Apple Fails to Impact Amazon as iBookstore Struggles After Six Months

Amazon and Barnes & Noble have both gained momentum in past six momths

   

Apple Fails to Impact Amazon as iBookstore Struggles After Six Months

The dialogue surrounding Apple Inc.‘s (NASDAQ: AAPL) iPad since its April release has hailed the tablet’s widespread success as not just emblematic of a sea change in consumer grade computing technology but also the death of the still larval e-reader market. With an install base estimated to be more than three times that Amazon Inc.‘s (NASDAQ: AMZN) Kindle, a device that’s been on the market five times longer than Apple’s machine, there’s compelling evidence that the iPad has indeed killed the e-reader before it truly had a chance to shine. This point of view presupposes that iPad users are using their tablets as e-readers though, purchasing e-books through Amazon’s Kindle or Banes & Noble (NYSE: BKN) Nook apps or, more importantly, Apple’s iBookstore, the literary equivalent of iTunes that launched alongside the iPad last spring. If the iBookstore’s first six months are anything to go by, though, Amazon, Barnes & Noble, and even beleaguered players in the e-reader market like Sony (NYSE: SNE) have less to worry about than previously thought.

David Winograd of AOL (NYSE: AOL) tech blog The Unofficial Apple Weblog recently compiled loose data regarding the number of e-books available through the iBookstore and prospective sales through the storefront, and the numbers are a troubling indictment of Apple’s attempts to compete with Amazon and Barnes & Noble’s competing outlets. Apple has not publicly stated how many titles are available in the iBookstore since the service first launched earlier this year. O’Reilly Research estimated last April that the iBookstore offered between 46,000 and 60,000 free and paid books, the overwhelming majority of which were fiction titles (29.5%) published by Pearson PLC‘s (NYSE: PSO) Penguin Group, News Corp‘s (NYSE: NWS) Harper Collins, and CBS‘s (NYSE: CBS) Simon & Schuster. Winograd pointed out that 30,000 of the books available on the iBookstore are free, out-of-copyright titles provided by the Project Guttenberg library, further limiting the selection of contemporary titles on the service.

Apple still hasn’t come to an agreement with Random House Inc. to bring theirs or any of their imprints titles to the service. Random House’s policy is that their vendors set pricing, and Apple’s refusal has kept the publishers hundreds of thousands of books off of the Apple retail space. This means that 30 of the United States’ most powerful publishing imprints, publishers of best-selling titles like Steig Larsson’s The Girl with the Dragon Tattoo, remain exclusive to competing e-book outlets like Amazon’s store. Apple’s e-book business can’t compete in the current marketplace because it simply doesn’t have the selection necessary to do so. Author Joe Koranth has been very vocal about his sales success with a line of independently published titles on Amazon’s Kindle marketplace. Koranth claims to sell 200 titles per day though the Kindle device while he reports around 100 titles sold through the iBookstore each month.

Rather than look to conquer the e-book market in the same way they have the digital music market in the past six years, Apple should instead turn their efforts to explicitly try to conquer the e-reader market. Both Amazon and Barnes & Noble have seen great momentum with their e-readers in the past six months. Amazon’s new WiFi-only model of the Kindle has been especially successful. Much in the same way Amazon and Barnes & Noble can’t hope to make real inroads against Apple’s music service, Apple should not expect to impact those retailers’ e-book businesses. The iBookstore is too little, too late and Apple should instead begin emphasizing how both Barnes & Noble and Amazon’s titles are available right there on iPhones and iPads through those companies’ respective apps. AAPL investors don’t need the iBookstore to succeed and, ultimately, Amazon and Barnes & Noble shareholders don’t need devoted e-readers to succeed. What they need is synergy between Apple’s hardware and those booksellers’ digital retail spaces. Then some real money can be made.

As of this writing, Anthony Agnello did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, http://investorplace.com/2010/10/apple-fails-impact-amazon-ibookstore-struggles-after-six-months/.

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