Kindle vs. iPad: A Longer Look

TechFlash reports: Amazon.com is likely mulling over the competitive threat posed by Apple's iPad, dubbed by many as the ultimate Kindle Killer. While there were plenty of "Kindle is toast" pronouncements yesterday, the reality may be a bit more nuanced. Here's my take on why Amazon should fear Apple's new tablet, and why it shouldn't.

Why Kindle Is a Goner:

Multifunction: The new iPad—which features email, Web browsing, photos, iTunes, video, games, along with digital books—definitely made Kindle look like a one-trick pony. And for people who've grown accustomed to all the features they get on the iPhone, the iPad will definitely be a big draw. The current Kindle, with its grayscale, slow-to-refresh screen and little joystick—looks positively prehistoric compared to the slick, color-touchscreen iPad.

Apps: Here's where Apple really shines and where Kindle could face trouble. Apple says its 140,000 iPhone and iPod Touch applications will run on the iPad, and Apple is encouraging developers to create specific iPad apps as well. Amazon, by comparison, just announced a software-developer kit for Kindle and has no apps available yet. Some developers have already expressed skepticism about apps for Kindle, given the e-reader's current design limitations.

Kindle DX: The larger of Amazon's two e-readers on the market today, the DX, would seem to be the most vulnerable to the iPad. One reason is price. The Kindle DX still has an eye-popping price tag of $489. That's just $10 cheaper than the cheapest iPad ($499). And as mentioned above, the iPad can do so much more. So if I have $500 to spend on a gadget that reads electronic books, why not go with the model that can let me check my email and watch TV shows as well? Of course, Amazon has dropped the price on Kindles in the past, and may be preparing to do the same with the DX.

Books: Apple's iBooks app and associated bookstore for iPad represent a direct threat to Kindle. Not only does Apple have the brand and marketing muscle to grab a chunk of the emerging e-book market, it's sparked major interest from publishers who desperately want an alternative to Amazon. Reports indicate Apple is giving publishers what they want: the chance to set higher prices on e-books, though that policy may come with its own risks (see below).

Why Kindle Will Prevail:

Content is king: While Amazon is heavily promoting the Kindle as a device, Kindle is also a content business. Amazon has pursued a strategy of making its large selection of digital books—now totaling more than 400,000 titles—available on multiple devices, including Apple's iPhone and iPod touch. Yesterday, Amazon made clear it will soon develop a Kindle app for the iPad as well—letting users of Apple's new tablet read Kindle books. So if Kindle (the device) takes a hit from the iPad, the Kindle content business may thrive.

Book pricing: Despite reports that Apple is working with major book publishers, and letting them set higher prices for e-books ($12.99 and $14.99), Amazon is signaling it will stick to its standard $9.99 or lower price for new-release e-books. That discounting strategy could put price pressure on Apple's new iBook store, particularly if iPad users can access the $9.99 Kindle books through an app. Of course, if publishers hold back digital new releases from Kindle—as some have done—that could complicate Amazon's strategy.

New Kindles: Amazon has been typically tight-lipped about future versions of its electronic reader, though analysts believe they'll include some combination of color, touchscreen capability, and flexible screens (i.e. plastic instead of glass). Kindles with more advanced features could help Amazon generate excitement about its e-readers again after the iPad hype dies down. While Apple is the undisputed champ of building media buzz, Amazon is no slouch in that department either.

Single purpose: Amazon CEO Jeff Bezos and other Amazon execs are constantly emphasizing that the Kindle is "purpose built" for reading. And while the multifunction iPad definitely has a "wow" factor, expect Amazon to keep up the drumbeat that Kindle is made for serious, long-form reading—with a specialized E-Ink screen that is easier on the eyes and longer battery life (up to a week with wireless on and up to two weeks with wireless disabled).