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Old 07-21-2010, 09:32 AM   #15
Kali Yuga
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I'm not sure what "victory" means, especially since in general I tend to think that competition benefits everyone from the punters to the publishers to the writers. One company holding 70% market share is not always a bad thing, but it's not necessarily a good thing -- even for the company who's got it, if their revenues suck wind and everyone targets them as a result of what they need to do to hold a high market share.

I don't think agency pricing had a big effect here. Without it, Amazon would have continued to subsidize ebook sales in order to capture / maintain market share.

Although I don't mind DRM, in part due to the ability to read DRMed content on a variety of devices, I don't think this will mollify the anti-DRM crowd. In many cases they are opposing DRM on principle rather than practicalities.

Re: Apple, IMO they're not really much of a competitor, at least not yet. Amazon blows them away in terms of sales presentation and execution, not to mention they have 15 years of experience and sales data in the book biz, plus a branding advantage. However it does give Amazon a big competitive advantage over Apple (but not B&N et al) as iBooks will be limited to iPads and iPhones.

More critically, Apple makes its money off of devices; the content largely exists to drive hardware sales, and constitutes a small fraction of Apple's revenues. Amazon, on the other hand, planned from the start to make money from both content and hardware and have them both drive revenues. Thus Apple doesn't really care if people buy iBooks or Kindle books, as long as they buy iPads.

Also, some analysts are recognizing that the iPad is not necessarily an ereader replacement, more a complementary device. My expectation for awhile (and I suspect Amazon's as well) is that the "casual" reader will be happy with a tablet, but those who read extensively (and buy more books, thus driving a disproportionately large amount of revenue) will want a focused device with a better reading experience.

So, I'd say it's the totality of the Kindle experience and Amazon's skills at execution (not all of which is positive, of course), as well as a few structural quirks and branding, that will keep them a big player for a long time.
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