Amazon Plans New Kindle E-Reader

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AmazonAmazon.com (AMZN) will introduce a new Kindle in August, according toBloomberg. The news agency says that product will be thinner and have a "more responsive" screen, which means it is likely to have a more powerful processor.

Even with improvements, the Kindle is no more than a simple e-reader and investors in Amazon have been worried that the Apple (AAPL) iPad, which can act as an e-reader and a tablet PC, will take market share from largest online retail company. The improved Kindle may be an attempt to hold off Apple's attack. It already has two advantages over the iPad. One is price. The Kindle sells for $259 and the iPad base price is $499. The other advantage is that the Amazon e-book store is widely known and has a huge selection. The Kindle is the best-selling product at Amazon.com and the company means to keep it that way.

Amazon chief Jeff Bezos says his company has sold millions of its Kindle e-readers. He won't be more specific than that. Several industry experts put Kindle sales at about 3 million at the end of Amazon's fiscal quarter, which was January 28th. The Amazon e-book store is believed to be the largest in the U.S. by market share and number of titles. The company has had disputes with several book publishers, but those now appear to be over.

Among the risks that Amazon will take with a new e-reader is that its improved features may make it more expensive, which would price it closer to the iPad. To make the price difference closer, Apple will probably drop the price of the iPad -- a normal pattern that consumer electronics companies use to pick up sales and market share. A more expensive Kindle, which is still only an e-reader, could suffer in comparison to a cheaper iPad.

Bezos says he has no plans to expand the Kindle's functions beyond what they are now. Forrester Research reports that it believes 6 million e-readers will be sold this year and that Amazon will have 60% of the market. That may be true unless consumers are willing to pay for Apple's product, which is essentially a tablet with e-reader functions. If that happens, Bezos will rue the day that he did not move up-market.
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