Future of the Kindle

By: ispeculatornew
Date posted: 08.09.2009 (4:00 am) | Write a Comment  (2 Comments)

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amznAmazon has a lot of momentum these days and thus commands a very high P/E valuation. To be certain, Amazon’s retail store remains its core and will be so for the foreseeable future. The recent acquisition of online shoe retailer Zappos certainly fits in that model. But Amazon is increasingly counting on growth coming from its portable electronic reader, better known as the Kindle. Is it fair to assume that the Kindle will mean to Amazon what the Ipod has been to Apple?

Different release strategies

While the Ipod was not perfect upon release, it was still a very high tech product that ended up taking months and probably longer to be matched by competition. Part of it was the brilliant design and part was the fact that generally speaking, competitors did not take the Ipod threat seriously enough until it was too late. Releases by Microsoft (Zune) and others were late and in most cases did not even match the features from the first generation of Ipods. This gave Apple the opportunity to grab early market share but also take prices down making it more challenging for competition but also ensuring that their product would become the “standard” both from the user and developer’s point of view.

kindlehandAmazon meanwhile has had a different strategy and a different environment. While its product is certainly the best in the market right now, thanks to its slick design and high capacity, its high pricing as well as some lacking features (colour screen, superior central platform, etc) have left it vulnerable to competition from the outside.

What is Kindle’s competition?

While Apple has been denying any plans to enter the market with a reader, the Ipod/Iphone is certainly more than capable of competing. It is also impossible to discount Apple entering the market with a cheaper, better looking and superior product. It would not be the first or last time that Apple denied entering a market before a major release.

For now, what seems like the real competition for Amazon is Sony with the launch of its “Reader Pocket Edition” in a few weeks. It will be retailed at 199$ which is about a third cheaper than the Kindle. This will probably put pressure on Amazon’s pricing power. And there is of course Google, which has also been very vague about the possibility. It’s a dangerous prospect for any competitor as Google has been digitizing books, newspapers and magazines for a few years now and is years ahead of everyone else. So a potential Google product would have a lot more possibilities in terms of content.

There is so much more to do…

What Apple was always able to do was stay ahead of the curve with its Ipod, with high resolution, pictures viewing, video capabilities, etc. The key was that Apple was always first to initiate. With the Kindle however, it is not clear at all that Kindle will be first in line. Obviously, adding high resolution colours will be in future E-reader editions, as well as wi-fi connections to download content, etc. But the big question is: Who will be launching product with these more advanced capabilities? Because if Kindle is not first to step up, it could very well lose its lead….

amzn

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2 Comments

  1. Comment by François — August 10, 2009 @ 11:27 am

    Humm the future does not look pretty for Kindle… or at least for the moment!

    Sony has also launched the “Touch Edition”. As the name says, this product has the touch-screen panel. Another thing is that Sony has partnership with Google, which now made available 1 million public domain books (free!!!) for the company’s e-book readers (against 300k for Kindle).

    And have u heard about a multi-million dollar lawsuit against Amazon (yes Kindles can be fragile)? because of that Amazon will replace cracked Kindle2 screens for Free…

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