The iPad: A Huge Winner for Amazon

Apple's (Nasdaq: AAPL  ) iPad, introduced this weekend, is a decent alternative to the Kindle, Barnes & Noble's (NYSE: BKS  ) Nook, and varying tablet PCs from Sony (NYSE: SNE  ) and Hewlett-Packard (NYSE: HPQ  ) . But for all the hype that surrounds this latest bit of iCandy, Amazon.com (Nasdaq: AMZN  ) may outdo all except Apple in reaping benefits from the iPad.

Why? The Kindle app for the iPad is every bit as good as Apple's iBooks, yet its inventory boasts 7.5 times as many titles at launch: 450,000 versus 60,000, according to media reports. Apple also failed to reach an agreement with publisher Random House before shipping the iPad, which means eager readers will need the Kindle app or a custom alternative from Kobo to download work from The Da Vinci Code author Dan Brown and other Random House writers, The Wall Street Journal reports.

Except for some bells and whistles, there appears to be little difference between Kindle for iPad and iBooks. Both are elegantly animated and use the device's bright display to maximum effect. Both allow for bookmarks and other standard features you'd expect in an e-reader.

And that's important. By making an app that's every bit as good as iBooks, Amazon fulfills a strategy CEO Jeff Bezos first talked about a Wired conference last June, in which he announced that he'd separate his company's e-bookstore from the Kindle.

"Separating the hardware from the store means that even if Apple does come out with a killer tablet, users would still have the option to buy from Amazon thanks to the Kindle Reader for iPhone -- and Amazon is likely to have the greater ebook selection," I wrote at the time.

Now that day is here and ... Amazon's is the biggest bookstore on the iPad. Surprise!

To be fair, having Kindle editions on the iPad isn't likely to mean much to Amazon over the short term. But over time, the iPad could become a huge and very profitable channel for the e-tailer, especially if Amazon and publishers reach a mutually beneficial accord on ebook pricing.

It's almost certain they will. Amazon has little choice but to do what it can to make publishers happy, and publishers aren't exactly swimming in profits right now. They need Apple and Amazon to succeed in selling ebooks.

With the iPad, that job just got easier.

Will the iPad live up to the iHype? Discuss in the comments box below.

Apple and Amazon are Motley Fool Stock Advisor selections. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is looking forward to the return of Gordon Gekko to the big screen. But then again, aren't we all?


Read/Post Comments (14) | Recommend This Article (22)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 05, 2010, at 1:48 PM, XMFTom7 wrote:

    I'm not convinced that NOT being able to download Dan Brown is necessarily a *bad* thing. ;)

    Of course, Amazon's still having problems with its own relationships with publishers -- note the latest game of chicken that Penguin and Hachette are playing. I suspect that this is going to be the norm for a lot longer than anyone is going to be happy about... and the folks getting the shaft are the writers and their readers.

    As the Chinese curse says: "May we live in interesting (read: disrupting) times." :)

  • Report this Comment On April 05, 2010, at 2:28 PM, kaplancreative wrote:

    Not just bells and whistles separate the two Apps. Kindle for iPad app is quite handsome, and does seem comparable to iBooks at first glance. (Especially like the black on neutral sepia text option.) But the text on page is not word-by-word interactive... ie no dictionary lookup, highlighting, commenting. That's a BIG diff and a drawback. This would presumably change in future Kindle for iPad releases .. but iBook store might just as likely broaden its title offerings by that time. So this is still a horse race.. with iBooks App well ahead in my opinion.

  • Report this Comment On April 05, 2010, at 3:16 PM, PorfolioTheory wrote:

    The biggest difference (and one that I think will make iBooks the standard over kindle on the ipad) is that you can buy book in-app from the iBookstore. Are people really going to use kindle app, exit and then open up the browser to buy books? Seems subtle, but I think this will make all the difference.

  • Report this Comment On April 05, 2010, at 5:32 PM, techhooligan wrote:

    Lets not forget the lack of organization. Though I deal with it because I had no option for fixing this, I hate hate hate, that all of my books are listed and are unable to be cleaned up in anyway. Why couldn't kindle push a firmware update to fix this? I will be switching to the ipad as soon it's delivered.

    While sitting high and pretty, Kindle ignored lots of little things that could have really improved what was a great ereader.

  • Report this Comment On April 05, 2010, at 6:27 PM, memoandstitch wrote:

    I don't understand why the publishers don't come up with their own iBook app (so they don't have to deal with either Amazon or Apple). Maybe they are too illiterate to write programs.

