Why Amazon Isn't Worried About iPhone's Kindle

I thought the next gadget I’d get after buying an iPhone was the Kindle. Then I discovered the Kindle app on iPhone and gave it a try. I’ve read three books on the iPhone so far, and am quite satisfied with its performance. If you have to read for hours together, then it’s not a very good option, but I haven’t been doing that kind of reading lately, so it’s not a problem for me.

In fact, I have decided that I won’t be buying the Kindle now. The iPhone serves as a satisfactory book reader and since I have access to all books that are on Kindle – I don’t think I will gain anything from getting the Kindle.

I guess there must be a few others who decided that they don’t need Kindle if they have an iPhone. So, I was wondering whether the app cannibalized Kindle sales or not.

I know my reasons for not buying a Kindle, and was interested to know Amazon’s (AMZN) reasons for not worrying about the app cannibalizing Kindle sales.

Here is what I found:

iPhone app may induce Kindle sales: For one, there must be several people who decide to buy Kindle after they use the iPhone Kindle app. A lot of people are apprehensive about using Kindle, and if they get to try a free app first — that might just nudge them into buying Kindle.

The app doesn’t have all the features that Kindle has, and most comparisons state that the Kindle is much better than the app. So using the app may nudge some people into buying Kindle.

Great potential for e-book sales: There are about 10 – 15 million iPhones and iPod Touches, but fewer than a million Kindles, so the potential boost that e-book sales can get from this app is pretty significant.

Competition: Other e-book readers like Indigo Books and Music Inc’s (IDGBF.PK) Shortcovers – are already on the iPhone. So, people who are looking to read on the iPhone do have other options. Amazon could lose out sales to their competitors, if they didn’t come up with this app.

Kindle didn’t cannibalize paper books: This is by far the most interesting thing I read about Kindle. In January this year, Amazon’s CEO Mr. Bezos said that Kindle hadn’t cannibalized its paper book business. He said that Kindle owners continue to buy the same number of paper books they did before owning a Kindle. They incrementally buy about 1.6 – 1.7 e-books for every physical book they buy.

This is a real indirect inference, but if Kindle didn’t cannibalize paper books, then the app may also not cannibalize Kindle, as that’s not a perfect substitute of Kindle.

Amazon was certainly not concerned when it released the app, and an Amazon Vice President Mr. Freed told the WSJ that he doesn’t expect iPhone readers to read more than 20 or 30 minutes on the iPhone and they were “not at all” concerned about cannibalization.

Reading all these reasons made me think that it’s much better for Kindle to be on the iPhone, Blackberry and Droid to boost e-book sales rather than stay away from there in the fear of cannibalizing their Kindle sales. Who knows – I might still change my mind and buy the Kindle after all.

Comments

[Aussie Machead:]

Personally love the e-book on the iPhone - only I prefer to use Stanza to Kindle. Like the page flip and drag finger to light or darken and full font size choices of Stanza (with Fictionwise Books on Board, Gutenberg library). Now Kindle machines are being sold in Australia - but surprised they haven't got the iPhone app available in Australia. Trialed Kindle app on a US account iPhone. Also very limited choice of books internationally as publishers tie up in the same way they do print books which countries are permitted to buy.
One BIG plus of iPhone Stanza over a Kindle machine, is reading in bed with the light out - no longer having to negotiate when to put a book down. Certainly read for more than 20-30 minutes - usually an hour or so in bed.. I've read about 12 books so far and find its availability on the phone when waiting in queues etc - just great.

Oct 23 08:37 AM

[dbbennett:]

I'd think that Amazon would be more concerned about the Nook from Barnes and Noble than the ebook reader on an iphone.

Oct 23 09:13 AM

[Tom B:]

Apple's not worried 'bout the Kindling, either. Black and white, last I checked. For reading books about "Leave it to Beaver".

Oct 23 10:58 AM

[Snitzer:]

Just ordered three dead tree books from Amazon, waiting for a more mature technology and a lower price point before going into the e-reader market. Perhaps 2011 holiday season?

Oct 23 11:10 AM

[BurkPhoto:]

The Kindle is great for what it is. My sister loves hers. But the iPhone and iPod Touch are multi-purpose devices. Last I checked, they can be any of about 85,000 different things, in addition to a book reader. So which would you rather carry around all day?

Okay, so they're a bit small, the iPhone sucks batteries dead in a few hours, and the Touch does, too. But you can use either while you charge, and you can charge in your car or at your desk or anywhere there's an outlet. Various third party battery solutions are also available.

Then there's the screen size. Despite the fact that these gizmos have the sharpest, best screens on the market for their size, they are still small, and no amount of pinch and spread touch gesturing to reduce and enlarge the image is going to make up for that when reading Gone With the Wind.

Beyond the iPhone and the iPod Touch, then, most of us who follow Apple expect them to release a product somewhere between those items and a MacBook in its design scope. Call it iPad, or iTab(let), or whatever, and hope it's a general purpose computing device as well. With a 7 to 10 inch touch screen, it could be about perfect for use as a reader, and as all 85,000+ other things the earlier devices can be as well.

I'd look for Apple to release such a device some time in the next three to five months, hopefully in time for the holidays. They're building a huge, honkin' data center in North Carolina to serve up content for something... I'd bet it's for this sort of device, among others.

Oct 23 12:25 PM

[Spad:]

I own a Kindle 2 and the Sony PRS-505, both 6-inch e-ink ereaders. I also have an iPod touch with several ereader apps and spend several hours a day reading on some combination of these devices. Beyond all doubt, if I could have only one I would choose the touch without a moment's hesitation.

Oct 23 02:03 PM

[User 504177:]

I love my iPod Touch, no question, but when it comes down to reading for pleasure -- and sometimes for hours at a stretch -- the Kindle has it beat hands down. You can bump up the text size to suit your comfort level and the Ink technology the Kindle employs produces none of the eyestrain known to even the sharpest LCD screens.

Bottom line? I don't see the two devices as competitors, but as complementary depending on where your attention is focused (no pun intended.)

Love 'em both. Great to have 'em both!

Oct 23 02:49 PM

[mollytjm:]

Amazon sells a lot of other stuff besides books and the Kindle. Personally, i wouldn't buy a Kindle. I read at least a book a day and though i use physical books a lot, i also read books on my iPhone every evening...and i use audiobooks there too. i would buy a slightly larger (maybe half again) sized iPhone before buying a book reader. and i've found that if i don't keep the brightness up all the way, the battery lasts a really long time.

Oct 23 06:38 PM

[Martin Hill:]

The number of people content to purchase a large boxy single-purpose plasticky reading device which can't be read in low light or dark conditions, which can't display colour photos, illustrations, animations or video clips is a pretty limited market.

This makes having a Kindle app available for the over 50 million iPhones and iPod Touches that have been sold (not 10-15 million as the article states) is essential to the success of the Kindle ebook sales platform.

-Mart

Oct 25 02:51 AM