Why Apple Crashed The Amazon eBook Party
By Alexis • Feb 8th, 2010 • Category: eBook Readers- Photo: Amazon

It was recently reported that the Amazon Kindle eBooks pricing of $9.99 crumbled due in no small part to Apple. Apple promised publishers it would support an alternative pricing model to Amazon’s that came with a pricing ceiling of $14.99. In doing so, Apple undermined Amazon’s Kindle pricing strategy.The Market-maker Kills the Market-maker.
Amazon, until recently, was the market-maker in this industry, with what is believed to be over 80% of the eBook pie. What they were attempting to do by pricing bestselling eBooks at $9.99 was to follow on in the footsteps of Apple’s offering of songs on iTunes at $0.99, so as to encourage publishers and users to favour their Kindle device. The long-term goal was the consolidation of power, in an attempt to eventually be the unassailable leader in the digital books business, much like Apple did with iTunes and the music business.
- Photo: Apple

Book publishers knew what Apple had done to the record business and were afraid of the same outcome with Amazon at the helm of eBooks. Then Apple appeared on the scene. With an alternative retailer who could in the short term mean loss of income, but in the long term more profits, publishers pushed back against Amazon and made their own prices, with threats to remove content if not adhered to. Amazon balked, the publishers flocked to this new pricing and with that Kindle’s eBook hegemony ended.
Why Did Apple Do This?
Apple is, in Steve Jobs’ own words, the “world’s largest mobile devices company“, so their goal is to sell portable devices. The iBook store, to this effect, is a mere means of selling more iPads. This, if one remembers, is the same for iTunes, which has been a vehicle for selling iPods. Amazon, on the other hand, is a retailer whose Kindle business is to sell content. Thus, Apple’s willingness to cannibalize content – at a decent profit, mind you – in the interest of selling more mobile devices butted heads with Amazon’s content-focused business.
Where to for Amazon
Amazon’s response in the coming weeks will be telling. They’ve acquired a start-up touchscreen technology company, meaning that the Kindle Touch is an inevitable development. Even then, what are the competitive advantages of a touchscreen device that does one thing, compared to the flexibility of the iPad? One cannot rule Amazon out, though, considering they revolutionized not just an industry but how people shop altogether with their online store. The difference, this time, is that they’re up against a strong competitor.
As for the publishers, they would do well to question if Apple is really the solution they think it is.
Tags for this article: apple, itunes, amazon

