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Originally Posted by markbot
my theory is that amazon has lost its pricing advantage on ebooks because of the change in the model and will now need to focus more on the hardware imrpovements. its books are more or less priced the same as other stores now, although haven't confirmed this. of course, they have a head start in the market though...but i think the surprising gains of the nook have scared them. i think the next kindle will be a significant leap forward. the previous generation was only a moderate improvement overall--just a newer screen essentially.
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While I agree that Amazon has, in large part, lost its pricing advantage, I don't think it's really afraid of B&N. I think what it's really concerned about is Apple - specifically, the possibility of there being a widely popular tablet used for e-reading that is incompatible (or too expensive) with/for Amazon's books.
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the next generation will have a lot more features is my guess. touch screen is very likely. color is even possible. they will probably increase the screen contrast as they did in the previous generations. it could be android based and have all of the android apps....although would present issues with 3g data usage.
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Because I think that Amazon is most worried about the iPad, I believe that their approach will be to stay tightly focused on differentiating themselves from the iPad by: (1) focusing on e-ink; and (2) keeping their price low enough that readers will buy an iPad and a Kindle.
Keeping these two points in mind, I don't think that Amazon will add tablet-like features to the Kindle unless it could do so without increasing the cost - there's not a lot of point in competing directly with the iPad anyway, as e-ink isn't nearly as responsive as an LCD screen. However, if a new e-ink screen comes out with an additional 50% improvement in contrast, I think that Amazon *would* add that to a new Kindle, as that would improve the Kindle as an e-ink device and further separate it from the iPad as a device.
And as impressive as the iPad 2 is as a tablet, the fact that Apple did not add a retina-style screen means that, as an e-reader, it's not really an improvement over the iPad 1. I think that Amazon will be more worried about the next iPad, if, as rumored, it has a retina-style screen: that would make it a better e-reader than existing iPads and more of a threat to e-ink readers.