app advantage. That, plus value-add features like AirPlay, iMessage and other things iOS provides that the competition currently doesn’t, will be enough to win back Apple customers just looking for a quality 7-incher to fill out their gadget lineup. In terms of the early adopter crowd, that alone could pay big dividends.

Groundwork

Apple has the elements of a low-end market play in place: the pedigree of the iPod touch, its recent willingness to target mid-market by leveraging older tech, the lessons and supply chain control it has amassed in making the iPad a huge success, and the market-leading content ecosystem that continues to drive and be driven by its hardware device purchases.

Amazon’s ability to win out over other Android devices and take a big chunk of tablet interest by undercutting Apple on price might not even bother Cupertino. If it can’t work out how to make a competing device with a reasonable profit margin, it won’t bother. But if it can, that’s when we’ll see the real sparks fly in the tablet mark

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Apple was second only to Amazon.co.uk, and beat out Argos, which has been at the top of the list along with Amazon’s U.K site since Hitwise began its rankings. In October 2011, the Apple site accounted for 1 in every 25o visits made by U.K. browsers, according to the information gathered by Experian Hitwise.

Part of the reason for the huge volume increase in traffic, which spiked in October, is the death of former Apple CEO and co-founder Steve Jobs. Jobs passed away Oct. 5, just a day after Apple announced the iPhone 4S. The combination of the two led to Apple reaching its highest-ever levels of Internet traffic, with 14 million visits coming to the site in October alone.

Hitwise also cited the iPad as another cause of high traffic for Apple, since tablet popularity overall is a growing driver of web traffic. Amazon experienced a lift thanks to its Kindle Fire, for instance, and in addition to its U.K site topping the list, Amazon’s U.S. shopping portal even made the U.K. rankings, coming in ninth.

Apple’s surge in retail web rankings may not last, but a six-place jump is nothing to scoff at, even if it is a temporary boost dictated by extremely unusual circumstances. If Apple dips back down next quarter, it probably won’t fall all the way back, since some of those new visitors will probably stick around to keep tabs on what’s coming next, specifically to look for clues about iPad 3, which is starting to become a popular target for the rumor mill.

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Apple’s filing with the U.S. District Court for Northern California argues that the modified use of Amazon’s product name threatens to negatively affect perception of Apple’s brand:

Amazon’s use is also likely to lessen the goodwill associated with Apple’s App Store service and Apple products designed to utilize Apple’s App Store service by associating Apple’s App Store service with the inferior qualities of Amazon’s service.

That’s some mighty fine trash talking on Apple’s part, but the company has to portray the effect of Amazon’s practices as blatantly negative in order to reinforce the legitimacy of its claim. But if the court agrees that Amazon’s decision to de-emphasize the “for Android” portion of the Amazon Appstore name, it may help strengthen its case.

Back in July, a judge ruled that while Apple hadn’t sufficiently established grounds to secure a preliminary injunction, Amazon’s argument that the mark was generic also didn’t fly. Accordingly, any move on Amazon’s part to close the perceived gap between the two probably won’t help Amazon’s case.

It’ll be interesting to see if this indirect volley is just the first attempt on Apple’s part to involve the Kindle Fire in its ongoing legal war against Android devices. Samsung, which is currently the hardware maker best-positioned to challenge Apple in smartphone and tablet sales, met with swift legal response from Apple, and is now facing patent infringement lawsuits in courts around the world. With the Kindle Fire doing well in its early days, might it not be Apple’s next target?

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The languishing iPod touch

Apple “updated” the iPod touch when it unveiled the iPhone 4S, but it’s not what you would call a revolutionary change; in fact, it seems like the only thing Apple changed was to add a white color option for its touchscreen iOS-powered media player.

I think that’s because the role the iPod touch played is becoming less of an issue now that the iPhone is more widespread worldwide, and especially now that Apple makes an iPhone that can be had for $0 on contract in many markets (the 8 GB 3GS). The touch is an iPhone for people who otherwise couldn’t have one; with far fewer barriers to entry for an iPhone, the touch’s role in Apple’s line is less defined.

Some pundits have described a smaller iPad as a larger iPod touch, and they’d essentially be right. But simply adding some screen real estate to an iPod touch, while keeping it slim and small enough to hopefully fit in a back pocket (to borrow a standard for portability held dear by my colleague Kevin Tofel), changes the role of such a device in significant ways. It becomes a third category of product, one that might offer something to both existing iPhone and iPad owners, unlike the iPod touch.

Apple can diversify the category it created

The tablet is still in its infancy, but Apple has already shown that its interpretation of the device can threaten long-established products like the notebook PC and help Apple take a lead position in how computing will look ten years from now.

The upheaval Apple spearheaded means we’ll soon think about tablets as a different sort of category of device from others, I believe. It will be more like PCs, where people often have both desktops and notebooks to suit different purposes, but lower costs could make it viable to own multiple tablets with similar, but distinct niches.

