I am a long-time customer and fan of Amazon, even when I was in Australia I still bought all of my books from you. Every so often I am tempted to look through my receipts and add up all of the purchases I have made over the years, then I decide the number would scare me.
It saddens me to think that, as things stand, Apple are about to blow you out of the water in terms of e-books. This really should be your domain, you started off selling books, you brought the first viable e-reader to market and you have a large market share. Sadly all of that will cease to matter, when Apple bring out their shiny new hardware and iBook store.
There are some things you just can't beat Apple on:
Industrial Design - I'm sorry but all of the versions of the Kindle have been kinda ugly. Sure they're thin and light but the keyboard on the bottom makes it look ridiculous. The screen may have the same form-factor as a book, but the device as a whole does not, you need to ditch the keyboard.
Multimedia Content - With the LED-backlit IPS display, they will crush you at displaying colour magazines, movies, tv shows and websites. This gives them much greater flexibility on content.
Simplicity and Elegance - In terms of the overall user experience, you just can't beat Apple on making things easy for people.
So can we agree, that going after the tablet computer market is a waste of your time? What you need to do is out 'book' them! Where they go wide and try to do everything for everyone, you need to go narrow and do one thing really really well. Their success so far has been with products that take an existing model and make it shinier and easy to use - computers, mp3 players, phones etc. With e-books they have to totally change the way people use and interact with books, which is a much harder task. Just look at the difficulty they are having with the AppleTV. So if you focus on books and offer significant benefits to customers, you might just be able to take Apple on at e-books and win.
What do you already have in your favour?
E-Ink - Ok there are some issues with the refresh rate for page turns and lack of colour, but for reading it is still much easier on the eyes than an LCD. It also leads to ...
Great Battery Life - You get one week of reading on a Kindle on a charge Vs 10 hours on an iPad. That is another major advantage and a big benefit for travellers.
Database Of Reviews and Recommendations - This is a huge advantage for existing customers, from the start you can recommend the best content for them and you have a wide selection of reviews. Apple will have to build all of this from scratch.
Physical Distribution - You can sell both physical and electronic versions of books, they can only sell electronically.
Based on the above, what could you do that would offer significant benefits compared to Apple?
Free Downloads Of Books People Already Own - You have an enormous database of people's book purchases, why not combine that with the Kindle and offer them free versions of electronic books they have bought previously? It wouldn't have to be every book, but if you gave people say 20 free books that they had previously bought from Amazon when they got a Kindle, that would be a big incentive. Rather than paying for the hardware and having to pay again to get content, you could give them some free content, that you know is of interest to them, to get them started.
Cheap E-Books With A Physical Book Purchase - If when someone bought a book, they could get the e-book for a low price, say $2, it would be an easy decision. Again this would make a big difference, even if people weren't fully committed to moving completely to e-books, this might get them started on the way. It would also be useful for traveling, you might prefer to own a book, but having a library of e-books on a Kindle would be useful while you were away. Or if like me, they are concerned about not really owning electronic copies, the safety net of a physical book would be appealing.
Set An Open E-book Standard - Ok maybe this goes against the idea of getting paid for both the hardware and the content all the time. But how many people would buy from you, if they knew that they could use other sources of content on your hardware and your content on other manufacturers hardware? It would also give you greater flexibility because other manufacturers could come up with more niche hardware, but people would still buy content from you. Or if you came up with killer hardware, people could use content from multiple stores on it. This would break down people's resistance because they wouldn't feel locked in to a single ecosystem. The trick would be, to then build an ecosystem so good that people wouldn't want to go elsewhere (see Music - iPod + iTunes).
None of the above would be a panacea, you will still have to continue to improve the Kindle hardware. But what the suggestions above do, is reduce people's resistance to buying and if you can get more people started on your hardware and ecosystem, you have a much better chance of competing. Remember, you need to focus on adding value for your customers NOT trying to make more money for publishers. Though if you get the former right, the latter will follow.
I will certainly continue to buy my physical books from you and if you implement any of the suggestions above, there is a good chance that I (and many others) will buy e-books from you too.
PS Please feel free to check out the rest of my blog posts on the subject of physical books Vs e-readers.
Books Vs E-Readers Series
1 - Introduction
5 - Conclusions
6 - Redux - An Open Letter To Jeff Bezos