iPad 2 and implications for Kindle

First, let’s take a look at the iPad 2 announcement call.

Interesting Things from the iPad 2 announcement

  1. Steve Jobs presented it.
  2. iBooks has hit over 100 million books downloaded. Random House coming to iBooks.
  3. 200 million Credit Card accounts across iTunes, App Store, and iBooks.
  4. 100 million iPhones sold.
  5. 15 million iPads sold. $9.5 billion in 2010. Greater than 90% market share. Samsung not doing well.
  6. iPod, iPhone, and iPad as the three pillars of Apple post-PC. Are Apple conceding they lost the PC wars? Why focus on post-PC?
  7. 65,000 apps for the iPad. 100 apps for Honeycomb Tablets.
  8. $2 billion paid out to developers selling apps in the App Store.

All very impressive. Just show iPad 2 already.

The iPad 2

  1. All new design. Completely new.
  2. New, faster chip. The A5. Same power usage as A4.
  3. Dual core processor. 9 times faster graphic performance. Apple does know how to explain things simply – surprising that very few other tech companies use language like this.
  4. Front and rear facing cameras.
  5. Built-in gyroscope.
  6. A third thinner than iPad 1. iPad 2 is 8.8 mm thin.
  7. Lighter at 1.3 pounds.
  8. Same 10 hour battery life.
  9. Available in black and white and for Verizon and AT&T.
  10. The same exact prices – starting at $499. That’s really, really disappointing. You have got to be joking – After selling 15 million iPads you still couldn’t cut prices. This pretty much means little to no threat to Kindle or Nook Color. The lighter weight makes things a bit difficult but the price is a huge barrier.
  11. Ships on March 11th. Wow, that’s quick. On March 25th it ships in 26 more countries, including Australia, Canada, France, Germany, Japan, and UK.

It’s not really all that much of an improvement. It’s better than the iPad, and it will definitely be hard for rival companies to catch up with the iPad 2. However, the price is the same. The dual-core processor and the dual cameras are the only things that scream out at you as big additions.

iPad 2 Software and more 

  1. Accessories – HDMI video out with up to 1080p for $39.
  2. Smart covers that bend and fold around iPad 2 and use magnets and can be used as a stand. They cover just the front. The cover is $39 for polyurethane and $69 for leather. For covers that only cover the front. Strange.
  3. iOS 4.3 comes with faster Safari performance. Some things I have no idea about – iTunes home sharing, AirPlay improvements, mute switch can now be used for orientation.
  4. PhotoBooth for iPad 2. It’s like one of those apps that lets you make funny faces. Don’t really know what to say.
  5. FaceTime. I guess we’ll be seeing millions of ads for this soon enough.
  6. iMovie. Share your videos in HD and it has multitrack audio recording. The rear facing camera has HD video recording at 30 fps.

Implications for Kindle

At $499 for the cheapest iPad 2, there aren’t very many implications.

Size is now lighter at 1.3 pounds, but the Kindle is still much lighter at 8.7 ounces. iPad 2 is thinner at 8.8 mm but it’s the largeness of it that was the issue, not the thickness. iBooks getting Random House is a bit of a threat but Random House is moving to the Agency Model and committing mini-suicide – So, again it’s not as big an issue as it might have been.

Note: The 30% tax is a big deal – However, that affects Kindle for iPhone, and not Kindle.

There really aren’t any big threats for the Kindle here. Rival Tablet makers and the Kindle Tablet now have a higher bar to meet. For the Kindle there’s no tangible threat here.

Implications for Nook Color

Again, the $499 price makes iPad 2 not much of a threat to Nook Color. At $249 (till tomorrow morning $200 at B&N’s eBay shop with a coupon code) the Nook Color is still much better value for money.

It’s a bit of a disappointment. If Apple had priced iPad 2 at $399 it would have forced Amazon and B&N to cut the prices of Kindle and Nook Color. Now we’ll have to wait for some other catalyst.

Apart from the dual core processor and the dual cameras, don’t really see anything worth calling a conference for. Here’s the screen (from the iPad 2 specs page) -

  • 9.7-inch (diagonal) LED-backlit glossy widescreen Multi-Touch display with IPS technology
  • 1024-by-768-pixel resolution at 132 pixels per inch (ppi)
  • Fingerprint-resistant oleophobic coating

An improvement on the iPad, and not much of a threat to Kindle and Nook Color.

More iPad 2, Kindle 3 threads

From the Kindle forum we get this excellent comment about the iPad 2’s impact on the Kindle 3 -

I just read two articles on the Internet confirming a rumor to most likely come true that Apple is going to launch two new iPADS geared to the e-Reader market.

