Amazon’s profit for the fourth quarter of 2009 was $384 million on revenue of $9.52 billion. That is more than $10 million of products shipped each and every day. Retail sales in total in the U.S. was roughly one trillion dollars in the third quarter of 2009. Just 3.5% of that — $35 billion — was e-commerce, but of that $35 billion, Amazon was more than $5 billion. Amazon is truly the emerging juggernaut of retail. Of the millions of retailers one of them represented 15% of retail e-commerce. Many stories here on patrickWeb as to why this is the case. What are the threats that Amazon faces? In particular, will the iPad dethrone the Kindle?
I don’t claim to have the answer but I may have clues. There are more than 40 e-book readers out there. Apple may be the largest threat to the Kindle among them, but it is not a slam dunk. I am quite enthusiastic about the iPad and can’t wait to get my hands on one but I do not see it as a Kindle killer. I read a lot of books and I don’t buy any that are not available on the Kindle. I am Kindlzed. The 5 once device never burdens the wrist and it fits nicely on holders I made for the elliptical trainer and treadmill. I tried the nook but was happy to sell it on eBay after a month. The nook is very nice, as I have written previously, one of the issues is that it is heavy compared to the Kindle.
Will potential new Kindle buyers turn instead to the iPad? Many will for sure but I think there are a couple of inhibitors for people who read a lot of books. The iPad is just one and a half pounds — not a lot compared to a laptop or even a netbook — but compared to the 5 once Kindle it is almost five times as heavy. If you spend a lot of time reading you may develop a need for a wrist brace. The other thing is the lighting. The Kindle uses e-ink — it is reflective — like paper. The more light the better. Reading by a good light or in the sunlight is better than trying to read in the dark. The iPad has back-lighting. I am sure the color screen is brilliant and for movies and pictures and magazines and newspapers it will no doubt be great. The demo by the New York Times at Steve Jobs’ keynote was quite impressive. But, for an hour or two of reading I have my doubts about how easy it may be on the eyes. We don’t need color to read a novel. The journalists that got to see the iPad in person reported that the room was dim. Why would that be? I suspect because good lighting makes the backlit screen harder to read.
On a positive note, I think the iPad will find very large adoption — tens of millions for sure — and will make a big dent in PC’s. The netbooks have been very successful but they are basically PC’s with Windows. Their only redeeming feature is their low price. That is a good thing but it is not innovative and who needs another copy of Windows? PC desktops and laptops are already in decline and the iPad is going to accelerate the trend.
Some people are saying the iPad is just a big iPhone. Yes! I can’t wait and it is much more than an iPhone. It has applications galore. On day one it will run 140,000 iPhone applications plus significant upgrades to calendar, contacts, mapping, and email. There will also be advanced word processor, spreadsheet and presentation apps. The creative juices of software developers around the world will introduce hundreds of thousands of new and exciting apps that the large multi-touch color screen makes possible.
I see the iPad lightening the load in briefcases when travelling. It will also take up a lot less space on the kitchen counter and while resting there in the new iPad case it will double as a picture viewer. In the family room it will be the controller for movies and music. With the keyboard dock or wireless keyboard I suspect it will become my tool for writing. With most of our data in the cloud why would anyone need a PC or laptop? Many of us will still have a PC and a big flat panel for certain things — like Quicken — but more and more of my time will be with the iPad. We don’t need color to read a novel but there is no doubt authors and publishers will develop books with color pictures and video in them. Publishers really really don’t like Amazon’s $9.99 eBook model. A big war is taking shape. Amazon is offering enhanced royalties but only if the publisher keeps the price low. Apple is telling the publishers to charge whatever they want. The problem for the publishers is that Kindle on the iPhone — which most readers don’t use — will work on the iPad on day one. I do use the iPhone to read Kindle books when I am in line at the supermarket or a waiting room. I love how the “bookmark” keeps track of where I left off on the Kindle or on my iPhone and soon on the iPad. Will there be two versions of the same book on the iPad? One with the Kindle reader and one with the iBook reader? Maybe. Some books may come in black & white and “enhanced” versions with color and embedded video.
The iPhone will continue to be an important part of my life — for calls and picture taking. And if I am in a location where there is no WiFi for the iPad, the iPhone will be my backup to the Internet. I do not plan to get the 3G model and sign up for another AT&T data plan. WiFi is available at most everywhere I go and the trend of expansion of WiFi will only accelerate. The iPad demo is great — the Apple team really has their act together. The iPad is not perfect. It does not support Flash movies, for example. If you read the WSJ and click on a video you will get a message saying that you need the Adobe Flash player. Apple has chosen not to make Flash available on their products. Adobe Flash is proprietary and although nearly all computers support it, the web standards people are developing an open standard for video. Apple seems to be betting that this will happen soon. Apple is also quite proprietary — more so than Microsoft was in the 1990’s and IBM in the 1980’s.
The $499 entry price is aggressive but by the time you add the extra storage — which is the smart thing to do — plus an extra dock or keyboard or case or car charger plus the three new iWorks apps @ $9.99 each plus 3G if you need it plus plus, you end up spending $1,000 or more. The netbook I bought my wife for Christmas was $249. So the iPad is expensive and although for millions of people it will be their only computer, for many of us it will be one of several. I suspect I will keep my Kindle too. There will be many naysayers and critics of the iPad but I am certain it will be a smashing success and a long-term game changer for personal computing. It will become so pervasive in our lives that even though it is a very powerful computer, it will not be thought of as a computer. It is at the crossroads between technology and the arts.
