How Amazon Just Trumped Apple and iBooks in the eBook Wars

To the surprise of almost no-one, Amazon updated the Kindle recently. It’s thinner, more sleek looking – and, most importantly, cheaper.

Way cheaper. In fact, the $139 Wi-Fi only model is almost a third the price of the original Kindle. And rather than that model’s, shall we say, unattractive design, this new Kindle looks pretty damn nice. So, fine. It’s cheaper. It’s sexier. No big deal, right?

Wrong. Amazon just showed how they’re going to win the eBook wars against Apple.

So how are they going to accomplish this feat against one of the few companies – and certainly the biggest – to have made digital media work?

Forget Hardware

Apple’s approach to digital media has been relatively simple: make lots of it available, and make it work best with Apple products. The point, at the end of the day, is to sell hardware.

What a lot of people don’t realize is that the App Store makes a very small amount of profit. For all intents and purposes, it’s a break-even biz meant to push iOS devices which, we hear, Apple may be making a little bit of money on.

Amazon is taking quite a different approach. Instead of attempting to use content to drive hardware, Amazon is doing the opposite: selling cheap hardware to drive their content business.

Now, by itself, this may be nothing huge. The amount of revenue Apple pulls in selling iPhones, iPods and iPads absolutely dwarfs Amazon book sales. But, rather than attempting to beat Apple in the hardware game, Amazon are doing what makes sense: trying to beat iBooks.

How? Simple: by tackling both ends of the market – hardware and content – Amazon have positioned themselves to become the default eBook provider for the English-speaking world.

Why Platform Neutral = Win

See, if you want to buy a book available on the Kindle store, you don’t have to buy a Kindle. Unlike iBooks, which requires that you own an iOS device to read a book on the Go, Kindle can be read on a variety of devices, whether PC, Android, Blackberry – or, yes, iOS devices.

Think of it this way: there is tons of stuff available on the iTunes video store. But to use it, you have to own Apple stuff – and to use it on your TV, you have to own an Apple TV. But if you buy a DVD, it doesn’t matter if your player is made by Sony, Samsung, or is the Hitachi drive in your PC or Mac. Amazon’s approach is much closer to the latter than the former.

So what would you rather have? An eBook you can read anywhere that syncs between all those devices, or one that is constrained to a much more closed ecosystem?

Why Amazon Are Set Even if Kindle Fails

A while ago, I said that the Kindle was toast. And in terms of hardware sales, I still believe the Kindle will be absolutely dwarfed by the iPad.

But by making themselves the default brand for books – and, with this new pricing, a Blackberry/Android app,  making themselves way more accessible than Apple – Amazon will likely be the first thing that comes to mind when it comes to books. What’s more, by positioning Kindle as a platform, rather than simply a device, Amazon are protected should the Kindle hardware business start to drop off.

After all, the millions of people who buy iPads will also be reading books on Kindle, in part because the Kindle app is on par with iBooks. Something similar can be said for the incredible surge in Android devices, or the continuing popularity of Blackberries. What’s more, by making their new Kindle so affordable, they have radically expanded the market for ebooks, particularly when even the cheapest iPod Touch is nearly $200.

By reducing the price to near commodity levels Amazon have really set themselves up to capitalize on both ends of the book market, both hardware and content. And in doing so, they seem poised to do what almost no-one else has seemed able to: finally be the ones to beat Apple at something in the new digital media game.