Thursday, March 25, 2010

Apple Vs. Amazon--Early Strategies

Nine days from now--on April 3--readers who pre-ordered the iPad will be able to pick up their new Apple devices.

Obviously the iPad is more than just an e-reader, but but for those consumers who want to read e-books on it, the New York Times pointed out yesterday here,
they will have to decide which online bookstore they want to give their money to. From the start, no one bookstore will come with an advantage: No matter which bookstore application iPad owners choose, they will have to download it first. Even the iBookstore, as Apple writes on its Web site, won’t come preloaded on the device.
The article's author Nick Bilton reminds readers that, with the new Amazon app for the Apple, they can download that app and access all the e-books they've previously purchased from Amazon.

I was surprised to learn that B&N did not yet have a similiar app ready for the Apple launch. With readers free to decide which bookstore to use, I would have expected all vendors to be prepared to influence that choice in their favor.

Many e-savvy readers already have libraries of dozens--or even hundreds--of e-books. They are going to want a device that allows them to access those e-books. Amazon recognized that desire when they announced their Apple app.

The other factor that will hugely influence readers as they choose their primary bookstore is, of course, price. And, according to the App Advice blog, Apple is prepared to attract readers to the iBook store. That blog reports here that "... at the moment, out of the 32 eBooks featured in the New York Time’s Bestsellers section, 27, including the entire top 10 are priced at $9.99."

It sounds like Apple recognizes the psychological importance of getting readers through the virtual doors of the iBooks store. And they are taking Amazon head-on by matching their prices. At least initially.

Tuesday's Motley Fool blog here addressed:
the flawed nature of [Amazon's] Kindle's current business model. Whereas game console manufacturers and wireless carriers often take losses on hardware sales to consumers, and make it up by profitably selling content and services, Amazon is trying to do the exact opposite.
The Motley Fool believes the Kindle is priced far too high at $259. They are supported in that assertation by a Forrester Research survey. CNET News reported on that survey here in September:
... consumers find e-book readers much too expensive. Extrapolating from the 4,706 U.S. consumers questioned, Forrester found that almost 65 percent of U.S. adults online would consider a price of $98 or less too expensive for an e-book reader but would still purchase one.
So ... it sounds like we may have Apple coming out of the starting blocks matching Amazon's $9.99 e-book pricing in order to grab early market share.

At the same time, Amazon is striving to become a platform for e-reading devices by offering an app that allows consumers to buy Amazon's books on the iPad.

What other surprises are in store for us?

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