Wednesday, January 20, 2010

Amazon Kindle vs Apple for eBooks. Is an Apple eReader app coming?

The big news today is that Amazon will be offering 70% net royalties for Kindle sales soon. (press release) This announcement is just one day after the Wall Street Journal reported that Apple is working with HarperCollins to bring their eBooks to the iTunes store (WSJ article)

Since Amazon is currently only paying 30%, it looks like they are concerned about Apple. Amazon has other competition paying up to 80%, but that didn't cause them to blink. I suspect that they've known for a while that they would have to raise the rate, and had this plan in the drawer awaiting the need.

But what is Apple going to do? Obviously they will be selling eBooks through their iTunes store for buying and reading on iPod and iPhone devices. Most people expect Apple to introduce a tablet device on the 27th, with assumptions that this device will be running the same operating system as the iPod/iPhone. However, there is a strong possibility that they will be upgrading this from the current version 3.1.2.

Would Apple include an eReader from Apple or HarperCollins? Since the introduction of OS version 3 last year, users could purchase content while within the application. Amazon's Kindle app has yet to take advantage of this feature. But if Apple preloads an eReader onto every new device plus all current devices via an update, they could easily overtake Amazon's sales for books read on the Apple handheld platform.

Apple enjoys selling music, apps (some of which are eBooks), and videos on their iTunes network, but they get no rewards from current book sales from Amazon, even though these books may be read using the iPhone Kindle reader. When Apple provides books on iTunes, they'll take a cut from those sales. Surely they'll want to funnel as much buying to their own iTunes eBooks as possible, and having their own eReader would do just that.