There’s a healthy consumer appetite for Apple tablets, and I think Apple will test that appetite with variations on its original theme, the same way the iPod spawned a bevy of model types during its rise to prominence. Apple admittedly seems to be simplifying its iPod line now, but that’s because interest as waning as consumers turn their gaze to iPhones and iPads.

Kindle Fire demonstrates interest in small done right

Consumers have only been cool to lukewarm on smaller slates to date, but the Amazon Kindle Fire seems to be proving there’s a definite interest in that category of device, if done well. Amazon is selling lots of pre-orders to customers based mostly on its reputation, a few slick product demos, and pricing.

Amazon may have a decent head start, but Apple doesn’t have to be first to a smaller tablet to be the best. It has proven time and time again that a strategy of taking what works for its competitors, and then polishing that concept and presenting it as new and magical works well with consumers. The latest example of such a strategy is Siri, which owes at least somewhat to Android’s Voice Actions on Google phones. Apple’s reputation, combined with a stellar experience, could help it swoop in and steal Amazon’s thunder after the e-tailing pioneer proves there’s a strong consumer demand.

Final thoughts

The iPhone 4S kept the iPhone 4′s screen, which is 3.5 inches. One reason Apple did that may have been to make it optimal for use with one hand, but another could be to keep the phone territory distinct from the tablet space. Large, unwieldy phones don’t seem like something Apple would create, but slim, portable tablets, despite Jobs’ past comments, could definitely fit the company’s design history.

As to past comments denying such a device is forthcoming, don’t take those too seriously; Apple knows what to say and when to say it in order to promote its agenda at the time, and when to release something that flies in the face of earlier statements in order to capitalize on a market opportunity. If an iPad mini makes sense as a growth opportunity for Apple, it won’t let anything stand in the way of releasing one.

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My recent experiences during a major power outage showed to me the one big downside to going 100-percent digital on books: When your battery dies, you can’t read a book, even in the daylight. Plus, the iPad was a little too large to just toss in my pocket when I left the house. Some people can’t leave the house without a pack of smokes; I can’t leave without a book.

I started becoming more interested in Kindle hardware in light of those problems. However, the prices just weren’t at a point I was happy with for a supplemental device. Today’s announcements have changed that.

Kindle Fire

While the Kindle Fire is likely to be a fine tablet, for me, it underscores some problems I have with the iPad: The IPS screen is going to be  nightmare to read outside, and at eight hours of battery life, it doesn’t have the month (or two) of long-lasting power that the e-ink Kindles do. My mobile gaming needs are met quite well with the iPad. As a technology commentator, though, I expect I’ll get one. The $199 price tag for an n0n-iPad tablet is a much easier pill to swallow than the $499 and up for other Android tablets. I do find it interesting that Amazon merged two distinct approaches: taking advantage of an open operating system (Android), yet creating a curated experience like Apple’s.

Were I not a tech commentator, and instead the average iPad user, I could see myself getting a Fire in these scenarios: Either I use Amazon steaming a lot, or I want a second tablet that travels better owing to its small size. In this economy, unless you can pretend you need one for “work,” I have a hard time seeing anyone needing a second tablet, no matter the price. But for those who can justify the expense, the Kindle Fire fills in some gaps, especially for users already heavily invested in the Android ecosystem.

The new Kindles

Now we’re taking. Books are my primary media consumption. The iPad isn’t good for reading in any situation where light is being cast on the screen. Ten hours of battery life is nice, but I’d like to not have to worry about that at all, which is what the e-ink Kindles offer. The size of the new e-readers is also right for “throw it in my jacket pocket” situations.

A Kindle reader under a hundred bucks perfectly fits my price point for buying a second reading device in addition to the iPad. I’ve ordered a Kindle for $79. Sure, it’s ad-supported, but from what I’ve been hearing the ads aren’t intrusive to my reading experience anyway.

A tale of apps

The big difference between Amazon and Apple is that Apple wants to sell you hardware, and Amazon just wants to sell you content. I believe Apple releasing iBooks for Android would be a sign of failure for its strategy. Amazon, on the other hand, doesn’t give a hoot what you read your book on, just that you the book from them.

Up until today, my e-reading plan was to buy the book on Amazon, and read it on my iPad. Now, I’m going to be mostly using the Kindle to read my books. Whispersync will do its job and I can read on my iPad, too, without losing my place. The lack of a keyboard or touch interface on the new entry-level Kindle doesn’t bother me. Almost all of my Kindle books are purchased via the web on my Mac.

Amazon has done something very smart with its table and e-reader strategy: priced its devices at a point where owning them in addition to other devices makes sense. The new Kindles don’t have to beat the iPad, especially when Amazon’s app strategy means that they can all play nice together.

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• Tablet market to hit over 377 million units by 2016
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