With no end in sight to the fracas that has gripped the publishing industry over the last week -- it's Day 7, and there are still no buy buttons available on Amazon (AMZN) for print and digital editions of Macmillan titles, despite half-hearted promises of "capitulation" and rumors of resolution -- it's becoming ever clearer that the only timetable Amazon respects is its own.Which is why the Amazon's latest acquisition should by no means be taken lightly. According to The New York Times, which spoke to a person briefed on the deal, Amazon has acquired TouchCo, a start-up founded by New York University's Media Research Lab that specializes in touchscreen technology. TouchCo's six-person staff -- which raised eyebrows when its website was taken offline in January and its YouTube channel was set to private -- will be merged with Lab126, the Cupertino, Calif.-based Kindle hardware division.
With Apple's (AAPL) iPad looming just around the corner, the Amazon wasn't about to let its e-reader Kindle stagnate on technology. The question, however, is whether loyal customers, Amazon's bread-and-butter, especially on digital matters, will like the new direction this purchase is likely to take them.
Although TouchCo's products have not been brought to market, the company's technology operates differently (and, allegedly, more cheaply) than the touchscreen technology in Apple devices. Per the Times, which profiled the company late last year, TouchCo touchscreens use a technology called interpolating force-sensitive resistance: Essentially, they become more conductive with increased levels of pressure, can constantly scan and detect multiple inputs, and operate on low power. As a result, TouchCo's technology can make possible "fully flexible multitouch devices." And it can do so at a very low price: Sheets of the touchscreen material could cost as little as $10 a square foot.
Price isn't the only feature that would have attracted Amazon. TouchCo evidently produces full-color LCD screens (like the ones the iPad uses), which raises the more-than-possibility that the next generation of Kindles will move away from the e-Ink based, black-and-white-only displays to flashier, more colorful, LCD-based displays. "If touch screens were added to the Kindle or other Amazon devices, it would bring them up to date with the plethora of other screens consumers are becoming used to," Colin Sebastian, an analyst at Lazard Capital, told the Times. "Any device is at a disadvantage if it doesn't offer it."
But keeping up with the Joneses -- or is it the Jobses? -- may come at a price. E-Ink may be "slow and ponderous" for reference works or multimedia entertainment, but it does work well for dedicated e-reading. And some customers who are happy with the Kindle's current version aren't thrilled at the prospect of a newer, sleeker, touchscreen device. "I have enough trouble with my touch screen cell phone -- no way would I want a touch screen Kindle," one customer declared adamantly on Amazon's popular Kindle forums. "Imagine the problems you would have when you carried it in your bag. Horrors to that thought!" Indeed, in the quest to stay current, Amazon may well alienate the very customers it has long said it prizes the most -- those who "just want to read."
Why do investors make the decisions that they do?View Course »