Google plans to enter the digital book market and directly compete with Amazon's Kindle. Google will allow its partner publishers to make their books available for purchase from any web-enabled device (PC, smartphone, etc), in contrast to Amazon's Kindle Store, which sells e-books that can only be read by the Kindle reader, the iPhone, or the iPod Touch.
Amazon's Kindle has been given many titles - from the iPod of reading to the savior of the newspaper. It is a wireless e-book reader that is linked to Amazon's Digital Text Platform. Although not the first of its kind, the Kindle is made unique by the Digital Text Platform, which enables authors to self-publish directly to the Kindle. Publishers have accepted the Kindle for many reasons, such as the attractive cost structure compared to old methods of printing and distribution and the restrictions on sharing (any purchased book is locked onto the Kindle - no printing or sharing it). Newspapers are also pleased with Kindle's effect on their business (newspaper subscriptions are the Kindle's top sellers), although they are wary of the eminent transition from ad-based revenue to fee-based revenue. The Kindle's business model is also unique in that the first few chapters of any book are free - so the customers can make a purchase decision after they started the book
Google's entry into the market may be troublesome for Amazon. The new Kindle Dx (now available in multiple sizes) is offered at a steep price of $489. If the Kindle network suffers from competition with Google, customers could potentially face a tremendous loss. This, in combination with Google's compatibility with virtually any device may significantly reduce demand for the Kindle.
Before Google's announcement the Kindle's outlook was extremely positive. Barclays Capital predicted Kindle devices would produce $840 million in profit on $3.7 billion in sales in 2012. Citigroup predicted total sales at 500,000 units. It is possible these forecasts will diminish in the near future.
Given the Kindle's high price and sharing restrictions, Amazon appears to have little choice but to promote the physical advantages of the Kindle device and compete fiercely over exclusive distribution rights with publishers. This may also prove to be difficult, because publishers will have little incentive to distribute exclusively to Google or Amazon. It is no secret the record labels agreed to extremely low margins at the onset of the iPod. Any smart publisher would want avoid such a mistake.
http://www.ecommercetimes.com/rsstory/67213.html
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