Why the iPhone's No Kindle Killer

In these days of iPhone hype run amok, it's understandable if some people get a little ahead of themselves. Back in 2007, how many people expected the device to become a portable gaming platform that rivals the Nintendo (OTC: NTDOY.PK) DS and Sony (NYSE:SNE) PlayStation Portable? Or, with the help of some mapping software, a personal navigation system that's putting Garmin (NASDAQ:GRMN) and TomTom on edge?

So when I read about industry research firm Flurry's assertion that the iPhone was now set to take market share from Amazon.com's (NASDAQ:AMZN) Kindle in the e-reader market, I took the predictions as a reflection of the tech zeitgeist. But in this case, it probably wouldn't hurt to throw some cold water on Flurry's enthusiasm.

From a hardware standpoint, Apple's (NASDAQ:AAPL) iPhone simply can't compete with the Kindle as an e-book reader. Though the iPhone does have a nice display, it still measures only 3.5 inches. This compares with six inches for the Kindle 2, and 9.7 inches for the more expensive Kindle DX. In addition, unlike the iPhone, the Kindle devices have dedicated keyboards and physical keys for tasks such as searching, highlighting, and page navigation.

But perhaps most importantly, the iPhone relies on an LCD display, whereas the Kindle relies on E Ink technology. While an LCD is just fine for browsing web pages and reading magazine articles, E Ink is much easier on the eyes for reading, say, a 400-page novel. And thanks to E Ink, a Kindle can go up to four days without needing to be recharged -- even while staying connected to AT&T's (NYSE:T) network. Good luck accomplishing that on an iPhone (or any other smartphone) while keeping its LCD lit for a several hours each day.

To make its case that the iPhone is a threat to the Kindle, Flurry noted that the "Books" category in the iPhone's App Store has now eclipsed the "Games" category in having the largest number of titles. But when I look at the top 20 "Paid Apps" in the Books category, there wasn't a single contemporary best-seller. Instead, there were several inexpensive collections of public domain works, four Bible-related entries, a recipe book, a dog trick book, and of course, a book on iPhone tips. Meanwhile, a list of the most popular downloads overall predictably had many free titles.

Compared with the Kindle, whose best-seller list includes many contemporary titles selling for $9 or more, the difference is night and day. The Kindle is being adopted by avid readers willing to carry around an extra device that's focused on replacing their paperbacks. The iPhone's e-reading capabilities, on the other hand, seem to be embraced more by casual readers who don't want to carry a second device, and are simply looking for a bit of reading material while on the go.

It's no surprise, then, that Amazon was willing to create a Kindle app for the iPhone. The company realized that reading an e-Book on an iPhone is a completely different experience, and that embracing the iPhone would do far less to cut into Kindle hardware sales than it would to increase the addressable market for Kindle content.

None of this is to say that the Kindle doesn't have real competition. Sony, with its Daily Edition reader, is a force to be reckoned with. As is Barnes & Noble (NYSE:BKS) with its recently announced Nook e-Reader. But as for the iPhone? Let's just say that Nintendo should be more worried about that device than Amazon.