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For Amazon's Kindle, iPad may be threat or boon

SAN FRANCISCO -- Amazon.com, which has dominated the young but fast-growing electronic book market for the past few years with the Kindle, could face its biggest threat Saturday, when Apple releases its iPad multimedia tablet.

The Kindle starts at $259 and is designed mainly for reading text on a gray-and-black screen. The iPad starts at $499, but with the higher price comes more functions: a color touch screen for downloading books from Apple's new iBookstore, surfing the Web, playing videos and games, and more.

It will take time to determine whether the iPad causes a tremor, a high-magnitude quake or something in between in the e-reader market. But in the meantime, people who read electronic books or are considering buying a reading device will find their choices getting more complicated.

If the Kindle falls out of favor with people drawn to Apple's offering, there could be a very thick silver lining for Amazon: It sells e-books that can be read on many kinds of devices, including the iPad and other Apple gadgets. That means the Kindle could fade and Amazon could still occupy a profitable perch in e-books.

However, Apple could find ways to tilt the field in its favor. At least for now, both the Apple iBookstore and the Kindle service will be accessible in much the same way on the iPad -- as "application" icons that users can click. Eventually Apple could give its own bookstore and reading program more attention on the iPad.

Apple could also try to curry favor with publishers in a way that matters to consumers, perhaps by securing exclusive titles.

Publishers' relationships with Amazon have been strained by Amazon's insistence on charging $9.99 for some popular e-books. Publishers have called that an attempt to get consumers used to unsustainably low prices. Amazon takes a loss on some books at that price, and the publishers fear that if the $9.99 price sticks, Amazon will force publishers to lower their wholesale prices, cutting into their profits.

The iPad gives publishers an opportunity for a new pricing model. Some e-books will cost up to $14.99 initially, and Apple says publishers can't sell books for less through a competitor. The iBookstore is launching with titles from major publishers such as Penguin, Simon & Schuster, HarperCollins, Hachette Book Group and Macmillan. One big publisher, Random House, has not yet struck a deal with Apple.

Amazon declined to comment on the iPad's release.

Although Amazon has tried to snag as much of the e-book market as possible since launching the Kindle in 2007, the company has never revealed how many Kindles it has sold. Analysts estimate the figure at 3 million. They say Apple could sell that many iPads in the product's first year. Amazon has offered only sketches of the Kindle's effect on its business, such as by saying that it sells 48 Kindle books for every 100 hard copies of books available in both formats.

Compared with the Kindle, the iPad would seem to have some disadvantages. The entry-level model is nearly twice the price of the Kindle, yet it can download books only by Wi-Fi Internet connection. At 11/2 pounds, it is more than twice a Kindle's weight. And its battery lasts for just 10 hours compared with up to a week on a Kindle when it has wireless access on.

However, the iPad's touch screen is 9.7 inches diagonally, compared with 6 inches on the Kindle. Ron Skinner, 70, of Las Vegas, who bought a Kindle in February, says he has ordered the iPad because it will offer a better reading experience.

Skinner, an Apple investor who reads about three books a week, says that the contrast between the text and the background is too low on the Kindle's "e-ink" screen and that reading on it bothers his eyes. The difference between the Kindle screen and the iPad screen "is like daylight and dark," Skinner said.

Tim Bajarin, an analyst with Creative Strategies, says the iPad signals the start of a larger shift away from static digital versions of books and magazines. Eventually e-books will be expected to have multimedia dimensions, with video and interactive elements, he says, which will call for something more like Apple's tablet device than something that is largely dedicated to reading.

The main question then would be whether Amazon would want to try to soup up the Kindle to be more like a tablet or whether it would remain content to offer something more specialized. The Kindle has Web access, but it's not a feature that's highlighted or encouraged much.

Since Apple unveiled the iPad in January, Amazon stock has risen about 11 percent, Apple stock 13 percent. But maybe investors haven't seen many risks for Amazon because it's not yet clear how people will take to the iPad.

People might not want it as an alternative to the Kindle and a laptop, says James McQuivey, a Forrester analyst. Instead, he says, they might see the iPad mainly as a big iPod, leaving room for other kinds of devices. And the hype surrounding the iPad may help Kindle sales among consumers who want a less-expensive digital reading experience.

"The iPad will bring all kinds of consumer benefits that the Kindle can't even pretend to attempt," McQuivey said, "but at the same time the Kindle solves a very focused consumer need in a way the iPad can't do well."

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