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To paraphrase Yoda: Begun, the e-book wars have.
Barnes & Noble (s bks) 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 (s amzn) 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 (s aapl) 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 (s nok) and others wouldn’t be running scared of Google (s goog) 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.