Apple's big announcement came and went this morning with more than a few surprises and disappointments (including a name that has made some women less than happy). But one unexpected announcement — a price point at less than half expected estimates — leaves a question unanswered. If the iPad only costs $499, is this the end of the Kindle?
Apple is certainly gunning for Kindle territory. After presenting the odd juxtaposition of Steve Jobs standing in front of a Kindle today, the Apple founder took a jab aimed directly at the heart of Amazon's e-reader business.
Jobs turned to the crowd and said:
"Amazon's done a great job of pioneering this functionality with the Kindle. We're going to stand on their shoulders and go a little further."
In 60 days, the iPad will start shipping. And while earlier estimates posited that its price point would come in around $1000, Jobs announced that the lowest model would ship for $499:
"When we set out to develop the iPad, we not only had very ambitious technical goals and user interface goals, but we had a very aggressive price for it.”
And that price puts it in direct competition with the Kindle. The Kindle's six-inch black-and-white display may seem paltry compared to the iPad's nearly 10-inch, multitouch screen and various features. And Amazon's similarly sized Kindle DX is nearly the same price at $489. But the low end Kindle is still only $259, which could keep users happy with its more limited features. Furthermore, with all of the connectivity pricing surrounding the iPad, the actual price of the cheaper iPad (with $130 extra for a 3G modem and $30 a month for unlimited wireless access) would come in closer to $1,349 with an unlimited data plan.
Apple does have the benefit of its vast array of iTunes users at its back. In addition to over 200,000,000 users, the iTunes store already has those credit card numbers on file and can let users easily download books with the click of a button.
According to Apple's VP of worldwide product marketing Phil Schiller:
“We use the ePub format, the most popular open book format in the world, and I’m very excited about this. We think the iPad is going to make a terrific e-book reader not just for popular books, but for textbooks as well.”
But it also means that books purchased for the iPad can be used easily in other formats. And while Amazon has an iPhone app, it is still furiously working to get desktop platforms up and running.
However, Kindle could give Apple a run for its money in the pricing of its titles. E-books can be had on Amazon for $9.99, while the example Apple used Wednesday was $14.99.
Apple announced that its iBook team includes Harper Collins, Haschett, MacMillan, Penguin and Simon and Schuster. But the world's biggest publisher, Random House, is not currently connected to the iPad, which could be an issue with avid readers.
The Kindle's decision to keep connectivity out of the book reading experience may soon be a weakness, but if the product can deliver the best digital reading experience it can beat out the iPad for reading.
As a one-function device, the Kindle has to deliver that function at an extremely high quality to beat out products like Apple's. And as mobile technology improves that will become increasingly difficult. But for now, Amazon has a few advantages.
One thing working in its favor is better battery life. With the wifi signal turned off, the Kindle's battery can last up to a week. And while the iPad has a lot of features, it only has 10 hours of battery life. For frequent readers, that's not a long time. And with other Apple products in mind, the battery life is likely to be a lot shorter than 10 hours.
Also, reading on the iPad may not be optimal. Russ Wilcox, CEO of E-Ink, the company that provides display technology for the Kindle, tells Forbes:
"Anyone who spends more than 10 hours reading on an LCD screen will yearn for E-Ink."
But the real test will be with consumers. High frequency readers may be willing to shell out for a more refined single featured reading device, a fact that Amazon hinted at last week with its shortterm offer of free Kindle's for freqent book purchasers.
It remains to be seen if that audience is big enough — or buys enough books — to support a digital device. But for now, the jury is still out. Amazon's stock was up nearly 3% by late Wednesday afternoon following the Apple event. Apple shares rose 1.1% by the closing bell.