How Will Amazon Respond To The Launch Of The Apple iPad?

Posted by tomgreen on March 7, 2010

Apple has, after what must have seemed like an eternity to their adherents, unveiled their much anticipated tablet computer at last. The name is confirmed as the iPad, which took some pundits by surprise – earlier guesses included iSlate, iTablet etc. – and it’s fair to say that it has had a somewhat mixed reception thus far. When it comes to Apple, there is always a certain amount of polarisation, and that’s exactly what’s in evidence at the moment.

Some reviewers have suggested that it is nothing more than an oversized iPod Touch. Others are considerably more impressed and are already predicting the disappearance of netbooks, notebooks and the Amazon Kindle e-book reader. The proof of the pudding is in the eating of course, and this will come when the iPad actually launches in March. It’s almost certain to be another success for Apple.

At the moment, the most commonly drawn comparison seems to be with the Amazon Kindle e-book reader. The two devices are very different – so it’s not necessarily a sensible comparison to draw. However, the comparison is practically unavoidable bearing in mind that Amazon’s Kindle has been the trendiest, “must have” gadget on the market for the last few months and was itself frequently dubbed “the iPod of books”.

Of course, the Kindle is a specialised device. It concentrates on performing its main function – allowing users to read books – very well and also incorporates some additional capabilities – a basic web browser, a dictionary, receipt of magazines and newspapers etc., which it performs, in all honesty, less well. Conversely, the iPad is an extremely versatile multi-functional device, able to perform a wide range of different functions. Unlike the Kindle it has a color display, which features touch screen control functionality and incorporates an accelerometer. That means that it’s great for surfing the net, ideal for video playback, an mp3 player, an e-book reader and all of the entire library of “apps” developed for the iPod Touch will operate on it. Expect to see some pretty radical games appearing soon.

So should Amazon be worried that Apple is going to kill the Kindle reader off and eat into their profits? It seems improbable. Putting the hype to one side, there is actually a pretty big price difference between the two devices. Certainly, the price of the entry level iPad at $ 499 is only $ 10 higher than the current Kindle DX price. However, the entry level model does not incorporate 3G connectivity and there is a minimum monthly fee of $ 15 for the Apple device, which could rise to $ 30 dependant upon how big your downloads are every month. With the Kindle 3G is included and there is no monthly fee. It’s not out of the question that the iPad could force a downward adjustment in the price of the DX – but this was always going to happen sooner or later anyway.

One of the apps that many will use on the iPad will be the “Kindle app”, which basically allows users to read Kindle books on their Pod or Pad. It may actually present an excellent opportunity for Amazon to increase the size of their potential market in this sector. Apple will also launch its own online book store for iPad users – so some level of price competition can be expected in future perhaps. In this scenario, it will be the end users who benefit most.

When the iPad starts shipping in March, it’s a fair bet that a lot of enthusiastic customers will be making their purchases via the Amazon website. It will probably generate a very nice spike in sales for them.

So – Amazon will have the potential to increase the sales of Kindle books. It will also do very nicely as a merchant considering that the Amazon site will be the first port of call for many iPad buyers. The price of the Kindle DX will fall, which it would have anyway, but they will continue to sell in volume and Amazon will continue to profit. It just underlines how robust the Amazon way of doing business is.

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