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Amazon is brightest hope of a viable alternative to iPad

Apple’s iPad 2 went on sale last Friday, with few doubting that it would be a strong seller, since it has very few competitors plus the Apple brand

By PETER WHITE

Published: 17 March, 2011

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Apple’s iPad 2 went on sale last Friday, with few doubting that it would be a strong seller, since it has very few competitors plus the Apple brand. But, while there are the usual near-hysterical unit forecasts from bullish Apple fans, there are serious questions for the broader market. In the glut that is likely to appear as scores of vendors chase the tablet dream, how many vendors can actually make an impact, and which of them will really be able to challenge the iPad’s lengthy headstart?

Meanwhile, Apple has its own showdown to contemplate, when it introduces its new rules on in-app purchasing at the end of June. At that stage, it will require apps that offer content through an external store also to offer it through in-app purchasing. These apps will not be able to provide a link to their own external stores, and they must give Apple the same 30% share that it makes from all App Store purchases.

It is not clear why Apple has delayed enforcing the rule – clearly designed to protect its own revenues, but also its position as the primary point of contact for the user’s mobile activity – until June 30, since it already barred the Sony Reader app from its App Store last month on the basis of the same terms and conditions. The period of grace for other players is probably to give publishers time to rework their products, but may also be giving Apple itself time – to build up iPad 2 sales and strengthen its hand against those content providers which do not choose to comply quietly with its demands.

Chief among those, of course, is likely to be Amazon, which may also be the biggest threat to Apple’s tablet lead should it launch hardware to go with its upcoming Android app store. The more headstart Apple can build up for iPad 2, the harder it will be for Amazon to play hardball over in-app purchasing come July 1. However, the retailer has the weight and self-interest to make trouble for Apple.

Currently, its Kindle for iOS ereader app handles all ebook sales through Amazon’s own Kindle web store, with the revenue divided only between Amazon and the publishers. The more successful Apple’s tablets and apps are, the more difficult it will be for Amazon to walk away from its iOS platform – but it could whip up a dangerous level of consumer, developer and even regulatory opposition to the iPhone maker (though, as the proud owner of a closed ecosystem itself, it would need to tread carefully).

Its hand would be even stronger if it was threatening Apple on other fronts, such as hardware. Though Amazon will never be primarily driven by hardware sales, its Kindle ereader has shown how it can increase overall content sales by offering an optimized experience to a particularly motivated (and high spending) segment of the population. What worked for booklovers could be extended to a strong apps and video experience on an Amazon Android tablet.

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