March 4, 2009, 12:00 AM

Amazon.com shakes up the e-books market with a reader app for the iPhone

Amazon.com seemed focused on its red-hot Kindle hardware, but now, through a free mobile app, is enabling consumers to bypass the Kindle and buy and read e-books on iPhones.

A tiny, free mobile application today has surprised and shaken up the e-books market.

Amazon.com Inc. has introduced Kindle for iPhone and iPod Touch, an e-books reader designed specifically for the Apple Inc. hardware and available through Apple’s mega-popular App Store. Until today, Amazon.com seemed to be focusing its e-books strategy solely on its own Kindle e-book reader hardware. Now the millions of iPhone and iPod Touch users can bypass the Kindle entirely, purchasing e-books through Amazon.com on their PC, iPhone or iPod Touch and reading them on their mobile devices.

This greatly increases the number of e-book consumers Amazon.com can reach-and greatly heightens the competition in the growing e-books market (the news comes on the heels of Indigo Books & Music last month introducing Shortcovers, a reader mobile app for iPhones and soon other mobile devices). At the same time, the Kindle mobile app opens up a major new avenue through which Amazon.com can sell Kindle hardware.

“This is an absolutely astute move on the part of Amazon. Since there really is no way people can conveniently try a Kindle before they buy one, Amazon is providing the next best thing,” says James McQuivey, vice president and principal analyst and an e-books specialist at Forrester Research Inc.

And it goes a step further: Consumers who use the Kindle iPhone app can also access the same content they’ve purchased on a Kindle if they later choose to buy one.

“They’ll have a kind of reading flexibility that surpasses the convenience of having a Kindle alone because they’ll have seamless synchronization of the Kindle and the iPhone,” McQuivey says. “Make no doubt about it, this is clearly a pitch aimed squarely at the iPhone’s attractive customers hoping to make them Kindle customers as well. That’s the future of media: Buy content once, then read it or listen to it on any device.”

The Kindle Store offers more than 240,000 e-book titles. Amazon.com’s new Whispersync technology saves and synchronizes a customer’s books and bookmarks across a Kindle and an iPhone or iPod Touch so readers can always have access to their content and never lose their place.

“Kindle for iPhone and iPod Touch is a great way for customers to catch up on their current book wherever they are, like in line at the grocery store or between meetings,” says Ian Freed, vice president, Amazon Kindle.

So the iPhone has become a platform through which Amazon.com, No. 1 in the Internet Retailer Top 500 Guide, can earn additional revenue. A big question is: Why hasn’t Apple, No. 7 in the Internet Retailer Top 500 Guide, begun selling e-books through its iTunes store, making e-books available on its own hardware? Apple did not return calls for comment. But some who watch the digital content market believe Apple has always kept a sharp focus on the audio and visual mediums (including audio books) and will continue to do so, unsure of why Apple doesn’t include e-books in its iTunes roster.

Amazon.com’s timing of the Kindle’s initial release in 2007, the same year the iPhone debuted, suggests Amazon.com questioned Apple’s viability in the e-books market-Amazon.com wanted to plant a flag before Apple did, McQuivey says.

And when it comes to hardware, industry experts believe Amazon.com’s position as market leader in e-books is secure for the immediate future.

“However, the Sony Reader is close on its heels, having sold as much as 80% as many readers as Amazon.com has, even without the wireless download capability the Kindle features,” McQuivey says. “Between the two, Forrester estimates that just over a million users have one or the other today, making it no longer a niche product. Some later entrants will be announcing products by year’s end, including Plastic Logic and Hearst, though both of these devices appear to be focused more on periodicals rather than books. So right now it’s a two-horse race for dominance between Amazon and Sony.”

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