Jan 28, 2010, 10.17 AM | Source: Reuters
The buzz in the gadget world has shifted from Amazon.com to Apple Inc with the launch of its long-awaited iPad tablet.
Industry watchers had speculated for months that Apple's new tablet would take a bite out of market share for the USD259 Kindle electronic reader, its best-selling item introduced in late 2007 and touted by Amazon as "the" gadget to buy.
But those fears appeared overblown on Wednesday, with shares of Amazon closing up 2.74 percent at USD122.75 on Nasdaq -- perhaps on relief that Amazon's Kindle remained secure.
"They (Amazon) don't have to worry about the market for their product suddenly drying up because everyone's migrating to the iPad," said Forrester Research analyst James McQuivey.
"Amazon has a year's runway left to show that they're going to stay ahead of Apple, and if they don't, by a year from now, Apple will have a few more content solutions in line," he added. "At that point it becomes a threat if Amazon hasn't responded by then."
James Friedland, a Cowen & Co analyst, agreed.
"This doesn't change the game," he said. "At the same time, Apple is a formidable competitor and our view is that over time Apple and Amazon will emerge as the two largest players (in e-books)."
Kindle should remain the device of choice for avid readers, analysts say, due to its e-Ink technology that minimizes eye strain and its already-formidable network of book choices. The iPad is backlit, which makes it more difficult to read.
Amazon Chief Executive Jeff Bezos has long held that the Kindle is intended for reading books, magazines and newspapers and is not a stepping stone to a more full-featured PC-like device that Apple has now delivered.
"Let's face it, Amazon has millions of people buying books from them every day -- they're putting in comments, they're putting in reviews. You're never going to have that at the iBookstore," McQuivey said.
Still, analysts say while Amazon's headstart has allowed it to dodge a bullet for now, it can't afford to rest on its laurels. The Kindle will likely roll out new features like colour, music and social networking functions, they said.
Amazon is due to report fourth-quarter results on Thursday, with analysts expecting a blowout quarter fuelled by market share gains in the competitive holiday period.