Apple's Epic E-Book Fail

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Amazon’s new Kindle for iPhone application shipped this morning. The software lets you read any of Amazon’s 240,000 Kindle books on an iPhone much like you would on an over-priced Amazon Kindle.

Unfortunately, the launch exposes Apple’s biggest blunder since the Apple Newton.

Apple could have, and should have, competed head-to-head with Amazon in the book sales market, transforming iTunes into the de facto marketplace for not only music, movies, music videos, audio books, podcasts, TV shows and iPhone Apps and games, but also books, magazines and newspapers.

Instead, Apple made the colossal blunder of thinking about e-books as competitors to audio content, with the apparent intention of riding the mobile audio and video revolutions to full fruition while the written word languished in obsolescence and decline.

“People don’t read anymore,” Steve Jobs told the New York Timesmore than a year ago in his explanation as to why the Amazon Kindle was irrelevant.

Never mind that Amazon sold more Kindles in its first year of sales than Apple sold iPods in that gadget’s first year.

Even before the Kindle iPhone App hit, electronic books were the fastest-growing categoryin the iTunes App Store. And within the category of books, “premium-priced books” — those priced at $10 or more — is the fastest-growing category.

Meanwhile, Google last month launched Book Search for iPhones(as well as Android and other devices). That free service puts 1.5 million books — mostly public domain and classic works (i.e. most major books ever written) on the iPhone. These older books won’t directly profit anyone, but they’ll bolster and broaden the habit of reading on phones.

It’s practically a foregone conclusion that Apple will soon ship a line or series of touch-screen tablet devices that share iPhone’s incredible user interface — an ideal platform for e-books.

The e-books revolution will transform the book market. And much of this revolution will take place on iPhones, Apple tablets and other Apple devices.

And Apple won’t get any of the revenue from it.

Apple failed to understand that people in fact do read, and that reading is about to undergo a come-back precisely because it will be available on the iPhone and other devices.

By offering books, newspapers and magazines on iTunes, and rejecting Amazon’s iPhone application, Apple could have given cell phone buyers yet another powerful incentive to choose an iPhone. Instead, Amazon.com will make its own proprietary format available on not only iPhones, but all phones that compete with the iPhone.

The best-case scenario would have been for Apple to compete directly with Amazon in e-books and electronic magazine and newspaper subscriptions. That would have forced Amazon to keep prices low and play nice with the publishing industry.

Instead, it appears that Amazon will have no real competition in the e-book market and will be free to dictate prices, leverage its proprietary e-book standard to exclude competitors and generally control the future of publishing.

Apple could have provided all kinds of unique benefits to users — and profited. For example, signing up for books on iTunes could have required a MobileMe account (for the storage and management of the content). Apple could have bundled audio book and e-book formats together, enabling users to switch back and forth between reading on-screen and listening during the drive to work — a vastly superior alternative to Amazon’s clunky computer-voice feature. And Apple could have inked hundreds of deals with authors to publish exclusively on iTunes.

Amazon’s whole Kindle initiative represents a massive exploitation of the short-sightedness and lack of vision of both the book publishing industry and would-be competitors like Apple. Only Amazon, it seems, understood the potential for e-books.

Apple, apparently believing that “nobody reads,” did not understand. But as its own customers rabidly embrace e-books on the iPhone and other Apple platforms, Apple will confront the magnitude of its failure.

People do read. And Apple should have read this market better.