I knew Apple had something up its sleeve to monopolize the E-reader production and what a more better time than Christmas!

If the prices should be in the $300-400 price range for the new models, Apple will certainly have an anaconda that will crush Kindle.

Perhaps it’s a bit of a stretch to call a 7″ screen device an Anaconda. However, the line is pure magic.

Susan U. has a response -

I can sleep better at night now. What a weight off my mind.

Love it. 

Our kindle forum original commenter also has a crazy conspiracy/spy theory -

It’s amusing how companies have spies because the prices for Kindle and Nook along with Sony have all of a sudden dropped because they must have caught drift of Apple’s new iPADS coming out.

So it seems there can only be two possible reasons for eReader price cuts – to compete against the iPad, to prepare for the iPad 2. Things like economies of scale or releasing new models at lower prices or lowering prices to clear stock just don’t apply.

Apple will certainly have an anaconda that will crush Kindle

Let’s find out a little more about Apple’s Anaconda -

  1. Some rumors mention 7″ screens and others mention 7″ and 5.6″ screens.
  2. Arriving before Christmas.
  3. Chimmei Innolux will supply 7-inch IPS LCDs.
  4. DigiTimes and Economic Daily Times (two sources of iPad 2 rumors) differ on some details. DigiTimes thinks the iPad 2 will have a OLED screen.  
  5. Compal Electronics will be assembling the iPad 2. 
  6. Cando would supply the touchscreen technology.
  7. There’s no mention of FoxConn which is not surprising.  

Details courtesy lots of sources including Fast Company. Fast Company thinks size and price are the big two factors and would probably add weight to that. If also thinks iPad 2 will debut at $300 and that’s probably quite likely.

How much of a threat is Apple’s Anaconda?

Well, it depends on whether it is a cheap $250 to $300 Anaconda or an expensive $350 Anaconda.

The Kindle WiFi is pretty safe. There’s no way the iPad 2 is going to be anywhere near $139. Kindle 3 sales will be affected a bit if iPad 2 is around $250 but not much if it’s $300 or more.

There are four main factors that make the iPad 2 better for reading than the iPad -

  1. Lower weight so you can actually hold it easily when reading and your hands don’t get tired. 
  2. Lower price so it’s more affordable. The whole ‘value for money’ angle becomes stronger when you can club ‘does more than just read’ with ‘$300 price’.  
  3. The more compact size means it’s easier to carry and hold.  
  4. It might have the new Retina Display and perhaps that reduces the readability gap between eInk Pearl and LCDs significantly.  

It’ll be quite funny to see the Press finally admit the iPad’s size and weight make it unsuitable for reading. Of course, its only the arrival of a smaller iPad 2 that makes the Press realize this.

iPad 2 is definitely more of a threat than iPad 1. The one area that’s a big concern is the ‘holiday gift’ area. If iPad 2 is $250 to $300 then a significant number of people thinking of gifting a Kindle 3 or Nook 2 might be tempted to gift an iPad 2 instead.

The Kindle 3 and Kindle WiFi and Nook 2 still have significant advantages -

  1. eInk Pearl is much better than LCD. 
  2. eInk is easy on the eyes and for most people LCD is not.
  3. Kindle 3 is readable in sunlight.
  4. Prices for eReaders have become really low.
  5. eReaders are built for reading with few distractions.

However, iPad 2 narrows the gap and forces eReaders to evolve faster.

It’s interesting that Apple are re-attacking the eReader market so soon

There’s lots of talk (mostly from DigiTimes) that the smaller iPad 2s are targeted at reading. It makes you wonder if Apple really does want to go after the eReader market.

If you saw a big emerging market and at the same time thought everyone in it was lost because they wanted to read on black and white screens and wanted to read books instead of throwing birds at pigs – Well, perhaps you might feel you ought to show them the true path. Perhaps Apple feels the iPad 2 will show people that reading without color and touch is a waste and that focusing on books isn’t really worthwhile.

The other possibility is that Apple, at some level, thinks it can steal off more and more readers by promising them more than just reading and take a bigger chunk of the eReader market. By it’s very nature the iPad steals generalists from various niches and Apple must feel that with a lower price and a smaller size it can get most casual readers to choose Apple over Amazon.

We’ll just have to wait and see what the iPad 2 is like and whether or not it affects the Kindle 3. It was a nice few weeks with no ‘Kindle is going to die’ articles – it might be 2011 before we see another stretch like it.

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