Originally Posted by latepaul
I started to write a reply about how whilst I agree largely derangedhermit there's an issue with there being limited competition when users are locked-in to particular stores by proprietary formats.[...]
Because I can buy an epub - of the same title - in various different stores and thus there's real competition. However unless I deDRM and convert then there's usually only Amazon selling Kindle-compatible formats.
Using proprietary technology to lock in users is a preferred method to help establish a monopoly. Doing it by lower prices is a last resort, the least desireable alternative. Companies like Amazon and Apple know they can command a premuim, if they want to, due to captured customer base.
The statement that epub creates "real competition" is incorrect. It could be so, if you had naive sellers, or hundreds of sellers of abou tthe same market size, but you do not. It is easy for the large epub booksellers to track each other's prices in real-time using software and price match (keep prices stable, or as high as possible). Airlines do it, retail chain stores do it, etc.
To start a price war, you need an in-place sustainable cost advantage. Walmart has their distribution and inventory system (Amazon has tried to dupicate this advantage for physical goods). I don't think such a thing can be created in the ebook market. If someone tried it, it would result in a "race to the bottom" where all participants make less money than otherwise. Unless you think your company would be one of the last two standing (a monopolist) as the others leave the business, and the entries to new competitors is high, it would be an obvious mistake (and failure to fulfill the fiduciary responsibility to shareholders) to start such a price war.
The large publishers are in the same position, I imagine - they have limited competition in the pbook business, and as a result have significant overhead. None of them could afford a price war based on internal efficiency. One component of their cost is what they pay authors, and if they try to cut that, popular authors will move to another publisher.
Amazon probably sees their only main competition in the west as Apple and Google. I don't know about China or India. I doubt the Chinese gov't will let any non-Chinese company be a dominant book seller in the future.