What's Next For Amazon, Kindle DX and E-Reading?

Indeed, with so much analysis both ahead of and following the actual announcement, there's been little opportunity for Amazon to preserve much mystery at all.

Channelweb.com has analyzed some of the big issues facing Kindle DX. For example, the display isn't yet in color, the device might cost too much, it's going to take a lot to entice students despite the obvious cost benefits of digital textbooks and despite the compatibility with other formats, Amazon Kindles still can't offer EPUB, the Open eBook Standard format established in 2008 by the International Digital Publishing Forum.

We asked Ezra Gottheil, an analyst with Technology Business Research, to take us through what's coming next for Amazon, the Kindle DX and e-reading in general. Excerpts of our conversation follow.

On challenges for the Kindle DX: I think this is quite a good step forward for Amazon. The only piece of the puzzle that doesn't fall into place is the idea that it's going to save newspapers. Newspapers have to deal with the Web. You're going to see convergence happen pretty quickly between e-book readers and Web browsing devices -- the e-book reader alone is a temporary state. Amazon has already indicated, with the creation of a Kindle application for [Apple's] iPhone -- that it's not going to resist this inevitable force of history. We've achieved critical mass on e-books at this point, and the Kindle and Kindle DX are simply the first in a series of devices that are going to drive e-books forward.

On why Amazon would roll out a new Kindle if it knows e-reader-specific devices will give way to multipurpose devices anyway: Because it works for now. It's too expensive right now for the mass market, but eventually, as demand scales up, prices will come down. When the iPhone was introduced, it was $600, and Apple sold it to people who were willing to spend that then. But I don't think of this as that type of prelude, either. The Kindle DX's positioning as a textbook reader for universities is very good for Amazon. Kids have to shell out that much per semester, per course, and overall it might mean the net textbook cost is lower.

On why Amazon would be fine with an Apple multipurpose, e-reading-enabled tablet: Amazon has signaled that it's perfectly comfortable having a complementary business model to Apple's. I do think that Apple will come out with a device and among its uses will be as an e-book reader. But Amazon's business is distributing content and selling stuff. This tidy but small device is for Amazon a secondary market, just as the iTunes business is secondary for Apple. I don't think their [Amazon's] main business is very vulnerable whatsoever. It's understood that competing devices may take away business from the Kindle, but if Amazon is selling through a bunch of different means -- the Kindle, the retail business, the Kindle applications, everything -- the total dollars it wins can be enormous.

On what else he takes from the Wednesday announcement: For me, the most significant thing was the statement that for books available in print and also on Kindle, sales on Kindle are already tracking at 35 percent of sales of the same books in print. That's amazing. The Kindle format for Amazon is all gravy -- no storage, no shipment. The inventory at zero cost becomes an enormous business opportunity.