Not too long ago, one could track the e-reader and tablet markets separately and have a legitimate reason to do so.
It was clear that the Kindle, for instance, was not the iPad, and the iPad was not the

But as technology evolves and hardware prices continue to fall, the differences
between e-readers and tablets is shrinking and it appears that both
markets are, for all intents and purposes, converging rapidly.

makes for an interesting battle between Apple and, well, everyone else.

When it comes to ‘everyone else‘, Apple CEO Tim Cook has
reason to be confident. Many would-be competitors have tried and failed
to woo consumers. From RIM and its Playbook to Samsung and its Galaxy
Tab, there’s no sign that iPad-wannabes are going to take over anytime
soon. But two of the strongest players in the e-reader market, Amazon
and Barnes & Noble (B&N), are making moves that should have
Cupertino’s attention.

Yesterday, Amazon announced
a deal with Disney-ABC that will give Amazon Prime members the ability
to stream popular programs including Lost and Grey’s Anatomy. The
company is aggressively going after content licensing deals, and by
early next year, says it expects to have 13,000 titles available to
Prime members.

Needless to say, Amazon appears to be building a compelling value
proposition: a color e-reader/tablet that costs less than $200 and a
$79/year subscription service that gives its owners access to a vast
library of digital content on that device.

Throw in a free month of that
subscription service with your purchase of the Kindle Fire and it
appears quite possible that Amazon will manage to compete with Apple in a
meaningful way by expanding the market for tablet devices as opposed to
going after the market that Apple targets directly.

And Amazon isn’t alone. B&N yesterday announced a press conference next week during which it will make a “very special announcement.” The speculation is that the bookseller will be announcing a new tablet that the Wall Street Journal says “is expected to differ significantly from its well-received Nook Color.

The Color, of course, has reportedly racked up respectable sales in the
millions of units, and its success may actually be one of the reasons Amazon
finally decided to develop a color e-reader sooner than later. B&N
may hope that a new Nook e-reader/tablet can steal some of the Kindle
Fire’s thunder, but just like the Kindle Fire, it too will likely
compete with the iPad, directly or indirectly.

All of this is good news for consumers and publishers. Yes, the iPad may
continue to be the world’s best-selling tablet in the near-term, but
make no mistake about it: the combined market for tablets and e-readers
is bigger than the iPad.

The question for Apple now is whether the iPad
can maintain its current position if Apple doesn’t counter Amazon and
B&N in some fashion.