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    IPad's Versatility Threatens to Sideline E-Readers - Via BusinessWeek

    IPad's Versatility Threatens to Sideline E-Readers

    Amazon may need to cut prices or add features to its Kindle e-book reader to compete with Apple's color-touchscreen tablet, analysts say

    By Olga Kharif

    Internet retailer Amazon.com (AMZN) may need to write a new chapter for the Kindle in the face of fierce competition from Apple's iPad.

    Since Apple (AAPL) announced on Jan. 27 that it would sell a versatile tablet computer that lets users read electronic books and perform a range of other computing tasks, analysts have said the iPad would likely take a bite out of sales of dedicated e-book readers such as Amazon's popular Kindle. In light of Apple's Apr. 8 announcement that it sold 450,000 iPads in less than a week, Wall Street analysts are already slicing their forecasts for Kindle sales.

    Charlie Wolf, a senior analyst at Needham & Co. who has a "buy" rating on Apple shares, on Apr. 9 cut his forecast for Kindle sales this year, settling on a range from 2.5 million to 3 million units, in place of a previous forecast of 3.6 million units. Wolf estimates that Amazon sold 2.2 million Kindles in 2009. "It's not a compelling product," he says of the Kindle, because Apple's iPad offers more features, such as the ability to play video, plus a more compelling design.

    Piper Jaffray (PJC) analyst Gene Munster, who has an "overweight" rating on Amazon shares, cut his 2010 forecast for Kindle sales by 400,000 units, to 3.45 million. Amazon's top-of-the-line Kindle DX, which is designed to let users read e-books on a black-and-white screen, is selling for $489, just $10 less than Apple's least-expensive iPad.

    The iPad starts at $499 for a model with 16 gigabytes of storage, a color touchscreen, and a library of 60,000 e-books. It also affords users the ability to watch videos, listen to music, and run a wide variety of applications. "No one in their right mind is going to buy a Kindle DX," says Munster.

    consumers dumping Kindles for iPads

    To keep pace with consumers' heightened expectations about what a tablet-style computer should do, Amazon may need to lower the Kindle's price or introduce such new features as a color screen to make the device more compelling, analysts say.

    Many iPad buyers seem poised to use them as e-reader replacements. On Apr. 3, the day the tablet went on sale, Piper Jaffray surveyed 448 customers in line at Apple's New York and Minneapolis stores. Ten percent of prospective buyers said they had considered a Kindle but decided instead to buy an iPad. And 58% of the respondents who already owned Kindles said they planned to stop using them in light of their iPad purchase.

    Munster recommends that Amazon drop prices by $100 on its smaller Kindle reader, which costs $259 and sports a 6-in. screen, as well as on the Kindle DX, which has a 9.7-in. screen. "If they lower the Kindle's price, it'll survive," says Munster. "If they don't, it won't."

    Susan Kevorkian, an analyst at market researcher IDC, says Amazon needs to update the Kindle with a color screen and replace its buttons with touchscreen capabilities. "They absolutely need a color screen—the sooner the better," she says. Earlier this year, Amazon acquired Touchco, a company that makes touchscreen technology.

    via businessweek.com

    Not to be all: "duh," but duh. I'm not going to beat my chest and claim to love all that Apple does, but man ... the iPad feels like a natural extension to things that I never even realized could be done a different way.

    My only wish - Give me a pen or something to hold with any of the sketch applications. Some science just needs to stay old school.

    • 12 April 2010
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    I work in advertising, but try not to make it my life. I love writing, art and design - and focus my time on these when I'm not working or hanging out with my family.

  • About Drew Ostry

    I work in advertising, but try not to make it my life. I love writing, art and design - and focus my time on these when I'm not working or hanging out with my family.

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