The Launch Of Apple’s iPad - Should Amazon Be Worried?
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. There is always a certain amount of polarisation where Apple is concerned and that’s pretty much the case here.
Some reviewers have suggested that it is nothing more than an oversized iPod Touch. Others are much more enthusiastic and are already suggesting that we will see the disappearance of notebooks, netbooks 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 is difficult to imagine that it won’t be a huge 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 almost inevitable when you consider that the Kindle has been the hottest gadget on the market for some months now and was itself often given the title of “the iPod of reading”.
Of course, the Kindle is a specialised device. It performs its primary function – allowing users to read books – very well and has a few supplementary functions, a basic web browser, a dictionary, receipt of newspapers and magazines etc., which it performs, quite frankly, less well. The iPad, on the other hand, is an extremely versatile device which performs many 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 funky games being made available shortly after the launch proper.
So should Amazon be worried that Apple is going to kill the Kindle reader off and eat into their profits? It doesn’t seem likely. 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 doesn’t include 3G connectivity and there is a minimum $ 15 per month fee for the Apple device, which could go as high as $ 30 depending upon the size of your downloads each month. The Kindle includes 3G connectivity - and with no monthly fee. It’s quite probable that the iPad’s appearance on the scene could produce a downward adjustment in the ticket price of the DX – but this would have happened 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 be an opportunity for Amazon to increase the size of their potential market in this area. Apple will also have its own online bookshop for iPad customers – so there may well some degree of price competition going forward. If so, it will be the consumers who benefit.
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 be a very nice sales spike for them.
So – Amazon will have the potential to increase the sales of Kindle books. It will also profit very nicely in its capacity as a merchant bearing in mind that the Amazon site will be the first place that many iPad potential buyers think of when it is time to make their purchase. 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’s a clear demonstration of exactly how robust Amazon’s business model is.