Apple's entry into the ebook market should benefit consumers
byFeb 10th 2010 4:00PM
Apple is considering reducing the price of the iPad.
This might strike you as strange because iPad has not yet hit the market. You cannot even preorder it today. So what's the deal?
What is probably playing out far from the eyes of the consumers is a significant game of business maneuvers and fierce competition.
After a run up of wild rumors, Apple finally announced the iPad's colorful and exciting looks only to underwhelm many observers with its unexciting specs.
But the game is just beginning to unfold. One of iPad's ambitions is to capture the ebook market that Amazon's Kindle reigns. The publishers that were selling ebooks for the Kindle were unhappy with the price Amazon was offering ($9.99) and wanted a higher price ($15). Since Kindle was the king of the market, the publishers had no option but to go along.
Apple offered to let the publishers set the price. That had an immediate effect and Amazon briefly pulled books as well as ebooks from the giant publishing company Macmillan. Clearly , the company succeeded in churning the ebook market.
That higher competition could raise the price of goods is strange, and Brad Stone of New York Times determined that there could be a case of anti-trust lurking there. Amazon admitted the publishers had a monopoly and settled, at least in part, with Macmillan.
The iPad also has company in Google's tablet. Google quietly announced the device it was working on two days before the iPad announcement. On its part, Google too is negotiating with publishers with the Department of Justice looking over its shoulder.
Google might take a position somewhere between Amazon's and Apple's -- it could buy ebooks from the publishers at a higher price and sell at a lower price. It already has many out of print books on Google Books. Amazon, on the other hand, struck a deal with the British Library to distribute 19th century classics for free. The other Kindle like ebook readers, from Sony and Barnes and Noble are small players that do not seem to have played any significant roles in these business maneuvers.
From the consumers' point of view, the new developments should be a win-win in the long run. Two more major technology companies entered the market with devices that would do much more than what the ebook reader does.
The competition has already caused Apple to consider reducing the price of a device it has yet to begin selling. Although the prices of ebooks are inching up, we have little to fear. When the dust settles, and new markets and devices have emerged, hopefully ebook prices will spiral downward. Let's keep our fingers crossed.