January 27, 2010, 12:00 AM

Apple’s new iPad could shake up the e-book market

Apple Inc. today unveiled its widely anticipated tablet computer, the iPad, a device designed to compete with Amazon.com’s Kindle e-book reader.

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Apple Inc. today unveiled its widely anticipated tablet computer, the iPad, a device designed to compete with Amazon.com’s Kindle e-book reader.


The device promises to make a big splash in the growing market for e-books. That’s because Apple, No. 5 in the Internet Retailer Top 500 Guide, (a PDF version of the company’s financial and operating profile can be ordered by clicking on its name) is creating a new iBookstore where consumers can buy electronic books. The device will have an iBooks app embedded on the tablet. Five publishers-Penguin Group, HarperCollins Publishers, Simon & Schuster Inc., Macmillan Publishers Ltd. and Hachette Book Group-already support the app, Apple CEO Steve Jobs said today at a press conference in San Francisco.

The iPad features a 9.7-inch color touch screen and virtual keyboard. Besides displaying e-books, the device will enable consumers to listen to music, view photos, play games, watch videos and access the web. The cost of the iPad, scheduled to start shipping in 60 days, will start at $499. The most expensive model, with higher-speed 3G capability, will sell for $829, Jobs said. Consumers can choose from two data plans that range from $14.99 to $29.99 depending on how much data the consumer will download.

The iPad can read e-books formatted to a standard known as ePub, which is supported by most of the e-book readers on the market other than Amazon’s Kindle. This represents a reversal from the online music space, where Apple employed a proprietary format that helped makes its online iTunes store a major source of downloads to its wildly popular iPod music player. In e-books, market leader Amazon is using its own proprietary format, aiming to lock in e-book readers the way Apple did in the music market.

Jobs credited Amazon with being a pioneer in e-book readers. “But we are going to stand on their shoulders and go a bit farther,” he said during the press conference. Apple is No. 1 in the Internet Retailer Top 500 Guide.

It’s not the iPad device, but the Apple bookstore and the prospect that it could become as popular as iTunes, that represents the threat to Amazon, says Maribel Lopez, founder and CEO of Lopez Research LLC, a California consultancy. “People are very familiar with the Apple model. They know how to use it,” she says. Amazon’s focus is not on selling the Kindle device, she adds. “ Amazon just wants to sell books.”

The Apple bookstore could be an important component in increasing the appeal of the iPad, according to recent survey data. Comparison shopping site Retrevo Inc. surveyed 500 of its users between Jan. 16 and Jan. 20, in advance of the iPad launch, and found that 28% of respondents “absolutely need” such a store before buying the device. By contrast, 39% desired a 3G connection and 75% wanted a long battery life. Jobs said Wednesday the iPad battery would last 10 hours.

38% of female survey respondents put an e-book store high on their must-have list, while 25% of male respondents said the same thing.

Consumers will buy 6 million e-book readers this year, according to a forecast released this month by Yankee Group, with at least 19.2 million readers sold by 2013. Though publishing industry estimates suggest e-books represent no more than 2% of overall book sales, about 5.8% of consumers own e-book readers, according to In-Stat, a research firm, with 11.6% planning to buy one.

“I’m a little underwhelmed at their offering,” says Dmitriy Molchanov, the Yankee Group analyst who wrote the forecast. For one thing, he says, the iPad has an LED backlight display that can strain eyes. “It’s essentially like staring into a flashlight.” He predicted, though, that the iPad launch will pressure Amazon to abandon its proprietary format for Kindle.

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