  • Report this Comment On April 05, 2010, at 6:34 PM, watersm wrote:

    Even if iPad outsells Kindle, Amazon still gets to sell either its app or the books themselves to Apple owners.

  • Report this Comment On April 06, 2010, at 8:27 AM, TMFMileHigh wrote:

    Thanks for your comments, everyone.

    @TMFTom7: Touche. Having Brown's books available isn't necessarily a huge win, and I agree that there will be more wrangling between publishers and retailers over pricing. But I also think they'll figure out an equitable deal; there's no choice but to figure out a model where there's enough profit to go around.

    @kaplancreative: You're giving Apple a ridiculous amount of credit. We already know from Amazon that future versions of the Kindle app will have these add-ons, and what's in iBooks now is hardly perfect. Example: Highlight and click on "Eeyore" in the copy of Winnie the Pooh that comes with the iPad. No definition given. (Saw this live at the Apple Store.) All that matters in this horse race is selection, and on that basis, Amazon is well ahead.

    @PortfolioTheory: You may be right, but iTunes has never been the sole source of music for iPod owners. In some cases, it isn't even the primary source. I expect consumers to behave similarly when it comes to the iPad.

    @watersm: That's my point. Amazon has planning for this day for some time.

    Thanks again and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On April 06, 2010, at 8:31 AM, TMFMileHigh wrote:

    'Morning all,

    For those who haven't yet seen it, here's InformationWeek's Fritz Nelson showing off some of the more notable iPad apps, including the Kindle and Netflix apps:

    http://www.youtube.com/watch?v=BON9_fCYYXE

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On April 06, 2010, at 8:43 AM, nysmoneyman wrote:

    big win for UPS also as they are the only shipper to ship the iPad because of a contract with Apple

  • Report this Comment On April 06, 2010, at 11:22 AM, ddirig wrote:

    iBooks for iPad is NOT compatible with the iPhone. Thus , iPhone users (like myself) who are not willing to pony up or another iDevice will stay with Kindle for iPhone for mobile reading. Round goes to AMZN.

  • Report this Comment On April 06, 2010, at 11:47 AM, PsymonPsays wrote:

    I realize you're merely comparing an app, but I think we need to take a look at the bigger picture here. A few points:

    1. For the average user, iPad will fulfill 90% of what most people do on a laptop. Kindle doesn't - and won't.

    2. Apple is slowly becoming a media company. Book titles will grow exponentially very quickly. While you're waiting for more book titles, you can play games, listen to music, browse the web (a beautiful experience), publish documents, write blogs, organize photos, watch movies and TV shows - in HD, create presentations, get your e-mail, chat with friends, etc. etc. etc - all while millions of software developers stumbling all over each other to develop apps for the iPad.

    3. Apple is a lifestyle brand and has more social proof than Amazon. No other company in my mind has consumers buying different color iPods as accessories to match their outfits. It's better to be first in the mind than in the market. Apple is arguably first in the mind. My point? Consumers want what's cool and they'll buy iPad over Kindle because of it. Flock theory at its finest.

    So, even though Amazon has the advantage of selection (for the moment), they still have to contend with Apple rapidly taking market share. iPad is arguably a better, more desirable device. Plus, there will be more and better book-reader apps so I guess the argument could be considered moot. I'll get off my soapbox now.

  • Report this Comment On April 06, 2010, at 9:02 PM, TMFBreakerTAllan wrote:

    TIm

    I think you are right. But looking at Apple revenue - Apple is first and foremost a hardware company. The content delivery revenue from iTunes/Books is dwarfed by what Apple sells in terms of physical products.

    T. Allan

  • Report this Comment On April 09, 2010, at 9:10 AM, kaplancreative wrote:

    Following thread to see how situation evolves. Find it ironic that the Kindle .. which until last week was a very modern piece of gear... suddenly feels quaintly oldschool. Clicking mechanical buttons to turn pages? Using a joystick to move cursor around? How retro!

    Guess that's the point. Whoever's device and App wins, the entire experience of e-reading (and e-grazing in general) is about to jump orbits. Glad to be in on the ride. (Thinking of bronzing my K2 as an early 21st Century artfifact to show my grandkids.)

  • Report this Comment On April 09, 2010, at 1:51 PM, TW35154 wrote:

    Hooray for Apple! But, when is it going to filter down to TQNT (your related recommendation)? I would have expected that Apple's IPad would have bumped a little more than it has. Were you guys wrong that IPad's fortunes would carry its related inner software to new highs ?

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