Amazon.com (NASDAQ:AMZN), said last week that it has sold 105 digital books for every 100 printed books since April 1. For perspective, consider that the company has been selling print books for 15 years and books for its Kindle e-reader for less than four years.
And there’s more good news According to research firm Caris & Co., e-book sales at Amazon are expected to top $7.96 billion in 2012.
But the celebrations need to be tempered with caution as competitors such as Apple (NASDAQ:AAPL) raise the bar in the digital media sweepstakes in terms of affecting margins in the publishing industry.
Low e-book production costs have taken publishers out of the equation, and at the same time bringing higher royalties for authors and a near monopoly for Amazon to the extent that $9.99 had become the de facto price for e-books.
Until the iPad came along, that is.
The iPad can be used for several activities, including reading. And despite the back-lit display, the tablet experience, with its touch-screen technology and color pages, is superior to the e-reader experience.
The iPad sells at a relatively higher price (it costs about four times as much as a Kindle) but it hasn’t done too badly for itself as a Kindle competitor. The device, which was launched last year, racked up 5 million book downloads within its first 65 days and cornered 22% of the e-book market.
What’s more, Apple CEO Steve Jobs has said the iTunes library already has credit card details of 125 million users, thus making impulse purchases at low price points that much easier.
As if that wasn’t enough, Apple is also challenging Amazon’s hegemony as price arbiter for e-books by pricing its books at publishing model of $14.99 for many best-selling hardcover titles. The increased price, which was agreed to as a way to get major publishing houses on board, will fund Apple’s move into the distribution channel and recoup publisher costs. Needless to say, publishers are already lining up behind Jobs with book publisher Macmillan firing the first salvo.
Add the iPad’s already phenomenal popularity (7.3 million of the devices sold during the last quarter of 2010 alone as compared to Kindle’s 6.6 million devices sold in the entire year) and Amazon has an e-book battle on its hands.
As of this writing, Rakesh Sharma did not own any position in the stocks listed above.